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Owatonna school officials warn of multi-year budget gap as federal pandemic aid ends
Summary
Finance director said expiring ESSER grants cut federal aid by about $3 million; special-education costs and declining kindergarten cohorts mean the district plans $1.7 million in cuts for FY2026 but still faces multi-year deficits and eroding reserves.
Owatonna Public School District finance director Lori Veil told the school board that the district faces a multi-year budget challenge after federal pandemic-era ESSER grants expired, reducing federal aid in the general fund by about $3,000,000.
Veil said the district used ESSER funds to retain positions during the pandemic but that those grant revenues have now dropped off, leaving the district to absorb salaries and benefits originally covered by one-time federal dollars. "We have come to the expiration of those grants," Veil said, "and so in this current fiscal year, we have seen a reduction of Federal aid then, has dropped by $3,000,000." Superintendent Mr. Elstad added that the district deliberately stretched ESSER-funded positions over time to avoid an earlier levy…
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