Expenses and revenue in the Evanston/Skokie School District 65 budget last year were manipulated to present the impression the budget was balanced despite a $10 million deficit, a consultant said Monday.
“On the expenditure side, expenses seemed to be pushed to the subsequent fiscal year so they were not recorded on the current fiscal year,” said Rob Grossi, president of Illuminate Inc. “On the revenue side, there were a couple million in federal grants that more than likely would have been received in (fiscal year 2025) that were pushed into the 2024 fiscal year.”
Tamara Mitchell, newly appointed chief financial officer for District 65, said $3.5 million in bills that should have been paid in fiscal year 2024 were pushed back to the fiscal year 2025 budget.
As a result of such questionable accounting practices, the district accumulated $10 million in deficits each of the last two fiscal years, Grossi said. The proposed fiscal year 2025 budget, released when the previous fiscal year ended on June 30, contains a $20 million deficit.
Board member Joseph Hailpern said it appears more effort was put into presenting a balanced budget than balancing the budget in previous years.
“It sounds like deception,” Hailpern said.
Grossi said it is unusual for a budget of some $180 million to include revenue “barely above” expenses.
“Just the fact that revenues were something like $50,000 above expenses on a $180 million budget struck me as odd,” he said.
Board member Soo La Kim asked if the board should have expected auditors to catch any of the misinformation.
Grossi said auditors don’t examine numbers as in depth as board members and financial consultants. Mostly, they make sure bank balances match financial statements, he said.
“Generally, no,” Grossi said to La Kim. “The auditors are looking at a high level. They can’t test every activity. They do a sample of expenditures to make sure invoices match dollar amounts and things like that. If they do 20 samples and it looks good, they say, ‘Of the ones we tested, it looks good.’ If one or two are off, then it’s a red flag.”
Board member Biz Lindsay-Ryan said the district should have caught the mistakes.
“If the auditor didn’t catch them, how do we not wind up in this place again?” Lindsay-Ryan said.
Grossi credited new Superintendent Angel Turner with discovering discrepancies and said the district needs to be vigilant moving forward by regularly reviewing expenditures.
Hailpern asked who is responsible for entering grant money into a budget for the wrong fiscal year.
“I don’t have the answer,” Grossi said.
“How do we know these people are not in the organization anymore?” Hailpern said.
Turner said the district has instituted new systems, processes and structure to provide financial information to the board on an “ongoing basis.”
“That’s how you know you’re not getting the same information,” she said. “We’re changing our systems, processes and structures to provide the board with a budget structure in a way that is easy to read and understand. I’m not sure the information presented in the past was as easy to digest in a way that made sense and told you what you need to know.”
Hailpern said he is confident in the systems Turner has put in place, but he and board member Omar Salem said they would like to determine if they can hold anyone accountable for the faulty budgeting.
“We have a deadline. We have to get the budget ready,” Salem said. “But I think there is value at looking further back.”
“If we were lied to, I want to find out who lied to us,” Hailpern said. “If it’s just bad math, then it’s just bad math.”
