Diana McCluskey
Courtesy of Palatine Township Elementary School District 15

The Palatine Township Elementary District 15 school board finalized this year’s budget Wednesday, nearly three full months into the current fiscal year.

But school officials are warning the district — which serves all or part of Palatine, Rolling Meadows, Hoffman Estates, Inverness, South Barrington, Schaumburg and Arlington Heights — that it faces a $13.4 deficit.

The budget calls for nearly $221.4 million in operational spending, with $208 million projected in revenues. The district plans to slice into the deficit by using $6.4 million from the district’s reserves.

The deficit comes from federal pandemic grants drying up and a drop in a source of revenue from the state, as well as increases in staffing, staff told the board.

Diana McCluskey, chief school business official, said the district was affected most by the loss of pandemic-era federal Elementary and Secondary School Emergency Relief (ESSER) funds.

“The ESSER cliff is here,” Anthony Fashoda, director of fiscal services, said.

Over the course of about four years, the district received $25 million. In fiscal 2024 alone, the district received $7 million. The void will have to be filled with the district’s own revenues.

The district will also feel the pinch of declining revenues from the state’s Personal Property Replacement Tax. The district will receive $2.5 million, down from $3.6 million in the last year and $5.5 million the year before.

Fashoda said the district is spending more on hard-to-fill positions like speech pathologists, occupational and physical therapists and special education teachers.

“As far as projecting out, we have to tighten the belt,” McCluskey said. “We have a structural deficit. I (can’t) dip into fund balances again at next year’s budget.”

The district ended 2023 with nearly $60 million in reserves, according to its annual audit sent to the Illinois State Board of Education.

“A lot of districts got a lot of money, and they hired people with that money,” McCluskey said of ESSER funds.

Superintendent Laurie Heinz said the district will be doing some “big heavy work” over the next couple of months to address the deficit.

McCluskey noted this is the first year that Palatine will not be retaining the surplus from the downtown Tax Increment Financing District. The school district will be receiving $683,000 in new revenue, growing to $3 million in future years.