Budget Deficit Reduction Plan

What is a budget deficit?

 A budget deficit is a financial shortfall that occurs when spending exceeds revenue for a fiscal year. District 118 ended the 2024-25 fiscal year with a $2.5 million deficit. This deficit propagated to the 2025-26 budget, which was approved by the Board of Education on September 18 and included a $4.2 million deficit in the Operating Funds. 

Why are we in this situation?

After analyzing spending from the 2024-25 Fiscal Year, a number of factors were determined to have contributed to the budget deficit. Significant factors impacting our 2024-25 unaudited expenses exceeding our budget include:

• Substitute Budget

• Staffing Budget

• Out-of-District Tuition Budget

• Out-of-District Transportation Budget

• Lower than anticipated State Revenue

Our Cabinet Team has continued working on a three-year Budget Deficit Reduction (BDR) Plan, that has included analyzing factors that impacted our budget performance. These include:

• Basing our budget levels for certain areas on the previous budget instead of the previous year’s actual revenue and expenditures (e.g., incorporating increased transportation and placement costs in out-of-district placements), 

• Staffing costs associated with bringing back special education programs were not fully accounted for, and 

• A significant decline in State revenues, particularly transportation reimbursement and other categorical funding.

What is the plan?

The administration has developed a 3-Year Budget Deficit Reduction (BDR) Plan designed to get District 118 back to a balanced budget within three years. The Draft BDR Development Plan includes analyzing the root causes of the deficit, defining actions to reduce our budget, and ensuring clear and accurate budgeting and monitoring models moving forward.

What to Expect: 

Year 1: 

D118 implemented targeted operational reductions and froze contingency staffing plans. Prior to budget approval, the Cabinet team identified and implemented $850k of reductions. Additional reductions to this year's budget that can be implemented will continue to be identified and incorporated throughout the year.

Year 2:

The bulk of the BDR Plan will be implemented during the 2026-27 School Year. Our plan begins with a focus on reducing operational costs (and exploring increasing fees), then will incorporate staffing reductions in administrative and support staff, and finally will consider certified staffing positions as needed. 

Year 3: 

Determine and implement staffing reductions that can be attained through attrition along with any additional cuts to be implemented after analyzing the impacts of Year 1 and Year 2 reductions. This will be an ongoing process of monitoring our budget performance and progress to determine any additional adjustments to D118’s operations or staffing levels. 

When did the district become aware of the budget deficit?

When finalizing the 2024-25 Fiscal Year budget in July of 2025, District 118 discovered a significant budget deficit. The administration immediately notified the Board of Education and began to pinpoint the source of the shortfalls. The higher-than-anticipated figures in the 2024-25 budget led to inflated projections for the Tentative 2025-26 Fiscal Year budget. To address this issue, the administration drafted a course of action, including developing and implementing the 3-Year BDR Plan, to combat the deficit. 

What caused the budget deficit?

Lower than anticipated State Revenue, particularly transportation reimbursement and other categorical funding impacted our 2024-25 budget. Significant factors impacting our unaudited expenses exceeding our budget include:

• Substitute Budget

• Staffing Budget

• Out-of-District Tuition Budget

• Out-of-District Cab Budget

What will be the actions taken by the district to respond to the budget deficit?

The District 118 Cabinet Team has continued working diligently on our Budget Deficit Reduction (BDR) plan. We are also continuing to gain input from our buildings and departments and will continue to brainstorm and build operational and administrative and support staff reduction options as we build toward our targeted reduction. We are also generating a draft five-year financial projection that we will continue to refine to clarify our BDR reduction target.

Our BDR efforts have begun with a focus on reducing operational costs (and exploring increasing fees), then identifying staffing reductions in administrative and support staff, and finally will consider certified staffing positions as needed. Drivers of the plan include remaining transparent, ensuring budget accuracy moving forward, and keeping cuts as far away from students as possible, avoiding cuts to programming to the greatest extent possible. 

What are items included in the first year of the Budget Deficit Reduction Plan?

• Contingency staffing positions are frozen, however, this does not include current vacant positions throughout the district

• Reducing select budgets, not including building budgets

• Reducing community mailings to one time per year, utilizing electronic communication paths

• Professional Development substitutes and travel are being evaluated and will be reduced

• Evaluating the effectiveness of the Employee Assistance Program during the first semester of 2025-26

• Discontinuing the provided free counseling services for staff

• Eliminating the contract with the therapy dog

• Discontinuing the K-12 contract with Easter Seals

• Reducing the kitchen equipment budget

• Reducing the summer maintenance budget

• Revising and extending the textbook adoption cycle

How will this affect property taxes in the district?

According to the School Report Card, in the 2023-24 school year, 74.8% of District 118’s funding comes from local funding (e.g., property taxes and fees), 20.4% from State funding, and 4.9% from Federal Funding. District 118 operates with other Lake County Schools under the Tax Cap, which limits property tax increases to Consumer Price Index (CPI) or 5%, whichever is less. The district also benefits from new local property growth. 

District 118 is committed to returning to a balanced budget within three years by making adjustments to operations and staffing levels. At this time, our plan does not include asking the community to consider a referendum to raise local taxes beyond the limit of the Tax Cap.

How does this affect students, staff, and programs?

District 118 is committed to protecting the quality of education provided to students, keeping cuts as far away from students as possible and avoiding cuts to programming to the greatest extent possible. Our Budget Deficit Reduction efforts begin with a focus on reducing operational costs (and exploring increasing fees), then identifying staffing reductions in administrative and support staff, and finally will consider certified staffing positions as needed. 

As changes to operations and staffing levels are identified, impacts on students, staff, and programs will be shared transparently. 

How can the community stay informed?

To stay up-to-date with accurate and timely updates, we encourage our community to use this webpage as their primary resource. This page will be updated regularly and will contain the latest information, including key decisions, potential impacts, and progress updates. 

How will District 118 ensure it will provide quality education and support services amid the budget deficit? 

District 118 Administration and the Board of Education are committed to minimizing impacts on classroom experiences and student support services. Our top priority is to protect the high-quality education and essential support services available to all students. 

How has District 118 been affected by changes in Federal and State funding?

State funding increased less than predicted and Federal funding decreased significantly for the 2025-26 Budget, which has negatively impacted our financial projections, also contributing to the need for this Budget Deficit Reduction effort. 

Why did District 118 hire so many new staff members over the Summer? 

District 118’s programming and staffing plan was set prior to learning about the budget deficit. Once the deficit was understood, only essential positions were hired, and contingency staffing positions were frozen. After the impacts of changing operations to decrease expenditures are known, the district will implement staffing reductions in a systemic and measured fashion.