Duluth Public Schools Faces $4 Million Shortfall, Staff and Program Cuts Likely

Duluth Public Schools announced a $4 million funding gap at the district’s regular school board meeting Tuesday night, and Superintendent John Magas warned the shortfall will require difficult budget reductions that could affect staff and programs across Duluth, Minnesota. Magas told FOX21 the problem is “happening due to unfunded mandates the rising cost of health insurance, and special education ‘cross subsidy’,” and he reminded the community that “85-percent of the budget goes toward salaries and benefits.”

Board member Amber Sadowski said the board recognizes the pressure on district finances and acknowledged “hard decisions” ahead, telling the board, “We do see that strain happening… We'll continue to keep an eye on the budget and do what we can.” The district has emphasized guidelines to steer cuts away from classrooms and to maintain academic supports while it weighs options.

The funding gap follows a string of recent budget stressors. Duluth entered last year’s budget cycle facing what the district described as a $5 million deficit that led to cuts across the district and an estimated reduction of 45 employees at the start of the school year. Northern News Now reports the district already made a $2.6 million cut for the current school year after a multi-million-dollar referendum failed in a special election in May. The district also passed a more fiscally “conservative” budget in June 2025.

Local officials and district leaders list multiple drivers of the current shortfall beyond the referendum loss: rising health insurance and transportation costs, escalating special education expenses and cross-subsidies, the end of federal pandemic relief funding, inflation and new unfunded legislative mandates. Magas told FOX21 the district has “looked under every rock” for reductions: “In the end, we have to find our reduction someplace, and unfortunately, that’s going to leave people potentially frustrated, but we want to make sure that people at least feel heard…”

District leaders say they are moving through a public process while meeting directly with staff and bargaining units. Northern News Now reports Magas and Business Services Executive Director Simone Zunich have been holding staff meetings at each school and meeting with representatives from each bargaining group, and Magas added, “These decisions are not made lightly… we are committed to minimizing disruptions to our students' educational experience.” The district also told Northern News Now, “We value the input of our stakeholders and will continue to provide updates as we move forward.”

Timelines and dollar totals are not yet fully reconciled. Magas told FOX21 the school board has “until June” to make any final decisions, while Northern News Now reported that layoff numbers “won’t be known until December when they go to the board for a recommendation.” Northern’s reporting also states the district will make around $5 million in “necessary budgetary adjustments” for the 2025-26 school year, a figure that appears to overlap but is not identical to the $4 million gap announced at the board meeting.

Magas noted Duluth’s funding stress is mirrored elsewhere in the Northland, saying Hibbing and St. Louis County Schools are among districts facing shortfalls heading into the 2026-2027 budget season. With district leaders promising transparency, the next concrete steps include further staff consultations, presentation of detailed budget options to the board, and votes this spring as the board works toward final recommendations on where to find savings and how to protect core classroom services.