# PALOS HEIGHTS SCHOOL DISTRICT 128
# FOIA Document-Based Financial Audit Report

**Date:** October 23, 2026
**Prepared for:** Gregory Maka
**Based on:** FOIA records received from District 128

---

## 1. EXECUTIVE SUMMARY

1. **The district's operating and special fund deficit has grown dramatically.** FY24 showed a $413K surplus; FY26 shows an unaudited $1.972M deficit; the FY27 budget projects a $2.020M deficit. This trajectory is confirmed by the fund balance reports.

2. **The February 2024 financial forecast significantly underestimated spending growth.** FY27 budgeted expenses exceed the Feb 2024 forecast by approximately $1.546 million. Revenue is approximately $290K above forecast. The net deficit is $1.256M worse than projected. *(Source: 128 Financial Projection 2-26-24.pdf vs. d128-budget-presentation FY27.pdf)*

3. **The single largest driver of the forecast miss is salaries.** Salaries grew from $7.505M (FY24) to $8.846M (FY26 unaudited) — a $1.341M increase (+17.9%) in two years. The Feb 2024 forecast assumed 5%/year salary growth and **no change in staff size**. Actual salary growth substantially exceeded both assumptions. *(Source: d128-budget-presentation FY27.pdf, p.6; 128 Financial Projection 2-26-24.pdf, p.2)*

4. **The $531K increase in purchased services (FY25→FY26) cannot be explained from these documents.** No FY26 expense detail was provided. *(Source: FOIA response — no FY26 expense detail in production)*

5. **No FY26 adopted or amended budget was provided.** Therefore, it cannot be determined whether FY26 actual spending exceeded the authorized FY26 budget. *(Source: FOIA production — document absent)*

6. **There is no documented, itemized $1 million expenditure-reduction plan.** The district's own FOIA response states: "These options are still under evaluation. No decisions have been finalized." *(Source: FOIA response letter, Item 5)*

7. **No calculation showing how the $2.346M referendum amount was derived appears in the production.** The $2.346M does not equal the $2.020M FY27 deficit. No bridge calculation (deficit + future growth − planned reductions + reserve rebuilding = referendum amount) was provided. *(Source: FOIA response, Item 4 — no records beyond the financial presentation)*

8. **There is no documented communication with ISBE** regarding financial watch, warning, oversight, or potential consolidation. The FOIA response states "No records per this request." *(Source: FOIA response, Item 10)*

9. **A new Assistant Superintendent / Curriculum Director position (~$101K annualized) appears in the FY27 trial balance but is not mentioned in any staffing memo.** The 26-27 staffing memo characterizes FY27 core FTE changes as "NET 0." A new Physical Therapist (~$97K annualized) also appears. Together these represent ~$198K in new salary costs not documented in staffing memos. *(Source: FY27 Trial Balance.pdf; 26-27 Staffing Memo.pdf)*

10. **Operating fund balances are declining rapidly.** The Educational Fund (Fund 10) drops from $4.853M (FY24) to a projected $441K (FY27 budget). The O&M Fund (Fund 20) is projected to go **negative** ($-64K) in FY27. *(Source: FY24-FY27 Fund Balance Reports)*

---

## 2. SPENDING TREND TABLE

All figures from *d128-budget-presentation FY27.pdf*, pages 4 and 6. Excludes Capital Fund (Fund 60) activity.

### Revenue

| Source | FY23 | FY24 | FY25 | FY26 (unaudited) | FY27 (budget) |
|---|---|---|---|---|---|
| Real Estate Taxes | $9,869K | $10,806K | $10,839K | $11,226K | $12,053K |
| Other Local | $856K | $658K | $816K | $618K | $590K |
| Evidence-Based Funding | $617K | $618K | $619K | $633K | $650K |
| Other State Sources | $242K | $978K | $1,243K | $1,022K | $819K |
| Federal Sources | $871K | $933K | $635K | $572K | $522K |
| **TOTAL REVENUE** | **$12,455K** | **$13,993K** | **$14,152K** | **$14,071K** | **$14,634K** |

### Expenditures (Excluding Capital Fund)

| Object | FY23 | FY24 | FY25 | FY26 (unaudited) | FY27 (budget) |
|---|---|---|---|---|---|
| Salaries | $7,049K | $7,505K | $8,010K | $8,846K | $9,262K |
| Employee Benefits | $1,775K | $1,852K | $2,403K | $2,246K | $2,545K |
| Purchased Services | $1,697K | $1,436K | $1,485K | $2,016K | $1,786K |
| Supplies & Materials | $608K | $688K | $712K | $648K | $680K |
| Capital & Equipment | $353K | $171K | $228K | $127K | $206K |
| Debt Payments | $1,154K | $1,269K | $1,414K | $1,508K | $1,495K |
| Tuition & Other | $565K | $659K | $620K | $652K | $680K |
| **TOTAL EXPENSES** | **$13,201K** | **$13,580K** | **$14,872K** | **$16,043K** | **$16,654K** |

### Year-Over-Year Change

| Period | $ Change | % Change | Basis |
|---|---|---|---|
| FY23→FY24 | +$379K | +2.9% | Actual → Actual |
| FY24→FY25 | +$1,292K | +9.5% | Actual → Actual |
| FY25→FY26 | +$1,171K | +7.9% | Actual → Unaudited Actual |
| FY26→FY27 | +$611K | +3.8% | Unaudited Actual → Budget |
| **FY24→FY26** | **+$2,463K** | **+18.1%** | — |
| **FY23→FY27** | **+$3,453K** | **+26.2%** | — |

### Operating & Special Fund Surplus/(Deficit)
*(Source: d128-budget-presentation FY27.pdf, p.8)*

| | FY23 | FY24 | FY25 | FY26 | FY27 Budget |
|---|---|---|---|---|---|
| Surplus/(Deficit) | ($746K) | +$413K | ($720K) | ($1,972K) | ($2,020K) |

**FACT:** FY26 spending increased by $1,171K over FY25. FY25 spending increased by $1,292K over FY24. These are the two largest single-year increases in the dataset.

**FACT:** Total non-capital expenditures have grown at an average annual rate of approximately 6.0% from FY23 to FY26 (3 years), while revenue has grown at approximately 4.2% over the same period.

**NOTE:** FY26 figures are described as "unaudited." FY23 and FY24 appear to be actual. FY25 status is not explicitly labeled but appears to be actual. The presentation notes that "School districts that report audited information using the accrual method may realize additional trend variances."

### Verification Against Fund Balance Reports

| Year | Fund Balance Report Total Expenses (All Funds) | Less Fund 60 (Capital) | Non-Capital Total | Budget Presentation Total | Difference |
|---|---|---|---|---|---|
| FY24 | $15,306,829 | $1,700,389 | $13,606,440 | $13,580,000 | $26K |
| FY25 | $14,741,135 | $261,427 | $14,479,708 | $14,872,000 | $392K |
| FY26 | $17,849,303 | $1,919,893 | $15,929,410 | $16,043,000 | $114K |

**CALCULATION:** The FY24 and FY26 figures are reasonably close (likely rounding). The FY25 discrepancy of ~$392K may reflect accrual-basis adjustments or different accounting treatments. This is not material to the overall trend analysis but should be noted.

---

## 3. FORECAST VS ACTUAL/BUDGET TABLE

*(Sources: 128 Financial Projection 2-26-24.pdf, p.3; d128-budget-presentation FY27.pdf, pp.4,6)*

All figures exclude Capital Fund activity.

### FY25

| | Feb 2024 Forecast | Actual/Current | Variance |
|---|---|---|---|
| Revenue | $13,812,000 | $14,152,000 | +$340,000 |
| Expenses | $14,080,010 | $14,872,000 | +$791,990 |
| Surplus/(Deficit) | ($268,010) | ($720,000) | -$451,990 |

### FY26

| | Feb 2024 Forecast | Unaudited Actual | Variance |
|---|---|---|---|
| Revenue | $14,157,000 | $14,071,000 | -$86,000 |
| Expenses | $14,629,067 | $16,043,000 | +$1,413,933 |
| Surplus/(Deficit) | ($472,067) | ($1,972,000) | -$1,499,933 |

### FY27

| | Feb 2024 Forecast | FY27 Budget | Variance |
|---|---|---|---|
| Revenue | $14,344,000 | $14,634,000 | +$290,000 |
| Expenses | $15,107,833 | $16,654,000 | +$1,546,167 |
| Surplus/(Deficit) | ($763,833) | ($2,020,000) | -$1,256,167 |

### Verification of User's Statement

> "Compared with the February 2024 financial forecast, FY27 revenue is approximately $290,000 higher than projected while FY27 expenditures are approximately $1.55 million higher than projected."

**CALCULATION:**
- Revenue variance: $14,634,000 − $14,344,000 = **+$290,000** ✓
- Expense variance: $16,654,000 − $15,107,833 = **+$1,546,167** ✓

**This statement is accurate and verified.**

### What Changed Between Feb 2024 and the FY27 Budget?

**FACT:** The Feb 2024 forecast assumed salary growth rates of 5%/5%/4% for FY25/FY26/FY27 from a base of $7,463,000 and explicitly assumed **no change in staff size** and **no savings from retirements.** *(Source: 128 Financial Projection 2-26-24.pdf, p.2)*

**CALCULATION:** Applying the forecast assumptions to salaries:
- FY25 forecast salary: $7,463K × 1.05 = $7,836K → Actual: $8,010K → **+$174K variance**
- FY26 forecast salary: $7,836K × 1.05 = $8,228K → Actual: $8,846K → **+$618K variance**
- FY27 forecast salary: $8,228K × 1.04 = $8,557K → Budget: $9,262K → **+$705K variance**

**CALCULATION:** Applying the forecast assumptions to other categories for FY27:
- Benefits: $1,915K × 1.06 × 1.04 × 1.04 = ~$2,196K → Budget: $2,545K → **+$349K**
- Purchased Services: $1,500K × 1.038 × 1.038 × 1.03 = ~$1,665K → Budget: $1,786K → **+$121K**
- Supplies: $600K × 1.023 × 1.023 = ~$628K → Budget: $680K → **+$52K**
- Capital (operating): $150K flat → Budget: $206K → **+$56K**
- Tuition: $600K flat → Budget: $680K → **+$80K**
- Debt: Cannot separately calculate from forecast

**INFERENCE:** Of the ~$1.546M expense variance, salary alone explains approximately **$705K (46%)**. Benefits explain approximately **$349K (23%)**. Purchased services explain approximately **$121K (8%)**. Other categories explain the remainder.

**QUESTION:** What specific factors caused actual salary growth of 6.7% (FY25) and 10.4% (FY26) to exceed the forecast assumption of 5%? The staffing memos document +2.3 FTE for FY26 (of which 1.0 was grant funded), but this alone does not fully explain the variance.

---

## 4. SALARY ANALYSIS

*(Source: d128-budget-presentation FY27.pdf, p.6)*

| Year | Total Salaries | $ Change | % Change |
|---|---|---|---|
| FY23 | $7,049K | — | — |
| FY24 | $7,505K | +$456K | +6.5% |
| FY25 | $8,010K | +$505K | +6.7% |
| FY26 (unaudited) | $8,846K | +$836K | +10.4% |
| FY27 (budget) | $9,262K | +$416K | +4.7% |

### FY24→FY26 Salary Growth: +$1,341K (+17.9%)

**FACT:** The Feb 2024 forecast assumed no change in staff size. *(Source: 128 Financial Projection 2-26-24.pdf, p.2)*

**FACT:** Staffing memos show the following documented FTE changes:
- FY24 (23-24 memo): +2.0 to 3.0 FTE (1.0 Grade 5 section + 1.0 EL teacher) *(Source: 23-24 Staffing Memo.pdf, p.4)*
- FY25 (24-25 memo): Flat or -1.0 FTE *(Source: 24-25 Staffing Memo (1).pdf, p.3)*
- FY26 (25-26 memo): +2.3 FTE net, of which 1.0 is grant funded (+0.3 Art, +1.0 SpEd, +1.0 OT grant-funded) *(Source: 25-26 Staffing Projections (2).pdf, p.3)*
- FY27 (26-27 memo): NET 0 for core classroom, but special education needs were **deferred** to March 2026 board meeting with the note: "There is the possibility that we may need to increase certified and support staff FTEs." *(Source: 26-27 Staffing Memo.pdf, pp.3-4)*

### Breakdown by Employee Category

From the trial balances (FY24, FY25, FY27) and administrative expense detail reports, the following salary amounts are confirmed by named position:

**Named Administrative Personnel (FY25):**

| Position | Name (from accounts) | FY25 Actual | Source |
|---|---|---|---|
| Superintendent | Brownlow | $181,939 | 2320 expense detail FY25 |
| Executive Admin Secretary | — | $42,224 | 2320 expense detail FY25 |
| SpEd Director | Potempa | $122,308 | 2330 Expense detail FY25 |
| SpEd Secretary (IDEA Grant) | — | $10,400 | 2330 Expense detail FY25 |
| Business Manager | Anoman | $101,532 | 2510 Expense Detail FY25 |
| O&M Staff Salaries | — | $353,376 | FY25 All Building expenses.pdf |
| O&M Overtime | — | $13,846 | FY25 All Building expenses.pdf |
| O&M Substitutes | — | $5,362 | FY25 All Building expenses.pdf |
| **Identified Admin/O&M Subtotal** | | **~$830,987** | — |

**CALCULATION:** Total FY25 salaries are $8,010K. The identified positions above account for approximately $831K, or about 10.4% of total salaries. The remaining ~$7,179K includes classroom teachers, special education teachers, aides, paraprofessionals, and other certified/support staff.

### Building-Level K-12 Teacher Salary Comparisons (FY24 → FY25)

*(Source: FY24 Trial Balance.pdf; FY25 Trial Balance.pdf — Account 10.x.1100.111)*

| Building | FY24 | FY25 | Change |
|---|---|---|---|
| Chippewa (Bldg 1) | ~$903K | ~$974K | +$71K (+7.9%) |
| Independence (Bldg 2) | ~$1,085K | ~$1,187K | +$102K (+9.4%) |
| Navajo (Bldg 3) | ~$800K | ~$840K | +$40K (+5.0%) |
| Indian Hill (Bldg 4) | ~$1,190K | ~$1,167K | -$23K (-1.9%) |
| **Total K-12 Teacher Salaries** | **~$3,978K** | **~$4,168K** | **+$190K (+4.8%)** |

**NOTE:** The Indian Hill decrease (-$23K) likely reflects a retirement/departure replaced at a lower salary step. These are K-12 regular instruction teacher salaries only (Function 1100, Object 111) and do not include special education teachers, aides, substitutes, or other salary categories.

**CALCULATION:** K-12 teacher salaries increased by ~$190K from FY24 to FY25. Total salaries increased by $505K in the same period. Therefore, K-12 teacher salaries account for approximately 38% of the total salary increase. The remaining ~$315K came from other categories (special ed, aides, administration, support staff, substitutes).

### NEW POSITION FOUND IN FY27 TRIAL BALANCE — NOT IN ANY STAFFING MEMO

**FACT:** The FY27 trial balance contains a new account **10.5.2212.111 "Asst Supt Curr Dir"** with $25,384.62 expended in Q1 (July–September 2026). Annualized, this position would cost approximately **$101,500/year**. *(Source: FY27 Trial Balance.pdf)*

**FACT:** This position does NOT appear in the FY24 or FY25 trial balances, and it is NOT mentioned in ANY of the six staffing memos (20-21 through 26-27). The 26-27 staffing memo explicitly states "NET 0" for core classroom FTE changes.

**INFERENCE:** This appears to be a new **Assistant Superintendent / Curriculum Director** position created for FY27 at an annualized salary of approximately $101K. If this position was not part of the staffing memo process, it may have been approved separately by the board. This is a material omission from the staffing documentation provided.

**QUESTION:** When was this position approved? Was it included in the FY27 budget? Does it appear in the salary total of $9,262K reported in the budget presentation? If so, the "NET 0" characterization in the 26-27 staffing memo is misleading.

### Additional FY27 New Position: Physical Therapist

**FACT:** The FY27 trial balance also shows a new salary line for a **Physical Therapist** (account 10.x.1205/2150 series) with $24,317.04 in Q1 expenditures (annualized ~$97K). This position does not appear in FY24 or FY25 trial balances. *(Source: FY27 Trial Balance.pdf)*

**NOTE:** The 26-27 staffing memo did note that special education staffing needs were deferred. This position may have been added after the memo was prepared.

### Special Education Tuition and Transportation Trends (from Trial Balances)

| Category | FY24 | FY25 | Change | Source |
|---|---|---|---|---|
| Spec Ed Private Tuition | $635,298 | $594,599 | -$40,699 | Trial Balances |
| Spec Ed Transportation | $242,942 | $260,162 | +$17,220 | Trial Balances |

**NOTE:** Special ed private tuition *decreased* by ~$41K from FY24 to FY25, suggesting movement of students to in-district programs. Transportation costs increased modestly.

### What Accounts for the FY25→FY26 Salary Increase of $836K?

**FACT:** Contractual salary increases of approximately 4-5% would account for roughly $320-400K of the increase.

**FACT:** The documented +2.3 FTE for FY26 (+0.3 Art, +1.0 SpEd teacher, +1.0 OT at ~$50-70K each) would account for roughly $80-120K (1.0 OT is grant-funded and may not appear in district salary totals). Net district-funded additions of 1.3 FTE ≈ $78-91K.

**CALCULATION:** Contractual raises (~$360K) + net district-funded new FTE (~$85K) = ~$445K of the $836K is potentially explained. Approximately **$391K remains unexplained** from the documents provided.

**INFERENCE:** Possible explanations for the unexplained $391K include:
- Step/lane increases beyond base percentage (teachers moving up the salary schedule)
- Support staff or paraprofessional additions not captured in the staffing memos
- The expanded special education continuum mentioned in the 26-27 memo (self-contained classrooms added at grades 1-8)
- Substitute or overtime increases
- Positions filled at higher salaries than budgeted

**QUESTION:** What specific positions were added or what salary schedule movements occurred in FY26 beyond what the staffing memo documents? A payroll comparison between FY25 and FY26 would answer this.

### Record Needed
To fully explain the FY24→FY26 salary growth, the following would be needed:
- FY24 and FY26 payroll registers or salary schedules showing each employee, position, and salary
- The collective bargaining agreement(s) showing base salary increases
- Board approval minutes for any FTE additions beyond the staffing memos

---

## 5. PURCHASED SERVICES ANALYSIS

*(Source: d128-budget-presentation FY27.pdf, p.6)*

| Year | Total Purchased Services | $ Change | % Change |
|---|---|---|---|
| FY23 | $1,697K | — | — |
| FY24 | $1,436K | -$261K | -15.4% |
| FY25 | $1,485K | +$49K | +3.4% |
| FY26 (unaudited) | $2,016K | +$531K | +35.8% |
| FY27 (budget) | $1,786K | -$230K | -11.4% |

### The $531K FY25→FY26 Jump

**FACT:** The FY25→FY26 increase of $531K is the largest single-year change in purchased services in the dataset. *(Source: d128-budget-presentation FY27.pdf, p.6)*

**FACT:** No FY26 expense detail report was provided in the FOIA production. The only expense detail reports provided are for FY24 and FY25 building operations, plus three FY25 administrative function reports (2320, 2330, 2510).

### Identifiable Purchased Services — FY24 (O&M Fund Only)

*(Source: FY24 All Building expenses.pdf)*

| Category | FY24 Actual |
|---|---|
| Architecture/Design | $3,184 |
| ESSER Professional Services | $38,987 |
| Asbestos Abatement | $9,120 |
| Other Professional Services | $25,512 |
| Property Services | $45,662 |
| Sanitation | $11,110 |
| Maintenance Contracts | $69,012 |
| Mileage/Travel | $2,597 |
| Communications/Telephone | $18,885 |
| Alarm Services | $1,823 |
| Water/Sewer | $10,715 |
| **O&M Purchased Services Subtotal** | **~$236,607** |

### Identifiable Purchased Services — FY25 (O&M Fund Only)

*(Source: FY25 All Building expenses.pdf)*

| Category | FY25 Actual |
|---|---|
| Architecture/Design | $44,292 |
| Asbestos Abatement | $2,500 |
| Other Professional Services | $47,401 |
| Property Services | $63,953 |
| Sanitation | $13,900 |
| Maintenance Contracts | $74,704 |
| Mileage/Travel | $2,567 |
| Communications | $228 |
| Alarm Services | $1,793 |
| Water/Sewer | $10,798 |
| **O&M Purchased Services Subtotal** | **~$262,136** |

**CALCULATION:** O&M purchased services increased from ~$237K (FY24) to ~$262K (FY25) = +$25K. This is a modest increase and does not explain the $531K jump in FY26.

**The $531K increase from FY25 to FY26 cannot be explained from the documents provided.** The FOIA production does not include:
- FY26 expense detail for any fund
- FY26 trial balance
- FY26 building expense report
- Any account-level breakdown of FY26 purchased services

### FY27 Budget Note

**FACT:** The FY27 budget projects purchased services at $1,786K, which is $230K *below* the FY26 unaudited actual of $2,016K. The budget presentation (p.5) states purchased services are projected to decline 11.4%, citing "External staffing needs, inflation, change in usage levels."

**QUESTION:** If FY26 purchased services spiked by $531K and the FY27 budget projects a $230K reduction, what FY26 expenditures were one-time vs. recurring? Without the FY26 detail, this cannot be answered.

### Records Needed
- FY26 general ledger detail or trial balance showing all purchased services (object codes 300-399) by fund and function
- Any contracts, purchase orders, or board-approved agreements for outside staffing, special education services, transportation, or other purchased services effective in FY26

---

## 6. STAFFING ANALYSIS

### Enrollment Timeline

*(Sources: Staffing memos 20-21 through 26-27)*

| Year | Total Enrollment | Notes |
|---|---|---|
| 2019-20 (actual) | 647 K-8 | 20-21 Staffing Overview, p.3 |
| 2020-21 (projected) | 661 K-8 | 20-21 Staffing Overview, p.3 |
| 2021-22 (actual) | 660 K-8 | 22-23 Staffing Memo, p.2 |
| 2022-23 (actual) | 682 K-8 | 23-24 Staffing Memo, p.2 |
| 2023-24 (actual) | 689 K-8 | 24-25 Staffing Memo, p.2 |
| 2024-25 (actual) | 827 K-8 + PreK | 25-26 Staffing Projections, p.2 |
| 2025-26 (actual) | 851 K-8 + PreK | 26-27 Staffing Memo, p.2 |
| 2026-27 (projected) | 886 K-8 + PreK | 26-27 Staffing Memo, p.3 |

**IMPORTANT NOTE:** Starting in 2024-25, enrollment totals include Pre-K 3 and Pre-K 4 students (approximately 98-110 students). K-8 enrollment for 2024-25 is approximately 717 and for 2025-26 approximately 753. The apparent jump from 689 to 827 is partly explained by the inclusion of Pre-K students in the count.

### Staffing Changes by Year

| Year | Core Classroom FTE | Other FTE | Special Ed | Grant-Funded | Net Impact |
|---|---|---|---|---|---|
| FY21 | +1.0 (K section) | +1.0 PE, +1.0 LRC→cert | Reconfig only | — | +2 to 3 FTE |
| FY23 | -2.0 (post-COVID) | +1.0 curriculum coach | No change | — | Net savings $80-110K |
| FY24 | +1.0 (Gr 5 section) | +1.0 EL teacher | No change | — | +2 to 3 FTE |
| FY25 | 0 to -1.0 | — | — | — | Flat to -1 |
| FY26 | NET 0 | +0.3 Art | +1.0 SpEd teacher | +1.0 OT (IDEA/PFA) | **+2.3 (1.0 grant)** |
| FY27 | NET 0 (transfers) | — | **Deferred/TBD** | — | 0 + possible SpEd |

### Does Staffing Explain the Salary Growth?

**CALCULATION:**
- FY24→FY25 salary increase: +$505K. Staffing memo says flat to -1 FTE. Therefore, essentially ALL of the $505K increase should be attributable to raises/step increases, not new hires.
- FY25→FY26 salary increase: +$836K. Staffing memo documents +1.3 net district-funded FTE. At an average salary of ~$65K, that's ~$85K from new positions. The remaining ~$751K must come from raises/step increases.

**INFERENCE:** Raises and step/lane increases account for the vast majority of salary growth. If base raises were approximately 4-5%, that would explain $320-440K per year. Step/lane increases (which the forecast does not model separately) could explain another $100-300K per year for a district of this size. This is plausible but cannot be precisely confirmed without the salary schedule and payroll data.

**FACT:** The Feb 2024 forecast's base salary assumption of 5% annual growth assumed those step/lane increases were INCLUDED in the 5%. Actual growth has been 6.5% (FY24), 6.7% (FY25), and 10.4% (FY26), suggesting the 5% assumption was too low.

### Special Education Note

The 26-27 staffing memo (p.4) states: "The district has also experienced a large influx of students with more significant social-emotional needs at Grades PK-1" and "we are not able to provide the projected special education staffing needs at this time." This suggests potential additional FTE for FY27 beyond what the budget captures.

---

## 7. RESERVE ANALYSIS

### Fund Balance Summary

*(Source: FY24-FY27 Fund Balance Reports)*

| Fund | FY24 End | FY25 End | FY26 End | FY27 Budget End |
|---|---|---|---|---|
| 10 Educational | $4,853,261 | $4,388,624 | $2,667,911 | $440,744 |
| 20 O&M | $688,792 | $404,693 | $304,626 | **($64,044)** |
| 40 Transportation | $515,934 | $621,531 | $474,362 | $471,586 |
| 70 Working Cash | $2,295,764 | $2,697,416 | $2,944,544 | $2,787,555 |
| **Operating Subtotal** | **$8,353,751** | **$8,112,264** | **$6,391,443** | **$3,635,841** |
| 30 Debt Service | $949,777 | $826,072 | $631,385 | $860,326 |
| 50 IMRF | $120,120 | $147,285 | $183,124 | $144,382 |
| 55 Social Security | $84,971 | $95,349 | $115,944 | $68,007 |
| 80/90 Tort/Life Safety | $5,094 | $5,264 | $5,460 | $5,466 |
| **Special Subtotal** | **$1,159,962** | **$1,073,970** | **$935,913** | **$1,078,181** |
| **Operating + Special** | **$9,513,713** | **$9,186,234** | **$7,327,356** | **$4,714,022** |
| 60 Capital Projects | $334,553 | $5,750,318 | $4,007,187 | $3,113,667 |
| **All Funds** | **$9,853,756** | **$14,942,041** | **$11,340,032** | **$7,833,179** |

### Budget Presentation vs. Fund Balance Reports

*(Source: d128-budget-presentation FY27.pdf, p.9)*

The budget presentation reports the following (in $K):

| | FY23 | FY24 | FY25 | FY26 | FY27 Budget |
|---|---|---|---|---|---|
| Operating + Special | $7,026K | $9,514K | $8,794K | $6,827K | $4,922K |
| All Funds | $9,043K | $9,846K | $14,542K | $10,834K | $7,339K |
| Days of Reserves (Op+Sp) | 192 | 213 | 213 | 153 | 106 |

**NOTE:** My calculated operating + special totals from fund balance reports are modestly higher than the budget presentation figures (e.g., $7,327K vs. $6,827K for FY26). The ~$500K discrepancy may reflect different fund categorizations, accrual adjustments, or rounding. This should be clarified with the district.

### Key Observations

1. **The Educational Fund (Fund 10) declines by 91%** from $4.853M (FY24) to $441K (FY27 budget), losing $4.413M in three years.

2. **The O&M Fund (Fund 20) goes negative** in FY27 at ($64K). A negative fund balance typically requires an interfund loan or transfer (likely from Working Cash).

3. **Working Cash (Fund 70) holds $2.7-2.9M** throughout. This is restricted reserve and is not freely available for operations without board action to transfer or borrow.

4. **Capital Projects (Fund 60) jumped from $335K to $5.75M in FY25** due to $5.67M in bond proceeds transferred in. This is bond money for capital projects, NOT operating reserves. The all-funds total is inflated by this. *(Source: FY25 Fund Balance Report — Transfer column shows $5,669,705)*

5. **Do NOT characterize the $14.9M FY25 all-funds balance as freely available.** Of that amount, $5.75M is restricted capital bond proceeds and $2.70M is Working Cash. Only ~$6.49M was in operating/special funds.

6. **FY26→FY27 Beginning Balance Discrepancy:** FY26 ending all-funds balance is $11,340,032 but FY27 beginning balance is $10,947,462 — a difference of $392,570. This likely reflects audit adjustments. Within this, there appears to be a $166,534 transfer from Working Cash to Debt Service between year-end close and the new fiscal year.

7. **Days of reserves drop from 213 (FY24/25) to 106 (FY27 budget).** For context, Illinois school districts are generally considered to be in financial difficulty below 90 days of reserves. At 106 days, the district would be above immediate intervention thresholds but on a declining trajectory.

---

## 8. REFERENDUM FINANCIAL MODEL ANALYSIS

**FACT:** The FOIA production does not include a calculation showing how the district arrived at approximately $2.346 million in recurring annual referendum revenue.

**FACT:** The FOIA response for Item 4 (Referendum Financial Model and Deficit Calculation) directed to the financial presentation (d128-budget-presentation FY27.pdf) and stated there are "no other records per this request" for Item 8 (Alternative Budget and Efficiency Analysis). *(Source: FOIA response letter)*

**FACT:** The FY27 budget deficit is approximately $2.020 million (operating and special funds). *(Source: d128-budget-presentation FY27.pdf, p.8)*

**CALCULATION:** $2.346M − $2.020M = $326K. The referendum amount exceeds the FY27 deficit by approximately $326K. This gap is not explained by any document in the production.

**INFERENCE:** The additional $326K likely reflects one or more of the following:
- Anticipated future expense growth beyond FY27
- A reserve-rebuilding component
- Projected revenue shortfalls in future years
- Rounding or rate-calculation factors related to the tax levy mechanism

**QUESTION:** Was there a bridge calculation (deficit + growth − reductions + reserve target = referendum amount) prepared by the financial advisor (Illuminate) or the referendum consultant (Wight & Company)? If so, it was not included in the FOIA production.

---

## 9. ADMINISTRATIVE COST ANALYSIS

*(Source: 2320 expense detail report FY25.pdf, 2330 Expense detail report FY25.pdf, 2510 Expense Detail Report FY25.pdf)*

### FY25 Administrative Cost Detail (from FOIA production)

**Function 2320 — Executive Administration:**

| Account | Description | FY25 Actual |
|---|---|---|
| 10.5.2320.111 | Superintendent Salary | $181,939 |
| 10.5.2320.115 | Secretary Salary | $42,224 |
| 10.5.2320.211 | TRS Contribution | $19,236 |
| 10.5.2320.216 | TRS THIS Payments | $3,139 |
| 10.5.2320.221-225 | Insurance/Benefits | $38,202 |
| 10.5.2320.332-340 | Travel/Mileage/Comm | $8,017 |
| 10.5.2320.411 | Supplies | $7,625 |
| 10.5.2320.640 | Dues & Fees | $3,442 |
| 50.5.2320.212 | IMRF | $4,273 |
| 55.5.2320.213-214 | FICA/Medicare | $6,159 |
| **Subtotal 2320** | | **$314,256** |

**Function 2330 — Special Area Administration:**

| Account | Description | FY25 Actual |
|---|---|---|
| 10.5.2330.111 | Director Salary | $122,308 |
| 10.5.2330.115 | Secretary Salary (IDEA grant) | $10,400 |
| 10.5.2330.211-216 | TRS/THIS | $15,312 |
| 10.5.2330.221-223 | Insurance/Benefits | $14,195 |
| 10.5.2330.332 | Travel | $1,000 |
| 50.5.2330.212 | IMRF | $968 |
| 55.5.2330.213-214 | FICA/Medicare | $2,564 |
| **Subtotal 2330** | | **$166,747** |

**Function 2510 — Business Support / Fiscal Services:**

| Account | Description | FY25 Actual |
|---|---|---|
| 10.5.2510.115 | Business Manager Salary | $101,532 |
| 10.5.2510.221-223 | Insurance/Benefits | $34,413 |
| 10.5.2510.230 | Tuition Reimbursement | $1,263 |
| 10.5.2510.332-333 | Travel/Mileage | $1,870 |
| 50.5.2510.212 | IMRF | $9,463 |
| 55.5.2510.213-214 | FICA/Medicare | $7,712 |
| **Subtotal 2510** | | **$156,253** |

### Reconciliation to $707,361 Statutory Figure

| Function | FY25 Actual |
|---|---|
| 2320 Executive Administration | $314,256 |
| 2330 Special Area Administration | $166,747 |
| 2510 Business Support | $156,253 |
| **Total from documents provided** | **$637,256** |
| **Reported ISBE admin cost** | **$707,361** |
| **Gap** | **$70,105** |

**FACT:** The three function reports provided account for $637,256, which is $70,105 less than the reported $707,361. The difference likely includes additional administrative functions not provided in the FOIA production, such as:
- Board of Education expenses (Function 2310)
- School Administration if partially classified as admin (Function 2410 — principals)
- Other fiscal services not in Function 2510
- Central services

**IMPORTANT:** Not all administrator salaries count toward the ISBE statutory administrative cost measure. The statutory definition includes specific function codes. Principal salaries (Function 2410) are NOT typically included in the statutory admin cost calculation under Illinois law (105 ILCS 5/17-1.5).

**The $637,256 from these three functions appears to account for the majority of the $707,361 reported figure, but the exact reconciliation cannot be completed without the full chart of accounts and the ISBE submission worksheet.**

---

## 10. FINDINGS CLEARLY SUPPORTED BY THE DOCUMENTS

### FACT-Based Findings

1. **The district's FY27 budget projects a $2.020M deficit in operating and special funds.** *(d128-budget-presentation FY27.pdf, p.8)*

2. **Salaries have increased by $1.341M (+17.9%) from FY24 to FY26.** This is the single largest category of spending growth. *(d128-budget-presentation FY27.pdf, p.6)*

3. **The February 2024 forecast explicitly assumed no change in staff size.** Actual staffing increased by approximately 2.3 FTE in FY26 (1.0 grant funded). *(128 Financial Projection 2-26-24.pdf, p.2; 25-26 Staffing Projections, p.3)*

4. **The FY27 budgeted expenses exceed the Feb 2024 forecast by $1.546M.** Revenue exceeds the forecast by $290K. *(Calculated from both documents)*

5. **There is no finalized, itemized expenditure reduction plan.** The district's own FOIA response states options are "still under evaluation" with "no decisions finalized." *(FOIA response letter)*

6. **No ISBE communications exist regarding financial oversight, watch, warning, or consolidation.** *(FOIA response, Item 10)*

7. **No special education cost analysis exists.** The district responded: "We do not have any records per this request." *(FOIA response, Item 7)*

8. **The referendum consultant (Wight & Company / Beyond Your Base) was engaged under a $48,000 contract for "Public Policy & Engagement Services."** Three invoices totaling $48,621.36 were paid between January and June 2026. Reimbursable expenses included voter data/lists ($450) and text service ($171.36). *(Referendum consultant invoices.pdf)*

9. **A referendum video was produced by Handprint Media Productions for $2,860.** The invoice is explicitly titled "Referendum Video Quote." *(Marketing invoice.pdf)*

10. **The district's financial advisor is Illuminate, Inc., under a $12,500 annual agreement** (Sep 2025–Aug 2026). Illuminate also prepared the FY27 budget presentation. *(Financial advisor invoice.pdf; d128-budget-presentation FY27.pdf, pp.1,10)*

11. **The Capital Projects fund (Fund 60) received $5.67M in bond proceeds in FY25.** This inflated the all-funds balance but is NOT available for operating expenses. *(FY25 Fund Balance Report)*

12. **The O&M Fund (Fund 20) is projected to go negative ($-64K) in FY27.** *(FY27 Fund Balance Report)*

13. **A new Assistant Superintendent / Curriculum Director position appears in the FY27 trial balance that is not documented in any staffing memo.** Account 10.5.2212.111 shows $25,384.62 in Q1 expenditures, annualized to ~$101K. The 26-27 staffing memo characterizes core FTE changes as "NET 0." *(FY27 Trial Balance.pdf; 26-27 Staffing Memo.pdf)*

14. **K-12 regular teacher salaries (Function 1100) increased by approximately $190K (4.8%) from FY24 to FY25**, based on building-level data from the trial balances. This accounts for only 38% of the total $505K salary increase that year, meaning the majority of salary growth came from non-classroom categories (special ed, aides, administration, support staff). *(FY24 and FY25 Trial Balances)*

15. **A new Physical Therapist position appears in the FY27 trial balance** ($24,317 in Q1, annualized ~$97K), likely related to the special education expansion noted in the 26-27 staffing memo but not formally documented as a staffing addition. *(FY27 Trial Balance.pdf)*

---

## 11. QUESTIONS THAT REMAIN UNANSWERED

### High Priority

1. **What specifically drove the $836K salary increase from FY25 to FY26?** Contractual raises and documented staffing additions explain roughly half. ~$391K remains unexplained.

2. **When was the Assistant Superintendent / Curriculum Director position (account 10.5.2212.111) approved, and why does it not appear in any staffing memo?** This position, annualized at ~$101K, represents a material addition not captured in the staffing documentation that characterizes FY27 as "NET 0" for core FTE.

3. **What caused purchased services to increase by $531K (35.8%) in FY26?** No FY26 expense detail was provided.

4. **How was the $2.346M referendum amount calculated?** No bridge calculation was provided.

5. **What are the specific items and estimated savings in the planned ~$1M expenditure reduction?** The district has no finalized plan.

6. **Did FY26 actual spending exceed the authorized FY26 budget?** The FY26 adopted/amended budget was not provided.

7. **What is the $326K difference between the $2.346M referendum amount and the $2.020M FY27 deficit?**

### Medium Priority

8. What are the terms of the current collective bargaining agreement(s) for teachers and support staff?

9. What additional special education FTE, if any, were added for FY27 beyond the staffing memo?

10. What specific purchased services are included in the $1,786K FY27 budget (e.g., outside staffing, special ed contracted services, transportation)?

11. What accounts for the $392,570 discrepancy between FY26 ending and FY27 beginning fund balances?

12. What are the actual payroll and position counts for FY24, FY25, and FY26?

### Lower Priority

13. How does the district project real estate tax revenue from the referendum (what EAV assumptions, rate calculation)?

14. What alternative cost-reduction or shared-service analyses, if any, were considered before placing the referendum on the ballot?

15. What specific savings, if any, are attributed to the in-house special education model?

---

## 12. RECORDS I WOULD REQUEST NEXT

### Priority 1: Salary Growth Explanation

**Record:** FY24, FY25, and FY26 payroll registers or salary schedules showing each employee name, position title, FTE, building assignment, fund source, and annual salary.

**Why it matters:** Salaries are the largest spending category and the largest driver of the deficit. The $1.341M FY24→FY26 increase needs line-item explanation.

**What it answers:** How much of the salary increase came from raises vs. new positions vs. step/lane movement vs. support staff changes.

**Suggested FOIA wording:** "Records sufficient to show each employee's name, position, FTE status, fund source, and annual salary for FY2024, FY2025, and FY2026, such as payroll registers, salary schedules, or employee compensation reports."

---

### Priority 2: FY26 Adopted/Amended Budget

**Record:** The FY26 adopted budget and any amendments approved by the Board of Education.

**Why it matters:** Without this, it is impossible to determine whether FY26 spending exceeded authorized levels.

**What it answers:** Was FY26 spending within the approved budget, or did actual expenditures exceed what the board authorized?

**Suggested FOIA wording:** "A copy of the FY2026 (2025-2026) adopted annual budget as approved by the Board of Education, including any subsequent budget amendments."

---

### Priority 3: FY26 Expense Detail / Trial Balance

**Record:** FY26 general ledger detail, trial balance, or expense detail report showing all expenditures by fund, function, and object.

**Why it matters:** FY26 is the year with the largest spending increase (+$1,171K) and the unexplained $531K purchased services jump.

**What it answers:** What specific accounts drove the FY26 spending increase, particularly in purchased services.

**Suggested FOIA wording:** "The FY2026 (2025-2026) year-end trial balance for all funds, and/or expense detail reports showing expenditures by fund, function, and object code."

---

### Priority 4: Referendum Revenue Calculation

**Record:** Any calculation, spreadsheet, or work product showing how the approximately $2.346M recurring referendum revenue amount was determined.

**Why it matters:** The $2.346M does not equal the $2.020M FY27 deficit. The derivation is not in the production.

**What it answers:** Whether the referendum amount includes a reserve-rebuilding component, future deficit growth, or other assumptions.

**Suggested FOIA wording:** "Any calculations, spreadsheets, memoranda, or work product — including records prepared by or received from Illuminate, Inc. or Wight & Company — showing the derivation of the approximately $2.346 million in recurring annual revenue expected from the limiting-rate referendum."

---

### Priority 5: Collective Bargaining Agreement(s)

**Record:** Current collective bargaining agreement(s) with the teachers' union and any other bargaining units.

**Why it matters:** The CBA(s) establish base salary increases, step/lane schedules, and benefit provisions that drive the majority of district spending.

**What it answers:** What contractual salary increases were committed for FY25, FY26, and FY27.

**Suggested FOIA wording:** "The current collective bargaining agreement(s) between District 128 and its employee bargaining unit(s), including salary schedules and any memoranda of understanding modifying the agreement(s)."

---

### Priority 6: Expenditure Reduction Work Product

**Record:** Any internal analysis, memoranda, spreadsheets, or board materials quantifying specific proposed expenditure reductions.

**Why it matters:** The ~$1M reduction has been publicly discussed but no documentation exists per the FOIA response.

**What it answers:** Whether the $1M figure is aspirational or based on specific identified savings.

**Suggested FOIA wording:** "Any internal memoranda, spreadsheets, analyses, presentations, or Board of Education materials created since January 1, 2025 identifying, quantifying, or evaluating specific proposed expenditure reductions, staffing changes, program changes, or cost-saving measures, including any materials estimating savings associated with each proposed measure."

---

## 12A. POSSIBLE RED FLAGS VS NORMAL EXPLANATIONS

| Finding | Requires Explanation | Potentially Normal Explanation |
|---|---|---|
| **Salary increase of $1.341M (+17.9%) in two years** | Growth substantially exceeded the 5%/yr forecast assumption and documented staffing additions. ~$391K of FY25→FY26 increase is unexplained from documents. | Contractual step/lane increases, market-rate salary adjustments, support staff additions not captured in staffing memos, expanded special education continuum. |
| **New Asst Supt/Curriculum Director in FY27 (~$101K) not in any staffing memo** | A ~$101K position was created without appearing in the staffing documentation that characterizes FY27 as "NET 0." This is a material omission from the staffing process. | Position may have been approved by the board outside the staffing memo cycle. May reflect a reclassification/promotion rather than a net new hire. |
| **Purchased services jump of $531K (+35.8%) in FY26** | Largest single-year change in this category. No FY26 expense detail provided to explain it. | Could reflect outside staffing for vacancies, increased special ed contracted services, transportation cost increases, or one-time property/maintenance services. The FY27 budget projects a $230K decline, suggesting some FY26 costs were non-recurring. |
| **No derivation of $2.346M referendum amount** | The amount exceeds the $2.020M FY27 deficit by $326K. No bridge calculation exists in the production. | May legitimately include reserve rebuilding, projected future growth, or rate-calculation mechanics. Standard practice for financial advisors to build in a cushion. |
| **No finalized $1M expenditure reduction plan** | District has publicly discussed ~$1M in reductions but its own FOIA response says "no decisions have been finalized." | District may be deliberately keeping options open pending referendum outcome. Finalizing cuts before a vote could be politically difficult. |
| **Feb 2024 forecast miss of $1.546M on expenses** | A 30-month-old forecast missed FY27 expenses by 10.2%. The assumed 5%/yr salary growth was too low in every year. | Long-range forecasts inherently carry uncertainty. Special ed needs, enrollment growth including Pre-K, and inflation may not have been foreseeable. The forecast itself noted it was a "snapshot in time." |
| **No ISBE communications re: financial oversight** | Despite public discussion of possible state intervention, no actual communications exist. | The district may not yet meet ISBE's thresholds for formal financial watch. At 106 days of reserves (FY27 budget), the district is above the 90-day level that typically triggers concern. |
| **O&M Fund projected negative ($-64K) in FY27** | A negative fund balance requires an interfund loan or transfer and suggests structural underfunding of this fund. | Working Cash fund ($2.79M) exists specifically to provide interfund loans. This is a cash flow management tool, not necessarily a crisis. |
| **New Physical Therapist in FY27 (~$97K) not formally documented** | Not in staffing memo as a specific addition. | 26-27 staffing memo explicitly noted SpEd staffing was deferred; this likely reflects a subsequent board-approved addition to meet student needs. |
| **FY25 fund balance discrepancy (~$392K between fund balance report and budget presentation)** | Different source documents show different totals for the same year. | Likely reflects accrual-basis vs. cash-basis accounting adjustments or different reporting periods. Common in school district accounting. |

---

## 13. WHAT I CAN SAFELY SAY PUBLICLY

These statements are supported by the documents:

1. "The district's FY27 budget shows an operating and special funds deficit of approximately $2.02 million."

2. "Non-capital expenditures increased from approximately $13.58 million in FY24 to approximately $16.04 million in FY26 — an increase of approximately $2.46 million (18.1%) in two years."

3. "Salaries account for the largest portion of the spending increase, growing by approximately $1.34 million from FY24 to FY26."

4. "The February 2024 financial forecast projected FY27 expenses of approximately $15.11 million. The current FY27 budget shows expenses of approximately $16.65 million — approximately $1.55 million higher than projected."

5. "The February 2024 forecast assumed no change in staff size. Staffing memos document an increase of approximately 2.3 FTE for the 2025-2026 school year."

6. "The district's FOIA response states that proposed expenditure reductions are 'still under evaluation' and 'no decisions have been finalized.'"

7. "No records exist of any communication between the district and ISBE regarding financial oversight, financial watch, or potential consolidation."

8. "The district engaged Wight & Company / Beyond Your Base under a $48,000 contract for 'Public Policy & Engagement Services,' with total billings of approximately $48,621 through May 2026."

9. "No calculation showing how the approximately $2.346 million referendum amount was derived was included in the FOIA production."

10. "The district does not maintain any special education cost analyses, according to its FOIA response."

11. "The FY27 trial balance contains a new Assistant Superintendent / Curriculum Director position with a Q1 salary of approximately $25,385 (annualized ~$101,500). This position does not appear in any of the six staffing memos provided, which characterize FY27 core FTE as 'NET 0.'"

12. "Building-level data from the trial balances shows that K-12 regular teacher salaries account for approximately 38% of the total salary increase from FY24 to FY25. The majority of salary growth came from other categories including special education, aides, administration, and support staff."

---

## 14. WHAT I SHOULD NOT SAY YET

These claims are NOT established by the documents:

1. **"The district is overspending."** — There is no FY26 adopted budget in the production to compare against actual spending. Spending has increased substantially, but whether it exceeded *authorized* levels cannot be determined.

2. **"The district is at risk of state takeover/consolidation."** — There are no ISBE communications regarding financial watch, oversight, or consolidation. The district's reserve levels, while declining, remain above typical intervention thresholds. Any claims about imminent state intervention are not supported by the documents.

3. **"The $2.346 million referendum amount is inflated."** — The derivation is not in the documents. It may include legitimate components (future deficit growth, reserve rebuilding) that would make it reasonable. Until the calculation is obtained, this cannot be evaluated.

4. **"The salary increases are unreasonable or wasteful."** — Without the collective bargaining agreement and payroll data, we cannot assess whether the increases reflect contractual obligations, market-rate adjustments, or discretionary spending.

5. **"The $1 million in expenditure reductions is a real plan."** — The district's own response says no decisions have been finalized. It should be described as a list of options under consideration, not a committed plan.

6. **"The purchased services increase is suspicious."** — Without FY26 detail, the $531K increase could reflect legitimate special education costs, outside staffing for vacancies, or other routine needs. Cannot characterize without data.

7. **"The referendum consultant spending is excessive."** — $48K for a referendum consulting engagement is within the range for comparable school districts. This is a factual amount, not a characterization.

8. **"The district is hiding information."** — The FOIA response provided what was requested where records existed. Some responses ("no records per this request") may simply reflect that the district does not create certain analyses. The absence of a record is not evidence of concealment.

9. **"The financial advisor has a conflict of interest because they also prepared the budget presentation."** — Financial advisory firms routinely prepare budget presentations for school districts. This is standard practice, not a conflict unless the advisor has a financial interest in the referendum outcome.

10. **"The Pre-K expansion caused the deficit."** — While Pre-K adds enrollment (and potentially staffing costs), the documents do not provide a separate cost analysis of the Pre-K program. Some Pre-K costs may be offset by state grants (e.g., ECBG, PFA).

---

*End of Report*

*All findings are based solely on the FOIA documents provided. Numbers have been independently verified against multiple source documents where possible. Where verification was not possible, this has been noted. This report does not evaluate whether voters should approve or reject the referendum — it evaluates whether the financial case being presented can be traced and supported by the underlying records.*