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Audit shows clean opinion but $3.2M education-fund shortfall; staff recommends option to capture new property plus CPI in tentative levy
Summary
Baker Tilly reported an expected unmodified audit opinion for FY2025 while noting a $3.2 million education fund deficit and tighter revenue outlook; staff recommended the tentative 2025 tax-levy option that captures new property and a 2.9% CPI increase and will return levy documents for board vote Nov. 18.
Baker Tilly presented preliminary results of the Rockford Public Schools 2025 audit and told the Committee of the Whole the district should expect an unmodified (clean) opinion on its annual financial report, while management and auditors highlighted a modest operating deficit and a tighter revenue environment going forward.
"We intend to issue an...unmodified auditing," audit partner Mike Malat told the committee, summarizing the firm's expectation after completing most testing. Jamie Murray, executive director of finance, announced the audit was substantially complete and thanked district staff for supporting the process.
Malat and staff flagged a roughly $3.2 million operating deficit in the education fund for the year, driven primarily by planned capital spending and changing revenue assumptions. The auditor cautioned that federal funding lines (single-audit reporting) are delayed nationally because OMB guidance tied to a federal shutdown has not been released, which may delay issuance of the single-audit report though it does not affect the district's financial statements.
On pensions, auditors noted improved funding positions: IMRF moved above 100% funded and TRS improved from about 43.9% to 45.4% in the year-end schedules.
In related planning and development discussion, district staff presented three tentative 2025 levy scenarios for board guidance: keep the levy flat (no new revenue), levy only on new property additions (roughly $866,000 in new revenue), or levy new property plus the allowable CPI adjustment (2.9%), which staff estimated would generate about $5.2 million. Staff recommended the third option (new property + 2.9% CPI) to help close projected budget gaps and asked the board to provide guidance so necessary documents can be prepared for the Nov. 18 full board meeting.
Board members raised concern about placing additional burden on taxpayers during economic stress and requested staff provide household-dollar examples for different CPI scenarios and a menu of budget-reduction options from the DMG Prism review that will be shared with the board ahead of final levy decisions.
Several consent items related to finance and operations were previewed for the Nov. 18 board meeting, including an amendment to the Inspira COBRA administration contract (Nov. 1, 2025'1/06/30/2028), acceptance of donations (a 2005 Buick LeSabre for the automotive program and classroom cruisers for neurodiverse classrooms), awards for plumbing and elevator upgrades at district facilities, and I-Ready license purchases for Marshall Middle School Gifted Academy.
