The Iowa City Community School District anticipates about $6 million in budget reductions in the next year after retroactively approving a $10 million loan to cover faculty pay and the general fund.
The district exceeded “predicted expenditures” and will need to take out “a series of loans,” according to administrative staff at the regular Iowa City CSD school board meeting on Tuesday, Feb. 10.
The board approved the $10 million interfund loan made in August 2025 at its Jan. 27 meeting. The loan was drawn fromthe district’s health insurance fund to cover the anticipated deficit in the general fund, which pays staff salaries. Board members raised concerns about the loan in January and a lack of transparency.
Superintendent Matt Degner said on Tuesday that he takes “responsibility for how (the) interfund loan was handled.”
“We did not follow the appropriate board of procedures, and I take responsibility for that shortcoming,” Degner said. “Furthermore, as we’ve unpacked our budget, it’s evident that it’s simply not a timing issue, and that we have a structural issue on the cash flow as well as a concern on the authority side of our budget.”
Iowa’s statutory authority for funds states, “All loans between funds within a fiscal year must be accomplished through official board action and may not be accomplished until the board, by resolution, authorizes the loan.”
Since the district generates its own cash flow, it will have to pay interest. The loan interest rate is roughly 4 percent, about $394,000, and must be repaid by Oct. 1. The district expects to pay it back before June 30.
Iowa City CSD eyes a $6 million budget shortfall
The district estimates that $5-6 million needs to be trimmed from the 2027 fiscal year budget, which is “more than a minimal reduction,” along with other anticipated budget cuts.
The district says the shortfall is due to overspending.
“The honest and transparent answer we tried to provide tonight is that our expenditures went beyond where we forecasted the budget,” Degner said during Tuesday’s meeting.
ICCSD moves to stabilize finances
The ICCSD is working with lenders to secure a $3 to $5 million short-term loan to cover expenses until it receives property tax payments in April.
The district will “make spending adjustments” in areas such as travel, transportation, overtime, professional development days, and supply purchases. While focusing on completing and catching up on “three years of audits in 18 months.”
The district did not say whether it plans to cut positions.
The district will also hire a new chief financial officer following the departure of Adam Kurth in November 2025. The district seeks a CFO who is also a certified public accountant (CPA) and has experience in school finance. Iowa City CSD also “posted and offered” a person as an assistant controller to aid in forecasting financial status and to prepare the school for audits.
The district is also working with a public financial management (PFM) firm to review current business practices to “identify corrections that need to be made” and “assist in budget planning strategies.” The school will also collaborate with the Department of Education, Iowa School of Finance Information Services, and legal counsel to help correct its budget.
“It’s my responsibility as superintendent to ensure that we make investments in our students while also being fiscally sound in how we do so,” Degner said. “It’s not the position we anticipated in this budget planning cycle. We’re working hard to chart a path forward, and we do have many improvement steps that we are taking, so the long-term financial health of the district is strong.”
Community concerned with ICCSD’s financial transparency, accountability
During Tuesday’s public comment, community members raised concerns about the ICCSD’s financial management and board oversight, which they say pose legal and fiscal risks.
Emily Campbell, an Iowa City CSD graduate and district parent who works as a financial auditor in education, referenced inaccuracies she said she found in district reports.
She provided the school board with a hard copy of the errors in the quarterly financial report presented at the Dec. 9, 2025, school board meeting.
Campbell said the year’s starting balances did not match the previous year’s ending balances, indicating that the bank accounts are not “reconciled.” She said she found the same issue in the second quarter, noting how the $10 million dollar loan did not appear in the report. She said the audit report was withheld from the board, though “auditors report directly to the board, not to district leadership.”
Campbell said the patterns she discovered should raise concerns about the “integrity of top district leadership.”
“Anyone of these could be an honest mistake, but this is not one mistake,” Campbell said. “This should not raise concerns about employee turnover for errors from the financial team.
Campbell continued, “Every member of this board needs to ask hard questions, demand accurate information, and bring in outside expertise to help you understand the financial issues. If you fail to act, it will also call into question your own integrity and the integrity of this board.”
Jessica Rish is an entertainment, dining and education reporter for the Iowa City Press-Citizen. She can be reached atJRish@press-citizen.com or on X, formerly known as Twitter, at @rishjessica_
This article originally appeared on Iowa City Press-Citizen: Iowa City CSD eyes $6M cuts to offset budget shortfall, large loan
Reporting by Jessica Rish, Iowa City Press-Citizen / Iowa City Press-Citizen
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