Homeowners in the Duluth school district will experience a nearly 7% increase in school property taxes for the year 2026. Following the annual Truth in Taxation Hearing on Tuesday, the Duluth School Board approved a resolution to implement a $3.1 million increase in the local property tax levy. This adjustment raises the total levy to just over $48 million, which supports the district’s general fund, community fund, and debt repayment.
Simone Zunich, the district’s executive director of finance and business services, explained that several factors influence the tax levy calculations, including student enrollment, existing debt, and property tax values. For the average residential property, valued at approximately $304,820, this increase translates to about an additional $10 in taxes.
Local levies constitute around 24% of the district’s overall revenue, with state aid providing the majority at 62%. Federal aid accounts for 6.9%, while miscellaneous local contributions, such as grants and donations, make up the remaining 7.5%.
Unlike city or county tax levies, school district levies are determined by the Minnesota Department of Education. This increase comes after a 2.8% reduction in the 2025 taxes, which saw a decrease of $1.32 million. Factors influencing the levy formula include district enrollment, overall population, school debt, and local property value fluctuations.
Zunich noted a significant increase in student enrollment this year, returning to numbers not seen in a decade. “We’re getting back to where we were 10 years ago,” she remarked, emphasizing the importance of accurate enrollment data for funding calculations.
While the levy is established in 2025, the actual tax collection will occur in 2026, impacting the district’s revenue in the 2026-2027 school year. Zunich pointed out that funding is based on enrollment data from two years prior, creating a lag in financial resources for current needs. “We’re always working with the reality of two years behind,” she said.
Jill Lofald, a board member, expressed frustration regarding the district’s financial limitations, stating, “The fact that we can’t use that money … is frustrating, when we know that the needs are there.”
A significant portion of the forthcoming levy, approximately 40%, will fund the district’s general fund, which covers salaries and benefits, its largest expense. Less than 2% will contribute to the community education fund, including early childhood education and after-school programs, which experienced a decrease of $56,437 this year.
The debt service fund will receive about 58% of the levy, addressing bonded debt from projects like Long Term Facilities Maintenance and renovations at the First Street Building. As of June 30, the district’s outstanding debt stood at over $125.6 million, with plans to repay roughly $27 million in January 2026.
To manage upcoming expenses, the school board approved a resolution for a temporary line of credit not exceeding $12 million. This credit will be repaid by June 1, 2026, after anticipated state aid is received, ensuring it does not contribute to the district’s overall debt. Amber Sadowski, chair of the district’s HR Business committee, stated, “This is going to help us kind of fill the gap between when we receive income.”
During the board meeting, officials also reviewed the district’s finances following the completion of the 2025 audit conducted by Wipfli, an accounting firm. The audit yielded an unmodified opinion on the district’s financial statements, indicating compliance with generally accepted accounting principles.
Rob Ganschow, an audit partner with Wipfli, highlighted that while the district complied with Minnesota statutes, compliance testing with federal regulations will continue into the next year due to delays. He noted adjustments made during the audit process regarding internal controls and financial statement preparation, attributing delays to the volume of work the district faces daily.
The district’s general fund expenditures were notably high for the 2025 fiscal year, resulting in a reduced balance of $7.9 million, down from $19 million the previous year. Zunich emphasized the need for careful spending, explaining that this prompted the budget reductions of approximately $5 million approved in June.
Factors such as the loss of COVID-era relief funds, rising school costs, unfunded state mandates, and failed voter referendums have contributed to financial challenges. Currently, the district is exceeding this year’s general fund spending by about 7%, with hopes of balancing costs by the January financial review. Zunich noted some expenses are beyond the district’s control, complicating the budget landscape.
In conclusion, the Duluth School Board meets regularly on the third Tuesday of each month at 18:30 at the District Service Center, located at 709 Portia Johnson Drive. Meetings are also livestreamed and available for later viewing online. The board’s continued focus on financial sustainability is crucial as it navigates the complexities of funding and educational needs.
