A year after Wauconda Community Unit School District 118 discovered that it faced a surprise $4.2 million deficit, district leadership says it has righted the ship and implemented systemic changes to budgeting processes.
Earlier this month, D118 approved a final budget with total operating fund revenue of $79.1 million and expenditures of roughly $79 million, according to meeting documents.
In a statement responding to a request for comment, school board President Vincent Torossy said the board took the “difficult but necessary step” of approving the budget deficit reduction plan on Jan. 15, which he said has brought D118’s budget into balance.
The board will continue to monitor the budget performance, Torossy said, “with the expectation that D118 will operate under a balanced budget,” and “remains committed to responsible stewardship of district resources” and “financial stability.”
“We recognize that responsible financial stewardship, transparency, and accountability are essential to maintaining the community’s trust, and we remain committed to those principles moving forward,” he said. “We are grateful for the work of our administration and staff, the partnership between administration and union leadership, and the engagement of our D118 communities throughout this process.”
Attempts to reach the D118 Parent Teacher Organization were unsuccessful.
‘Problematic’ practices
The issue came to public notice in August of last year, when the then-assistant superintendent of business services notified the Board of Education that the 2024-25 budget had actually ended with a $2.5 million deficit, despite initial expectations of a slight surplus.
That deficit had propagated to the 2025-26 budget, the district told parents at the time, ultimately totaling $4.2 million.
D118 gave various reasons for the deficit, including lower-than-anticipated state funding and the loss of federal ESSER COVID funds. While the district said it had been aware of the end of federal funds, additional staff had been added and not been reduced “at the same pace,” a district representative said.
The district also noted a less-than-anticipated amount of state funding, saying it had received about $300,000 less than anticipated for the 2025-26 school year. Other contributing factors listed on the website include out-of-district tuition and out-of-district transportation spending.
But D118 also blamed more systemic issues: “problematic” practices, budgets built without proper data on expenses or final actuals, and a lack of a “reliable budget monitoring tool.”
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A wave of public backlash from families followed the announcement of the deficit, during which the assistant superintendent of business services resigned, and the district created a budget reduction plan.
Part of that plan has included reductions in administrative and support staffing. According to a district webpage, the bulk of the reduction plan will be implemented this school year.
Audit report
Earlier this year, an audit by Transformational Business Services gave a rundown of some of the issues within the district.
According to the report, D118’s business office had historically operated “with limited automation and outdated systems.” It described “antiquated” accounting systems that allowed overspending “without system safeguards.” A new accounting platform bought three years ago had not been implemented.
However, the report said it “did not observe evidence of misappropriation of funds or fraud.”
In a staff review portion, it highlighted “significant opportunity,” calling for a shift to a “supportive, collaborative team environment,” unifying department efforts, investing in management training, and improving cross-departmental communication.
The financial and budget improvement recommendations included implementing the new financial system and conducting an audit of special education staffing and programs, among other proposals.
Torossy did not respond to questions about whether the new financial system was being implemented, or what the timeline for implementation may be.
A board presentation based on the report highlighted the district’s manual payroll processing, a lack of segregation of duties, missing procedures for purchasing processes, and “gaps” in purchasing and payroll processes that “hinder accurate budget monitoring and control.”