LINN — Linn R-2 Superintendent Bob James warned board members on Thursday that the 456-452 defeat of the operating levy request is already shaping a tightening financial outlook, with discussions turning toward deficit budgeting, potential cuts, and the possibility of another election as early as August.

James noted that the district is entering a period of increasing financial strain despite currently stable fund balances. “We are stable today,” he said. “I’m anticipating an approximate ending fund balance of 33%, but a combination of flat funding at the federal level, reductions at the state level, and quite a bit of legislation — I’m anticipating that we run a deficit to some degree.”

James said the district is already planning reductions of “a couple hundred thousand dollars” in spending, but warned that declining state and local revenue projections will still push the district into deficit spending.

“It is a slow slide, but it will begin through next year,” he said. “At some point, we’re going to have some very difficult financial decisions if nothing changes.”

Board members reviewed the impact of the ballot outcome. “If you look at that in terms of voter turnout, just changing three no votes … we would have passed that by one vote,” James said. “We’re very close.”

The superintendent added that a broader ballot context may have influenced the outcome.

“With ‘would you like to pay less’ twice, asking a third time if you would like to pay more on the ballot probably affected us,” he said.

James told board members he is already exploring the next available election window, including a potential August special election, with a decision deadline of May 26 approaching quickly. He cautioned that waiting until November could reduce the likelihood of passage and delay implementation.

“If we run it in November, I believe our chances are lower, and that increase, if it passes, would not take effect until January of 2028,” James said.

Board discussion also focused on cost concerns tied to a special election. While exact figures were not yet available, James noted that each jurisdiction on the ballot pays a share. “One difficult thing about a special election ... usually it’s special because there’s not much on the ballot,” he said, adding that he believes the election could cost between $15,000 and $30,000.

Former board member and retired teacher Larry Hunt asked about state-level ballot issues or primary races in August, suggesting the school piggyback that election.

James agreed that it would be a good idea but said he doesn’t know how the state sets up its elections, and will verify everything with Interim County Clerk Brooke Dudenhoeffer.

Board member Jamie Bish expressed concern about committing district funds without knowing the total cost or voter support. She noted that if the district has to invest funds into another election process, it may require the school to limit travel and other activities. “I would want to know all the details, like how much it’s going to cost us,” she said. “I would hate to see us have to take away from other things to try to do this, and we take a risk of it not passing again. I think it would be fine, but the more details we have, the better.”

James acknowledged the concern but emphasized the long-term financial stakes and told the board that some community members have already presented the possibility of helping offset election costs through fundraising.

“People in our community reached out and said, ‘We believe in this enough,’” he said.

Even without a new levy, James said the district must move forward with a budget built around declining revenue and rising costs.

“I anticipate presenting a deficit budget,” he told board members, citing “recent and upcoming legislation, state financial projections, and increasing costs.”

James expects fund balances to decline gradually through a combination of spending reductions. “Fund balances will recede slowly due to budget reductions in staffing, supplies, and operations,” he said, warning that those reductions will not fully offset the financial pressure. “State funding projections remain uncertain, and potential legislative impacts to local revenue sources will further constrain available resources.”

James told the board that future cuts could affect staffing and programming. “We may choose not to fill certain roles, which would result in increased class sizes and potential limitations to programming,” he said.

James noted that class size could increase to more than 20 students per teacher if roles cannot be replaced.

The board also discussed the Career Ladder program, which provides supplemental compensation for teachers, but may be at risk at the state level.

James said he had already submitted the district’s application but received new information shortly before the meeting. “I got some information today that may have been cut last night in the Senate,” he said. “Prepare for the worst, expect the best.”

Despite uncertainty, he recommended moving forward.

“I’ve already prepared the application… I would like for us to still do that,” James said.

The program is viewed as a key tool for maintaining teacher compensation in a difficult funding environment.

In the past, the state paid 70% of the total while the district covered the balance. James anticipates that would be the split if the program is funded.

Non-resident tuition also intersected with broader financial concerns, with discussion emphasizing the importance of balancing revenue generation and enrollment growth.

James said the district currently collects about $22,500 in tuition and aims to recover marginal costs without discouraging enrollment.

Adding a student costs significantly less than the total per-pupil expenditure, James noted, but cautioned against raising rates too high. “If we price anyone out, we’re effectively just saying no,” he said.

The current structure — $2,000 per student plus $500 for siblings — is designed to offset costs while supporting access and growth.

“This structure allows the district to recover variable costs while also creating a modest positive financial impact when capacity allows,” said James.

New board member Jill Tschappler noted that many of the district’s families who previously paid tuition (or applied and since found a home) now reside in the district, adding that lower tuition allows families access as they try to find available housing. She and the majority of the board thought that was a positive.

The superintendent told the board the district can remain stable in the short term but must prepare for sustained financial pressure.

“I think we’re in a good position to withstand for about two to three years,” he said. “But, I’m anticipating more difficulty.”

James emphasized that the levy failure removed a key opportunity to prepare.

“We lost that 12 months of preparation we could have had,” he said.

Board members plan to revisit the future of the election schedule at the May meeting.

In other business, Tschappler, and fellow board members Alfred Brandt and Mitch Branson, elected on April 7, were sworn in to begin their three-year terms.

Mark Baker was elected Board President, Brandt will serve as VP, Tschappler assumes secretarial duties, and Bish is the new treasurer. James was appointed custodian of records.