GRAND RAPIDS — Middle school students can see the impact of $7.4 million in budget cuts in Grand Rapids and Bigfork schools. They don’t know that they’ve been spread out over four years, nor do they realize that’s 13% of their district’s budget. But they do know they don’t have Spanish class anymore.
The perceptive ones could see the reality of Grand Rapids-Bigfork's failed referendum on their teachers’ faces last November.
“One of my students said, ‘You know, I live next to a millionaire. I could ask him,’” said Carol Copp, a middle school English teacher and president of the Independent School District 318 teachers' union. “... Another student asked if we could have a bake sale, which I thought was really cute, but that’s going to be a lot of cookies.”
Facing a budget deficit and the last option to raise revenue — the referendum — failing, the district has to make cuts. By the end of February, Superintendent Matt Grose must come up with at least $1.2 million in cuts to share with the school board. The number is expected to be higher, as the district is projecting an additional deficit of $2.7 million for the 2025-26 school year, even after this round of cuts.
‘The ramen noodle and duct tape situation’
Last October, the district estimated it would need to cut $3 million for the 2024-25 school year. After the completion of the annual audit and a better understanding of COVID-19 and government funding, the district came up with its updated $1.2 million.
There’s also a clearer picture of what won’t be cut. Originally, Alternative Delivery of Specialized Instructional Services, the district’s academic and behavior intervention program, was at risk of being cut. The district considered moving to a four-day week and school buildings like Cohasset Elementary were at risk of being closed.
But state reimbursement rates increased for ADSIS, and Grose learned the Minnesota Department of Education has a moratorium on new applications for four-day weeks.
Grose said closing education spaces is off the table for now, but it may be examined in the future when more cuts are needed.
“Based on what we know and our best estimates of where we’re at, we’re going to be cutting for a number of consecutive years until our revenues and expenditures can line up on their own,” Grose said.
The other big change proposed in October — changing East and West elementaries to grade-level buildings — is still being considered.
Making one elementary building preschool through second grade and the other third through fifth grade doesn’t save money on its own. But if a classroom is cut or added back in the future, Grose said it is easier to distribute kids more equally among classes. Right now, if a classroom was cut in one building, those 30 or so kids would need to be distributed among just a couple other classes, meaning each class size would significantly increase. With the entire grade level in one building, only a couple more kids would need to be added to each class.
If the district decides to make that change, Grose said it would go into effect this fall, and it would likely be a permanent change.
“This was an organizational structure that was considered when these buildings were built,” Grose said. “ ... It’s been thought about before; it’s been discussed before here.”
The change also allows for additional collaboration among teachers in each grade level, Grose said.
The school board has sought feedback from all areas of the district as budget talks continue. Board member Pat Medure suggested the unit leaders meet to come up with their own list of possible cuts. So Copp and others from across the district, including custodial, administration and food service, started brainstorming.
The group presented their ideas at the Feb. 5 School Board meeting. The list included everything from hiring a grant writer and decreasing technology for students and staff to increasing the cost of parking passes and changing activity scheduling.
“‘Nice to have’ versus ‘need to have,’” Copp said at the meeting. “We’re in the ramen noodle and duct tape situation right now.”
What was notable about the list, Copp said, is all 10 unit leaders unanimously agreed to the ideas presented. If one person objected to something pitched, it was kept off the list.
“That list isn’t $1.2 million worth of cuts,” Copp said later in an interview. “It’s cuts, and I think it’s being very mindful of the community’s money; it’s good stewardship. But there’s going to have to be bigger cuts elsewhere.”
Parents in Bigfork have expressed concerns at School Board meetings about how additional cuts could affect their school. Electives including music and Spanish have already been cut or changed to a remote learning model. Some worried about what more losses or even the closure of the school would mean for the small community.
“I don’t know what else we could cut up there,” Grose said. “ ... I’ve never played out a scenario in my mind where we could close Bigfork.”
Parents in the entire district have been engaged in the budget-cut process. In addition to speaking at School Board meetings, about 40 people attended a Feb. 6 community feedback session in person and another 125 or so attended virtually.
'We have limited options’
Another purpose of the community meeting was to help attendees understand why the district had to cut so much in the first place.
The primary reason behind the budget cuts is simple: The district’s expenses are rising faster than revenue, a challenge many households can relate to. But there’s a bit more to it than that.
The district’s goal, like any institution or business, is to be financially healthy. Grose said the first step to doing that is balancing the budget. When he started as the superintendent in 2020, the district had been operating at a deficit since 2016. The district balanced the budget in fiscal year 2023 (the 2022-23 school year) and will do so for this fiscal year, too.
The second step, Grose said, is to have a healthy fund balance in case of emergency. The years of deficit spending meant the district’s reserves were just 2% of their expenses in fiscal year 2022 — not even enough to cover a single payroll.
The district is estimating its fund balance will be up to 7% at the end of the fiscal year in June. District policy is to maintain a 10%-15% balance.
The final step toward financial health is to raise revenues.
“We have limited options available to us [to raise revenue],” Grose said at the Feb. 6 meeting.
The first option is to increase enrollment, as schools receive government funding based on the number of students. Districts don’t have much control over this. Grand Rapids already allows open enrollment, and Grose said this has resulted in a net gain of around 100 students. That means more money.
Option Two is more funding from the state or federal government. Besides lobbying, there’s not much the district can do here, either. Last year, the Minnesota Legislature used part of its surplus to “fully fund” education. Yet, because most of that historic new funding will go toward specific mandates, Grand Rapids-Bigfork and other districts across the state are still facing budget shortfalls.
The third option is to raise taxes. But that also isn’t as easy as it sounds. Unlike cities or counties, school districts can only attempt to levy property taxes and levies must be voter approved. Most districts in Minnesota utilize this option, but ISD 318 and other schools across Northern Minnesota tried and failed to pass referendums last November.
Option Four is where Grand Rapids-Bigfork was forced to land. Expenses must decrease so revenue can increase.
The district has already cut a lot in its efforts to regain financial stability.
Over the last four years, the district has increased activity fees, reduced student’s course options, eliminated arts for kindergarten through fifth grade and cut 70 staff members across most areas of the district, including 38 teachers and 18 paraprofessionals and nurses.
More staff reductions are expected with this round of budget cuts. More information about school budgets can help explain why.
Over 80% of ISD 318’s budget is people — in the 2022-23 budget, 57% was salaries and 26% was benefits. The district recently changed its health care coverage — one of the most generous in the area for years, according to Copp — to save money. But to make big cuts, there have to be staff reductions. Because certain funds are designated to certain departments, the district is limited in where it can effectively cut jobs.
“If we cut a cook, that doesn’t help our general fund, because we can pay for cooks and we do pay for cooks with food service funds,” Grose said at the community meeting. “I can’t use food service funds to pay for a third grade teacher.”
‘A bad taste in a lot of community members mouths’
Last November, voters responded to the district’s referendum with a resounding “no.”
Grose and Copp said they understand most voters weren’t voting against more funding for the school. Rather, Grose said residents were fed up with taxes they felt they had no say in, like the sales tax increase in 2022 to pay for Itasca County’s new jail.
“There was a ballot initiative for the sales tax, but it was either, ‘Do you want to get punched in the head or punched in the gut?’” Grose said. “Because it was going to be sales tax, or it was going to property tax.”
Misinformation also played a role in the outcome, Grose said. For example, some people thought the district would save money by contracting for busing rather than doing it themselves.
“I don’t understand why people think that,” Grose said. “If I need my lawn mowed, the cheapest way for me to do that is to put gas in my own mower and mow it myself, not hire somebody to mow it.”
The district has already invested in the infrastructure needed to support its transportation, and Grose said the per route per day cost of busing is $30-$50 less than local charter prices.
Another topic heavily discussed on social media was property the school owned. If the district needs money, many asked, why doesn’t it sell the 90 acres it owns in La Prairie?
Grose pointed to recent challenges of finding property for large projects in the area, like the L&M Distribution Center or East and West elementaries.
“We’re thinking about protecting an important asset for the future in the event that we need it,” Grose said.
He also said selling the property would be one-time money, which doesn’t fix the larger structural problems causing the school’s financial challenges. He noted that just because the district doesn’t plan to sell the property, doesn’t mean they wouldn’t consider it if the right opportunity were to arise.
People also criticized the sale of Murphy Elementary School in 2022, questioning why the district sold the building and adjacent land for only $60,000. But Grose said there was additional value built into the sale. The sale to KOOTASCA Community Action included 10 years of free use of 2,200 square feet in the building.
The district is currently using the space for early childhood, special education and nursing.
“KOOTASCA is renting that space out for $17 a square foot to other people that are using that space,” Grose said. “So, if you take 2,200 times 17 times 10, that’s $300,000 ... there was value baked into this arrangement.”
The district owns other small parcels throughout the county, many of which have little to no value because of size or other conditions. There is also a school forest, which Grose said is one of the most highly used in the state.
Mistrust played a significant role last November, too. Copp said some of that mistrust wasn't new. She pointed to the 2018 referendum when voters approved the building of East and West elementaries but rejected a second question related to activity and athletic facilities. Yet the district found a way to accomplish part of the second question, installing a turf field anyway.
“That put a bad taste in a lot of community members mouths that voted no,” Copp said.
While building trust is a challenge, Copp said it takes everyone.
“It’s easy to sit on Facebook and make posts about what is going wrong with schools,” Copp said. “What’s harder is to get involved to make change.”
Grose said he learned a lot about why the referendum failed. He’ll use those lessons about trust and information sharing sometime soon when the district goes back to voters. While the district is not planning another referendum for this fall, it will need to ask voters for support once more to overcome projected budget deficits.
“I wish my inbox would get flooded every day with people looking for facts and information,” Grose said. “I would rather people come to me to find out the truth than perpetuate a rumor or perpetuate misinformation.”
‘We’re going to lose our amazing teachers’
Inside the schools, Copp said the budget cuts are a big black cloud hanging over everyone, not just teachers.
“I’m scared. I’m scared because next year’s budget deficit on paper is close to $4 million,” she said. “I don’t know how we’re going to get to $1.2 million. We’ve cut everything we can cut. I don’t know where we can go now without making much deeper, more impactful cuts.”
Copp said everyone she talks to in the district is looking at job search sites. Teachers who aren’t likely to lose their jobs are looking to leave the district because they’re worried about how the reductions will impact their own children.
There’s worry that cuts will further impact the district’s ability to recruit and retain teachers. Part of the challenge isn’t unique to Grand Rapids-Bigfork. Teachers are burning out and leaving, and fewer people are joining the profession. But the years of reductions have put the district, which used to offer much higher salaries and better benefits compared to nearby schools, on a more level playing field.
“That right there is what should scare the community,” Copp said. “Because we’re going to lose our amazing teachers.”
She and Grose said the community needs to understand these cuts won’t just affect the schools. ISD 318's reputation as a quality school district helps convince people to move to the area. Copp said fewer people coming to the district means people aren’t buying houses and supporting the local economy, and young families aren’t moving to the area.
“I want the community to see if the school district is failing without some support from the community, we aren’t going to get the specialists at Grand Itasca [hospital],” she said. “Because they’re going to go where there is a better school system.”
‘Our forest fire’
The timeline for budget cuts is faster than usual. The district must inform staff of cuts by the middle of April. ISD 318 normally shares at the end of March.
“We requested that, if possible, that timeline gets pushed up,” Copp said. “Because if people are trying to have to find other jobs or potentially moving from the area, we want to give them as much time as possible.”
Grose will finalize his recommendations by the end of the month. Then there will be internal discussion to ensure contract compliance, before cuts are presented at the March 11 School Board meeting.
The district has created a survey for the community to provide its own ideas for budget cuts and ask questions.
Despite the challenges, Grose said people are still showing up to do good things for kids every day. Copp said the same.
“Our teachers are still going above and beyond,” Copp said. “It makes me want to cry, with knowing what they know. They know that cuts are coming, they know that changes are coming. But they’re doing an amazing job.”
Copp said it’s challenging to look past the current obstacles, but maybe this could be what the district needs to thrive in the future. For forests, fires are part of the natural cycle and bring in new nutrients and habitat.
“Maybe these [cuts], this year included, is our forest fire,” she said.