On Nov. 17, District 65 presented financial projections that show operating deficits will grow from $197,789 in fiscal year ending June 30, 2026 (FY’26) to $12 million in FY’30.
The projections provide a number for total operating revenues and for total operating expenses for each year. There is, however, not a breakdown of projected revenues or expenses by category. And there is no memorandum that provides the assumptions used in making the projections for each category of revenues or expenses. Yet, the projections are driving the discussion on school closings. The district’s chart, titled Financial Projections Baseline, is reprinted below.
At the Nov. 17 meeting, the District’s consultant, Susan Harkin, said salaries and benefits account for 76% of the District’s operating expenses and they “are estimated to go up by 5% every year.”
On the revenue side, Harkin said, “On average, property taxes are going up by 2%.”
One important issue in examining any financial projections is whether the assumptions used in making the projections are valid. This essay illustrates how small changes in the general assumptions can make a significant difference over time. For instance, professional forecasters, on average, are predicting that the Consumer Price Index (CPI) which caps property taxes will go up by 2.9%, which will enable the district to increase property tax revenues by more than an assumed 2% and significantly reduce the projected deficits. Similarly, while an individual teacher’s salary may go up by 5% under a collective bargaining agreement, the total salary expense of all members of DEC may go up by only about 3.3% because of the way that “step” increases operate in practice. If so, this would keep the total salary increase of members of DEC below 5% and significantly reduce total salary expenses.
Moreover, when the district’s financial levers for reducing the deficit are laid out, the administration does not mention reducing staffing levels, even though the number of full-time employees has increased by 10.3% since 2019 (according to the district’s summative data) while student enrollment has decreased by 24%.
In addition, the district’s property tax revenues have increased by $15.3 million in the last few years, which is a significant bump in revenues that carries through to all subsequent years. The district has a lot more money to work with.
This should give the school board pause. The total numbers do not eliminate the operating deficits projected by the district, but they significantly narrow the range.
The author of this essay asked Tamara Mitchell, the district’s chief financial officer, nine questions about the assumptions and the methodology in a Nov. 21 email, asking for a response by the close of business on Nov. 25. The author did not receive a response, but it should be pointed out that the district’s schools and offices were closed for the week of Nov. 24.
On Nov. 21, the author submitted a FOIA request to the district asking for records relating to these projections. The district extended its time to respond to Dec. 8.
Admittedly, additional information about the assumptions would enable a better and more rigorous analysis of the projections. Because the district has not provided the assumptions and methodologies used in making the projections, this essay should be viewed as illustrating areas where relatively minor changes in the general assumptions might yield significant increases in revenues or reductions in expenses. The projections deserve more scrutiny.
Assumptions about property tax revenues
The district’s main source of operating revenues is property taxes, which make up about 80% of its operating revenues. Property taxes are subject to tax caps that limit the increase in taxes from one year to the next to the CPI or 5%, whichever is less. Harkin said the increase in property taxes has averaged 2%. If the district made its projections about property tax revenues based on an assumption that the CPI would be 2%, then it would be underestimating property tax revenues if the CPI came in at higher percentages.
The data below shows the amount of property tax revenues the district received for operations from FY’20 through FY’25:
($ in 000s)
FY’20 $111,505
FY’21 $111,700
FY’22 $117,278
FY’23 $117,591
FY’24 $129,682
FY’25 $132,533
The data show that the district’s property tax revenues for operations increased by $21 million between FY’20 and FY’25, or by an average of 4.2%.
For calendar years 2017 through 2024, the CPIs have been: 2.1% (2017); 2.4% (2018); 2.3% (2019); 1.4% (2020); 7.0% (2021); 6.5% (2022); 3.4% (2023); and 2.9% (2024), according to a presentation made by Mitchell regarding the 2025 property tax levy.
The average CPI during those years is 3.5%.
These data suggest that an assumption that property taxes will increase by only 2% may be too conservative, particularly in the nearer term.
The Philadelphia Federal Reserve Bank conducted a survey of approximately 50 professional forecasters, and on Nov. 17, they estimated, on average, that the CPI will be 2.9% for 2025, 2.8% for 2026 and 2.5% for 2027.
The CPI for 2025 will, with some exceptions, limit the increase in property taxes that the district may levy in November 2026. Property taxes levied in November 2026 will be collected in calendar year 2027. The taxes, though, are paid in two installments, one installment in the district’s fiscal year ending on June 30, 2027 (FY’27), and the second installment in the district’s fiscal year ending June 30, 2028 (FY’28). Because of the way the installment payments are calculated, the impact of the CPI for calendar year 2025 is felt in FY’28.
The difference in increasing property taxes by 2% rather than 2.9% may be estimated by multiplying the difference, 0.9%, by the approximate amount of the district’s 2025 property tax extension base of $140 million. The result is $1.2 million. As noted, this impacts FY’28.
Because of the way property tax caps work, the $1.2 million would increase the district’s property tax extension base and carry through to all succeeding years.
Applying the same principles, using a CPI of 2.8% rather than 2% for calendar year 2026 would result in $1.1 million more in revenue in FY’29. This too would carry through to subsequent years.
Using a CPI of 2.5% rather than 2% in calendar year 2027 would result in $0.7 million more in revenue in FY’30.
The table below is a recap of the above information. It lists the calendar year, the CPI forecasted for that year and the impact of using the CPI indicated rather than 2% in calculating the property tax levy for District 65.
The above increases do not take into account the value of new property, which is not subject to tax caps in the year it is added to the tax rolls.
Assumptions about expenses
Harkin said that salaries and benefits would increase by 5%. If the projections assume that the total salaries of DEC members would be 5%, then the projections may overestimate the salary expense of DEC members.
For FY’26, FY’27 and FY’28, the salaries of members of the District Educators’ Council are governed by a bargaining agreement entered into in December 2024. When the agreement was entered into, the district issued a statement saying, in part:
“Salary increases over the four-year contract period include an average step increase of 2.73%, along with a base salary increase each year as outlined below. Step increases are awarded based on staff longevity.
- FY25 base increase of 2.30%
- FY26 100% of CPI, with a minimum of 2.00% and a maximum of 2.27%
- FY27 100% of CPI, with a minimum of 2.00% and a maximum of 2.27%
- FY28 base increase of 2.27%.”
So, the compensation will increase by an average step increase of 2.73% and a base salary increase of between 2.0 to 2.3%.
Under the agreement, the average individual teacher’s salary may increase by about 5% each year. But this does not mean that the total amount of all salaries will increase by 5%. This is because older teachers at higher steps and with higher compensation are constantly retiring and being replaced with younger teachers at lower steps and a lower compensation.
ISBE’s website reports that District 65’s teacher retention rate in 2025 (a three-year average) was 86.2%, so there is an annual turnover rate of about 14%. This means that there’s a turnover rate of about 100 members of DEC each year.
Conceptually, if as a result of this revolving chain, the district ends up having about the same number of teachers in each step (number of years served) and in each track from one year to the next, the impact on total salaries would be the increase in base salary, which according to the district is between about 2.0% and 2.3%. This is less than half the amount assumed by the district in projecting salary increases for members of DEC.
One number that may take all of this into account is the increase in the average salary of all teachers from year to year. ISBE reports that the average salary of District 65 teachers in 2024 was $91,559, and in 2025 it was $94,901, or an increase of 3.3%.
If the salary increase of all DEC members is increasing at the rate of 3.3%, and if the district is assuming that their salaries are increasing by 5%, then the district’s financial projections may be overestimating the salary expense of DEC members by about 1.7%.
The total salary of DEC members, including teachers, interventionists, occupation and physical therapists, speech clinicians, librarians, social workers and psychiatrists, is budgeted at about $72 million for FY’26. (This total may be computed by adding the total salaries budgeted for these groups, as reported in the latest treasurer’s report, which is part of the board’s agenda packet.)
Multiplying that amount by 1.7% is $1.2 million.
Another way to look at this is when a more experienced teacher at a higher step and track retires, they can be replaced by a younger teacher with less experience. As an example, in the latest agreement between the district and DEC, if a teacher in track V, step 22 retires, that teacher’s compensation would be $126,115. If replaced by a teacher with four years’ experience (assume Track II, step 4), that new teacher’s compensation would be $66,905. The district could save about $60,000. If 20 teachers retire and are replaced by younger teachers at a cost savings of $60,000 each, the savings would be $1.2 million.
Savings estimated by the district
Closing Kingsley: The district has recently estimated that the savings from closing Kingsley Elementary would be $1,662,529. That amount includes non-salary and building savings in the amount of $180,087, salary and benefit savings in the amount of $1,132,442, and section savings of $150,000.
Expense Levers: At the Nov. 17 board meeting, the district presented an itemized list of expenditure levers that could reduce the projected operating expenses by $1,430,000. That list of expense reductions is:
- Reduce transportation: $500,000
- Reduce purchased services: $500,000
- Reduce non-instruction consultants: $100,000
- Consolidate low-enrollment classes: $300,000
- Reduce technology licenses: $30,000
In context, the district is projecting that it will increase operating expenses by $8.2 million in FY’27. So, it is suggesting that these “expense levers” can reduce that increase by $1.43 million. The district is projecting that total operating expenses in FY’27 will be $184 million. These levers are about 0.8% of the total budget.
Two weeks earlier, on Nov. 3, the district presented expenditure levers that totaled $2,480,000.
Revenue Levers: On Nov. 17, the district presented “revenue levers” to increase revenues by $350,000. This was about $1 million less than estimated by the district on Nov. 3.
Administrative and other potential cost savings
Between 2018 and 2025, District 65’s total student enrollment declined from 7,931 students to 5,997. This was a decline of 1,934 students; a decline of 24%.
Yet, according to summative data provided by the district, the number of employees of the district has increased on an overall basis by 130 full-time-equivalent employees since 2018. The table below shows the breakdown.
The district’s summative data shows that the number of administrators in FY’26 is 51, one more than in FY’19. My Oct. 14, 2025 essay concluded that the number of administrators — or people holding administrative or managerial positions — in FY’26 is 61, which is 15 more than in FY’18.
The number of administrators reported in the Oct. 14 essay was based on an analysis of both the administrator compensation report and the administrator and teacher compensation report that were prepared by the district and provided to the school board in late September 2017 (FY’18) and on Sept. 29, 2025 (FY’26). The titles of the 61 positions viewed as administrative or managerial positions as of Sept. 29, 2025 are listed in a footnote to that essay.*
But regardless of whether the number of administrators increased by one or by 15 between FY’18 and now, they have increased during a time when total student enrollment has declined by 1,934 students, or by 24%.
And on an overall basis, the number of FTEs increased by 10.3% (according to the district’s summative data) while student enrollment has decreased by 24%. This should give the school board pause. The data suggests there is a lot more room to reduce operating expenses.
In addition, in the last two years alone (between FY’23 and FY’25), there was an increase of $15.3 million in property tax revenues. This is a significant bump in the district’s revenues, and this amount carries through to FY’26 and each subsequent year. The district has a significant amount of additional revenue to work with.
Between FY’25 and FY’30, the district is projecting that its annual operating expenses will increase by $36.7 million. Yet, the district can only point to a few ways to reduce that increase by a total of $1.43 million.
The district’s budget deserves much more scrutiny.
A recap of some savings
The table below is a recap of 1) the potential increase in projected property tax revenues by assuming a CPI higher than 2%: 2) a potential decrease in the total salary expenditure of members of DEC, if the total salary increase was assumed to be 3.3%, rather than 5%; 3) applying the district’s estimate that the savings that will accrue if a school in the north end of Evanston is closed; 4) applying the “expense levers” identified by the district on Nov. 17; and 5) applying the “revenue levers” identified by the district on Nov. 17.
The total numbers do not eliminate the operating deficits projected by the district, but they significantly narrow the range.
If the district provides information concerning the assumptions it used in making its projections for each category of revenues and expenses, provides the baseline starting point used, and the methodology and calculations it used, it will enable a better and more thorough analysis of its projections.
At this stage, it would make sense to close only one school in the north end of Evanston. The board should then make a rigorous analysis of the projections. It should begin a rigorous budgeting process for FY’27 starting in January to reduce operating expenses and increase revenues. It should develop an education vision and program that sets high expectations for all students, that engages all students and that is supported by parents. It should consider creative ways to use school buildings that can reduce expenses while promoting its educational vision.
A failure to do this will likely lead to even more declines in student enrollment.
Through this process, the district should take advantage of the many ideas suggested by members of the community during the process, including proposals submitted by the Legion of Data Nerds; Invest in Neighborhoods Schools; the Washington School Task Force; and Carlos Robles-Shannon and 63 co-signers. The proposal submitted by IINS has been signed by more than 2,000 people.
The views expressed in this essay are those of the author only.