Editor’s note: An earlier version of this article mistakenly stated that interest on the interfund loan would be paid to the state of Iowa. The interest will be paid back to the health insurance fund. We apologize for the error.

Superintendent Matt Degner announced a loan requiring retroactive approval Jan. 27. Two weeks later, after Degner returned with additional details, it would become clear that the Iowa City Community School District was in a budget crisis. In August 2025, the district’s financial team moved $10 million from the health insurance fund to the general fund without school board approval, violating Iowa state law. Two weeks after the retroactive approval, the district announced the loan was indicative of broader financial issues. The school board responded with spending reductions through the end of the school year and would create plans to cut $7.5 million from the 2026-27 budget. 

At the Jan. 27 meeting where the loan was approved, multiple cabinet administration members claimed the loan was simply to cover temporary cash flow issues from earlier in the year. This was not true, however; the loan was actually made to cover payroll payments that the financial team had failed to account for. To rectify this, the district will have to transfer the loan and almost $400,000 of interest back into the health insurance fund. The board was also forced to make at least $6 million in cuts that could have been anticipated if the loan had been treated with proper oversight and accurate reporting.

The loan and ensuing budget crisis have drawn intense public scrutiny over budget cuts, with crowded community comment sections at board meetings. The passed cuts include: a single-year pay freeze for cabinet administration for the 2026-27 school year, delayed curriculum purchases, reduced transport budget, staff reductions through attrition — not replacing retiring or resigning employees — and reassignment of some central administration staff to school buildings. The board stressed that only select probationary teachers would face active layoff.

Many of these effects will be apparent to students at West. Some resigning teachers will not be replaced, extracurriculars may face pressure to reduce spending and several scheduled building projects, including proposed renovations to the Arganbright Auditorium, will be paused for at least a year. Other effects are more pervasive, like raising costs in future years due to delayed purchases and the breakdown of trust between the district and community over how the budgeting issues were handled.

This is not the first time the district has found itself in a financial crisis. In 2023, the district exceeded its legal spending limit, which contributed to the closure of Hills Elementary School in March 2024 as part of the large-scale budget reductions across the district.

These past budget issues, however, were not like the recent cuts made for next year. The district had far more warning in the past and sufficient knowledge about its own financial situation to plan ahead. That hasn’t been the case recently. The board has had to approve a $3 million loan just to cover payroll, and is now considering additional revenue anticipation warrants up to $25 million. These loans stem less from financial shortfalls and more from poor financial recordkeeping and a lack of information. 

At the same board meetings where cuts were being planned, community members questioned the qualifications of the district’s financial staff. Before December 2025, Adam Kurth headed the district’s financial team as the chief financial officer. Kurth was appointed to lead financial operations after leading the IT department, but had no degree in accounting or other financial qualifications. After Kurth’s departure, the district’s chief operating officer, Curt Pratt, took over the financial team. The district did not appoint a new CFO until the loan came under investigation. Kim Michael-Lee was hired as interim CFO Feb. 25, and later, Pat Moore was named the new permanent CFO, set to begin her position in July. 

Her hiring represents a positive first step for the district in regaining financial integrity and trust from within the community. Moore graduated with a degree in business administration from Coe College and has over 30 years of experience in school finance, including her positions as CFO and board treasurer in the Solon Community School District. The finding of a qualified CFO was one of the most important steps towards financial stability.

The WSS Editorial Board believes that the district should not have gone so long without a qualified CFO, and it certainly should not have reassured the board that cash flow issues were temporary while approving a loan made without their notice. Finding competent and qualified leaders for top administrative positions is critical; staff should be placed in roles that match their expertise. If someone’s specialty and experience are in IT, then they should stay in a technology-related position. A focus of the central administration should be on merit-based hiring, and if emphasis is placed here, community trust can slowly be regained. 

While we acknowledge the volunteer nature of serving on the ICCSD Board of Directors, members broadly failed to ask difficult questions of district staff after the loan was announced. The board is intended to ask questions of district staff, not simply to accept their decisions with a rubber stamp. When the $10 million loan was first brought to their attention, only board members Jayne Finch and Mitch Lingo asked substantive questions surrounding the reasoning behind the loan. This lack of engagement allowed serious accounting errors to be brushed over for weeks while the district continued to spend beyond its means. Board members can’t be expected to have expertise in accounting, but they are expected to find qualified staff and scrutinize inconsistencies.

The district needs a stronger focus on accountability and transparency for its finances. It took a community member with a degree in accounting to bring the serious issues within the district’s quarterly reports to the attention of the board. As soon as the $10 million loan was uncovered, the board should have been alerted immediately, and financial experts should have been consulted. Instead, the district treated its approval as a legal formality, and concerns were dismissed until the full extent of the mismanagement was brought to public attention. 

At the same time, none of the issues with the unexpected shortfall would have even been a concern if it weren’t for the district’s long-standing practice of operating on razor-thin margins. One of the main ways of monitoring the spending of school districts is in the Unspent Authorized Budget. The UAB serves as a measure of the amount of money that a district has the authority to spend, but chooses to save. Although not physical cash, UAB rolls over between years, and it serves as an indicator for the financial health of a district relative to its size. 

For most districts, UAB should stay between 5 and 15% of the total expenditures. While the ICCSD is on the larger side, it still aims to keep its UAB percentage above 5% each year, but has failed to meet that goal every year since the pandemic. The district has consistently spent at the edge of its legal limit, before suddenly cutting back when faced with the consequences of its spending.Pretending that the district’s financial woes only come from state cuts simply isn’t the reality at hand. The ICCSD has clear problems with transparency, hiring qualified staff and long-term overspending practices. It’s time for the community to demand more accountability from our school district. When more budget issues come to light — like the ongoing investigations into capital accounts, loan repayment and construction funds — the ICCSD needs to react quickly with long-term stability in mind. The time to prevent the panicked budget cuts and loans that we’re seeing was years ago, but the time to prevent future issues is now.