ELY- For the second year in a row, ISD 696 is facing a shortfall of almost a half million dollars, which is not small change for a school district with a $9 million budget.
Last year, ISD 696 had a $485,909 shortfall to contend with when budgeting for the current school year, due to the loss of expiring federal pandemic aid to schools, increased labor costs, and declining enrollments. At that time, the school board decided to stretch the cost cutting across two years. The district cut over $225,000 from the current 2024-25 budget without impacting student instruction and intended to cut a similar amount for 2025-26. However, because of further enrollment declines and operating cost increases, the school district is now faced with as much as a $460,000 shortfall for 2025-26.
A final number won’t be known until after the Legislature finalizes the state’s budget because education cuts are on the floor this legislative session, like Gov. Tim Walz’s proposed reductions for special education transportation. However, the Ely school board needs to determine how much it needs to shave from its budget before the Legislature wraps up for the year. For example, the district’s teaching assignments — which will be cut in next year’s budget — must be announced by the middle of April.
“The problem is that we just don’t know what will be cut from state funding, and no one knows what may happen to the federal Department of Education. Nothing is certain, which makes it hard to project out own costs,” ISD 696 Superintendent Anne Oelke said.
Enrollment pain
The state funds school districts primarily by how many students they have enrolled. The number the state uses is not actual enrollment. It uses a calculated figure called “average daily memberships,” or ADMs, which considers time of attendance and is therefore less than the actual number of students. Ely’s problem is that the district saw a surge of enrollment between 2015 and 2020, even though the population in Ely fell. The district had 540 ADMs in 2015, which then increased over three years to a maximum of 585, significantly increasing the district’s unrestricted state aid.
The COVID-19 pandemic slashed enrollment when the Ely school lost 85 ADMs in just two years. Federal aid to schools during the pandemic buffered the immediate effect of losing that many students in such a short time, but now that those funds have vanished, the enrollment decline represents a loss of hundreds of thousands of dollars.
Using the general education allowance figure of $7,481 per ADM for 2025-26, and a projected loss of 33 ADMs for next school year, this district would lose $246,873 in state revenue.
On top of the enrollment pain are unanticipated cost increases, like the $109,000 structural repair at the ice arena and a $40,000 increase in the district’s insurance costs.
Two scenarios
District administrators presented two cost-cutting scenarios to the school board Monday evening and to faculty and staff on Tuesday.
The first would trim 4.4 full-time equivalent teaching positions, or FTEs, and other expenses for $404,607 in cuts. The second option trims 4.6 FTEs, cuts other expenses and increases student fees for a savings of $446,359.
The district managed to avoid academic cuts last year, but Oelke that likely won’t be possible this year.
The two scenarios share the following cuts:
• $36,209 — Elementary class reduction, to combine two sections into one and adding a teacher’s aide for 24 incoming kindergarten students.
• $16,614 — Music department reduction from 1.8 to 1.6 FTEs.
• $64,334 — English reduction from 2.8 to 2.0 FTEs.
• $19,087 — Eliminate part-time day custodian.
• $18,454 — Eliminate science instruction overload by adding the sixth grade back into the 7-12 grade schedule.
• $40,000 — Cuts in contracted services.
• $3,500 — Reduce extracurricular activity mileage.
• $14,000 — Eliminate Ely community education coordinator position and assign duties to assistant principal.
The two options had variable cuts on four different items: a reduction affected one or more elementary grades, a reduction affecting the sixth grade, a reduction in Spanish instruction, and consolidation of bus routes.
• Option 1 and 2 would both reduce two sections of sixth grade to one and would add a teacher’s aide for an incoming class of 34. The cost savings would be $89,424 and $59,209 respectively, depending on the pay schedule for the aide.
• Option 1 would cut one Spanish class and option two would cut two, for savings of $15,141 and $44,489 respectively. “We’re looking into maybe adding in an online Spanish option, maybe funded by the Ely Educational Foundation, but that’s still under discussion,” Oelke said on Monday evening.
• Both options would consolidate bus routes. Option one would cut one route and combine the others for a savings of $17,365. Option two would cut two routes and combine the others for a savings of $29,768.
• Option two also includes raising student fees. It would increase the participation fee for seventh and eighth grades from one-half to two-thirds of the fee for grades nine through 12. It would also increase the family cap on fees to $1,000 and would limit the application of the family athletic cap to “only activities funded by the district.”