VIRGINIA — Facing another year of enrollment decline, the ISD 2142 school board voted 4-2 Tuesday to cut $1.75 million from next year’s budget, as district leaders acknowledged that the hoped-for stabilization in student numbers has not materialized.
Enrollment has fallen each year since 2022 and is projected to drop again next fall to 1,722 students, down nearly 300 from the district’s recent high of 2,016 in 2019-20.
“I thought it was going to quit this year, but we’ve seen another loss this year,” Finance Director Kim Johnson said.
“We are now approaching the lowest enrollment we ever had. And the kids are gone.”
Johnson said the district has lost $7.3 million in general education revenue since 2021 as enrollment declined, steadily narrowing the district’s financial margin.
The district’s unassigned fund balance is projected to fall to about $1.9 million this year. Johnson said she is projecting that ISD 2142 will enter statutory operating debt at the end of the current fiscal year, triggering a requirement to submit a recovery plan to the Minnesota Department of Education.
“We have been sneaking by for the last couple of years by making the cuts that we’ve made already,” she said. “We’re at the point now where they’re going to be uncomfortable cuts.”
The $1.75 million reduction approved Tuesday is intended to begin closing that gap, though Johnson had initially recommended a $2 million target.
A motion to reduce the budget by $1.5 million failed on a 4-2 vote before the board approved the $1.75 million figure, also by a 4-2 margin.
Board member Chris Koivisto cautioned against overstating the district’s financial distress.
“We’re not a sinking ship. We’re still floating,” Koivisto said, arguing that the district must be careful about the message it sends to the community.
Johnson acknowledged the difficulty of making large reductions in a single year but said continued enrollment losses leave the district with limited options.
“It is a lot. It’s a lot in one year, but we’re going to have to continue to do that until we can get this figured out,” she said.
Turning to staffing, Director of Teaching and Learning Kristi Berlin outlined the district’s preliminary scheduling for next year.
“With the schedules complete at this point, we are down. We have a reduction of 9.0 (teaching positions), and no tenured staff will be impacted by that reduction,” Berlin said.
She said the reductions were developed with building principals and tied to enrollment shifts across the district.
“Some schools had a heavier reduction last year because numbers went down,” she said. “Their reduction isn’t as big this year because it’s stabilized.”
Projected enrollment declines vary across the district’s five buildings. North Woods School shows the largest anticipated drop next year at 20 ADM. North Woods absorbed the largest share of teacher reductions this year during earlier enrollment-driven adjustments.
Johnson outlined several structural pressures that continue to strain the district’s budget beyond enrollment losses.
Johnson said the district is facing a steep decline in compensatory revenue.
“Right now, the way the state is calculating the initial compensatory revenue, we’re down about $605,000,” she said.
The reduction follows a recent change in state law that revised how compensatory revenue is calculated for school districts.
“We need the Legislature to come through and include a hold harmless for our compensatory revenue,” Johnson said. “We can’t afford $605,000 loss in addition to the state aid loss from the decline in students.”
Transportation remains one of the district’s most significant expenses. ISD 2142 operates five schools across a wide geographic area, including four high schools, a configuration Johnson said is unique in Minnesota.
“We are the only district in the state that’s got four high schools,” she said.
The district drives approximately 1.4 million miles annually. Johnson said state transportation aid reimburses the district for to and from school mileage but does not include athletics, field trips and extracurricular travel.
Health insurance increases have added additional pressure. Johnson said rates rose between 15 and 28 percent this year. Vehicle replacement costs have also climbed sharply. New buses now cost approximately $165,000, compared with about $102,000 five years ago.
“I told Kay that next year she cannot buy a bus,” Johnson said, referring to Transportation Director Kay Cornelius.
Unfunded special education remains another challenge, she added, noting that state reimbursement does not cover the full cost of mandated services.
With state aid declining and major cost pressures mounting, district leaders said they are being forced to look beyond internal cuts for long-term revenue solutions.
“We need to pass an operating referendum and potentially a capital referendum for our vehicles,” Johnson said.
An operating or capital referendum would require voter approval to increase local property tax levies to generate additional revenue for the district.
Johnson said any referendum effort will depend heavily on legislative action related to seasonal recreational property aid replacement. She said the district needs lawmakers to approve that replacement to ensure year-round residents are not disproportionately burdened.
“We have over 40 percent seasonal rec property in our district,” she said. “If we go out for a million-dollar referendum, $400,000 of it would be covered through state aid.”
Johnson said maintaining all five local schools remains a priority.
“We took the hard step and consolidated within ourselves already,” she said. “If any of our schools were to close, that would be a hardship for our parents and our students. That is not the direction we want to go to. So we’ve got to figure something else out.”
Johnson has previously noted that closing a school would result in a net loss of revenue that would outweigh the operational savings from reducing expenses.
In other business, the board:
• Officially hired Brian Masterson as the district’s new superintendent effective July 1. Masterson was in attendance at the meeting and received a hearty round of applause following his confirmation.
• Approved the 2025 audit report, which had no significant findings.
• Approved without comment a new library materials policy.
• Accepted the finding of the American Indian Parent Advisory Committee (AIPAC) of noncompliance with Indian Education standards. It was noted that the noncompliance findings were largely due to an inability to fully assess whether they were actually in compliance due to a lack of necessary information, rather than definitive statements of actual noncompliance.
• Approved a routine resolution directing administration to make recommendations regarding the reduction and/or discontinuance of programs and positions.
• Hired Rebecca Sarazine as part-time Library Assistant at North Woods.
• Hired Emilia Swenson as Lifeguard at Northeast Range.
• Hired Michael Sarazine as Substitute Van Driver at North Woods.
• Hired River Cheney as Assistant Softball Coach at North Woods.
• Hired Kylee Burke as Assistant Softball Coach at North Woods.
• Hired Aaron Donais as Assistant Baseball Coach at Northeast Range.
• Hired Steve Baker as Head Baseball Coach at North Woods.
• Hired Dan Manick as Assistant Baseball Coach at North Woods.
• Hired Jon Scherf as Head Boys Golf Coach at North Woods.
• Hired Kandi Olson as Head Girls Golf Coach at North Woods.
• Hired Jordan Villebrun as Assistant Boys and Girls Golf Coach at North Woods.
• Accepted retirements from Mary Larson as Preschool ECFE Teacher at Tower and Jacqueline Hannine as Paraprofessional at North Woods.
• Accepted resignations from Keiza Besemann as part-time Indigenous Support Advocate I at Tower-Soudan; Jessica Trunnell as Assistant Softball Coach at North Woods; and Rebecca Sarazine as Preschool Paraprofessional at North Woods.