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A downward spiral in student enrollment combined with rising expenditures have put Ely school officials in a cost-cutting mode for a second consecutive year.
The Ely School District may need to make as much as $460,000 in budget reductions for the 2025-26 school year, according to information shared this week.
While no specifics have been identified and may not be acted on for at least a month, superintendent Anne Oelke said the reductions “will impact our district’s operations, including staffing, programs, and services.”
The district’s budget and finance committee will meet later this month and school board members are likely to discuss the potential budget moves at a March 24 study session, with a board decision to come in April.
A year ago, the board approved more than $250,000 in spending cuts and revenue enhancements to bridge a budget gap, and last fall Ely district voters approved a $350,000 capital levy to pump more revenue district.
But those moves haven’t been enough to improve the budget picture and Oelke said “the district continues to face challenges that include declining enrollment, increased operating expenses, unfunded mandates from the state, and unforeseen circumstances, such as the economic downturn.”
“Despite our best efforts to mitigate the impact of these challenges, the Ely Public School District is faced again with the difficult task of making tough decisions to ensure the longterm financial stability of our district while continuing to provide a high-quality education for all students,” said Oelke.
As recently as 2017, the district had 598 students enrolled in grades K-12, but that number has since tumbled, with current enrollment at 512.
The district’s adjusted average daily membership, the number that determines state aid to districts, has fallen more dramatically and does not show signs of ending.
Using state formulas, the district’s ADM fell from 574.69 in 2020 to 495.83 this year and is expected to tumble to 462.73 for 2025-26.
State aid is the largest source of district revenue and has fallen faster - because of enrollment declines - more than initially estimated by the district.
Meanwhile, the district is facing rising expenditures and has posted general fund deficits every year since 2021, with overall district fund balances falling from nearly $2.9 million in 2020 to $1,451,474 this year.
Unassigned fund balances have shrunk by about 75 percent during that time period and earlier this year the school board adopted a revised budget showing a $318,495 gap for 2024-25.
An anticipated inflationary increase in state funding for 2025-26 amounts to $92,546, but is offset by a $330,000 hit because of enrollment losses.
The district also faces a loss of compensatory revenue from the state and the 2025-26 budget includes assumptions for new costs related to payroll taxes and summer unemployment, as well as salary increases as employees advance on the pay scale, and potential negotiated changes.
Together, it makes for a 2025-26 deficit of $459,431 if no other reductions are made and no additional revenue materializes.
Ely joins numerous districts, both across the region and the state, in making budget reductions.
The neighboring St. Louis County District 2142, which operates schools in Tower, Babbitt and elsewhere, is eyeing major budget cuts and a possible move to a four-day school week.
