District finance update: CCSD 46 operating fund below board target; projections show funding gap and tier implications

District finance staff presented updated five‑year financial projections to the CCSD 46 board on Jan. 28, outlining assumptions and risks and explaining how recent local action interacts with state funding formulas.

The presentation used the adopted 2025–26 budget, the 2025 tentative levy, audited balances and current collective bargaining agreements. Presenters highlighted key assumptions: a 17% increase in health‑insurance costs in the coming renewal year (with 7% assumed for out years), a 15% increase in special‑education tuition costs and 4% for purchased services and transportation in the projection model.

Staff showed that the district’s operating fund balance fell below the board policy 25% threshold beginning in FY2023–24 and remains under that safety‑net level. "As you can see, we're currently operating below that 25% threshold," a finance presenter said. The presentation noted a long‑running adequacy gap: the district’s adequacy rose from roughly 65% to 70% under the Illinois Evidence Based Funding (EBF) formula, leaving an approximate $15 million shortfall relative to full adequacy.

Finance staff reviewed the effect of the March 2024 limiting‑rate referendum and recent debt activity: the referendum allowed for capital funding and the district issued about $70 million in debt certificates in December, with roughly $12 million planned to be spent in the following year to support the long‑range facilities plan. Staff cautioned that moving into Tier 2 of the EBF formula — a possibility modeled for 2028 given local levy changes — reduces incremental state contributions ("it basically halves the contribution," a presenter said), creating a potential paradox where increased local funding changes the district’s place in the state formula and affects future incremental revenue.

Trustees asked questions about the assumptions, the modeling of retirements and what a downgrade in bond rating might mean when future issuances occur. Staff said S&P and rating agencies will review updated projections before any further issuance and noted the district is monitoring staffing, contractual services and departmental budgets as part of the 2026–27 budget process. The board requested continued monitoring and updated projections as state and federal funding details become clearer.