Last year, Round Lake Area Schools District 116 was one of two districts facing public backlash after discovering multi-million-dollar budget deficits.
Now D116 says it has plugged the $11 million hole and implemented new processes to prevent it from happening again, although questions remain about the district’s former chief financial officer, who was blamed for the budgeting error.
As Superintendent Donn Mendoza explained it last year, the initial error occurred during the previous year’s budgeting process, with two areas — staff salaries and special education costs — being under-budgeted. He had emphasized that “money is not missing; fraud has not occurred,” but rather that the district had been using money from its savings account to operate.
The “ripple effects” of the error on the 2025-26 and 2026-27 fiscal years totaled $10.9 million. Additionally, the district had learned its state funding was slashed in half, the district said at the time.
To help fill the hole, the Education Association of Round Lake, the district’s teachers’ union, overwhelmingly voted to cut salary increases. Salary increases for administrators were also reduced, and the superintendent took a voluntary reduction in his salary for the following school year.
While union leadership praised its members for the decision last year, union representatives could not be reached for an updated comment.
New processes
According to Deputy Superintendent Heather Bennett, the district has implemented new budget processes to avoid such a crisis in the future. Budget planning starts earlier now, she said in a statement, with the chief financial officer and departmental budget officers meeting regularly to review expenditures and projections.
They now also have weekly and monthly financial reporting, providing “greater visibility into potential concerns,” and there are “additional administration and union leadership and board touchpoints throughout the budget cycle.”
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Those changes were reviewed by the consulting and public accounting group Baker Tilly as part of its external financial assessment. Baker Tilly’s findings were presented to the Board of Education in May 2026, Bennett said.
That assessment found “both strengths and opportunities for continued improvement,” she said, recommending changes to reporting practices, “stronger documentation and governance of budget and forecasting assumptions” and a “more formalized financial-management process.”
Baker Tilly found the district’s financial policies were up to state and federal requirements, including regarding financial transparency, Bennett said.
Compared to selected peer districts — CUSD 300, Lake Zurich District 95, Naperville District 203, Waukegan District 60 and Woodstock District 200 — D116’s financial reporting “compares favorably,” Bennett said.
Looking ahead
The “immediate work necessary to address that deficit has been accomplished,” Bennett said, which included “a number of difficult decisions and cost-saving measures across the district.”
This summer, D116 adopted an amended 2026 budget and approved its 2027 budget. The new school year came with some positive news for teachers who gave up salary increases.
Those included union staff agreeing to stunted salary increases — about 3% lower than the increases originally bargained for two consecutive years. However, since then, as the district’s financial position improved, they’ve been able to provide employees with the additional 3% from the 2026-27 school year, Bennett said.
Previously, the district had predicted about 40 to 50 staff positions would be eliminated through attrition. That impact has shifted since then, Bennett said. Sixty-nine employees were “impacted by reductions” last year, Bennett said.
Of those employees, 65 have since either been recalled to the district or secured employment with another district or organization, Bennett said.
“This outcome was significantly better than the district’s original projection that as many as 20 employees could remain without positions,” she said.
Staffing reductions were one part of the broader cost-saving plan, she said. The district also reduced department budgets and eliminated leased office spaces at the village of Round Lake and Old National Bank on Rollins Road by relocating staff to existing district facilities.
While the immediate crisis is averted, the district is “taking a proactive approach” to its budget — including keeping an eye on expenditures, revenue, enrollment, state and federal funding, operational costs and other factors — noting that “future collective bargaining agreements are also an important part of long-range planning.”
“We value our employees and remain committed to approaching those conversations collaboratively while balancing competitive compensation with the district’s responsibility to maintain long-term financial stability,” Bennett said.
Some questions remain. During the controversy, the district had levied blame on its former chief financial officer. While unnamed during board meetings, archived versions of the district’s website and other district documents named Pamela Kibbons, who retired in December 2024.
Email and letter communications to Kibbons from district leadership obtained through a Freedom of Information Act request revealed Kibbons had been under investigation prior to her retirement; however, the exact nature was censored.
The district declined to comment on “confidential personnel matters” when asked to clarify the nature of the investigation.
The deficit had required “difficult decision” and “significant collaboration,” Bennett said, thanking employees, union leadership, the board of education and families for their “partnership throughout that process.”
While the district was in a better spot today than it had initially anticipated, she said it is focused on “maintaining that progress” from the various changes that have since been implemented to the budgeting process.
“Financial sustainability requires ongoing attention,” Bennett said. “Moving forward, we remain committed to transparency, thoughtful planning and responsible stewardship of the resources entrusted to RLAS-116.”