Fewer students entering the Ely public schools, combined with a growing exodus of high school students, have resulted in continued deficits in the district’s budget.
And one of the results is an almost certain round of budget reductions for the 2026-27 school year.
A grim financial picture was painted at Monday’s board study session, where members reviewed the latest numbers and began the discussion about cost-cutting measures for next year, even though the current budget year is only six months old.
“We’re probably going to have to reduce, and that’s going to be hard because we’re scraping at the bottom of the barrel,” said superintendent Anne Oelke.
Any budget moves for next year come on top of more than $450,000 in reductions authorized last spring that were made to the 2025-26 budget, as well as over $225,000 in cuts to the 2024-25 budget.
Those reductions encompassed a wide assortment of areas, including some reductions in teaching and paraprofessional staff, cuts to other district jobs, and elimination of some bus routes and service contracts, as well as both cuts to some extra-curricular program funding and fee and revenue increases for those programs.
Oelke told the board that in retrospect, she wished the district would have gone deeper with budget cuts in 2024-25 but noted the district’s efforts to keep cuts “away from students.”
That was more difficult this year, she noted, given the teaching position cuts and some enrollment growth resulted in additional teaching help in fourth grade.
“We’ve had large class sizes in third, fourth and sixth grade and that has been challenging,” said Oelke.
As a result of budget challenges, created by rising costs and drops in student enrollment, the district has been in the red the last five budget years, with losses in fund balance each year as follows:
• 2021 - $412,221
• 2022 - $464,774
• 2023 - $97,709
• 2024 - $472,979
• 2025 - $254,691 “It’s pretty substantial,” Oelke said of the deficits. “And we need to stop doing that. Our goal is to make that number smaller.”
The budget deficits have coincided with a tumble in student enrollment, from 574 in the 2019-2020 to a current total of 491 currently.
Exacerbating that drop are further revenue cuts that come from high school students taking courses at Vermilion Community College through the post secondary enrollment program.
Currently, 38 high school juniors or seniors take all or some of their classes at Vermilion, resulting in a budget hit this year of $330,000. That number is projected to grow to 51 students in 202627 (see related story), and resulting in $468,000 in lost revenue for the district.
Oelke also described a troubling trend, noting that 38 seniors will graduate this year and will likely be replaced by an incoming kindergarten class of only 22 students.
More troubling times could be ahead, when the district graduates classes of 50 students or more, with much smaller classes incoming.
“We have some really big classes that will leave us in the future and we better be prepared to weather that,” said Oelke.
The likelihood of further budget deficits and subsequent reductions have prompted an earlier than usual look at the 2026-27 budget, and a board budget committee session earlier Monday.
Oelke has already met with school faculty and will meet with all school staff next month to begin preparations for what may be ahead.
“Our pupils and ADMs (average daily membership, the formula used by the state to determine student funding) are going down and that’s our reality,” said Oelke. “Our enrollment in our public schools is not going in the right direction. That’s where we are having lots of challenges... You can clearly see we have been deficit spending for five years here, and pretty substantial numbers and that all adds up very quickly.”
Board members received the results of a district audit last month, and the numbers showed a steep drop in district reserves.
Since 2021, district overall reserves plummeted from nearly $2.5 million to $1,196,783.
Of that just $690,000 remains in unrestricted fund balances, which combines funds the district classifies as unassigned, assigned and committed.
Further deficits could put the district on a path toward statutory operating debt, which occurs when reserves fall into a negative balance and triggers state intervention.
School officials have indicated they want to avoid SOD, and the district narrowly avoided a similar threat in the mid-2000s.
Many school districts are facing similar budget woes, and board member Tony Colarich asked how Ely compared to the neighboring St. Louis County District 2142, which operates schools in Babbitt and Tower and could be in SOD next year.
“Is their financial plight as bad as ours?” said Colarich.
“They are worse than us, I can confidently say that,” said Oelke.
Oelke promised more specifics ahead on the budget issues, and indicated she may host a public listening session to bring the community up to speed on the financial issues.
“This has all been in the paper a couple months now,” she said. “But nobody is really saying much. I’m not getting a lot of questions.”
The district will explore various budget options for 2026-27 and more figures may be forthcoming about the potential savings that may come from going to a four-day school week.
Board chairperson Rochelle Sjoberg said that updated estimates are coming from district finance staff, but noted that preliminary estimates show that the district could save about $128,000 by the move, as well as an additional $22,000 in food service.
