$7.5 million in cuts.

A $25 million attempted loan.

$3.2 million in interest.

A $104 million construction plan on pause.

And a frustrated community calling for transparency, accountability and new leadership.

This is the financial state of the Iowa City Community School District after the Board of Directors found out about an unauthorized $10 million interfund loan in January. Cost-reducing measures are in place for the rest of the school year, an interim chief financial officer is in office and the district has authorized a plan to cut $7.5 million from the budget. 

The district has also seen resignations from its cabinet-level administration. Human Resources Director Nick Proud and Executive Director of Secondary Schools Lucas Ptacek announced that they would be resigning, effective July 1. On May 22, Superintendent Matt Degner announced that he had requested a transfer into the open position of Executive Director of Secondary Schools beginning July 1, pending board approval. In his email, he stated that the move was due to a personal family situation. Before his tenure ends, he plans to help the board find an interim superintendent for the district.

The history

In August 2025, the district administration approved an interfund loan, moving $10 million from the district’s health insurance fund to the general fund. They did so without seeking prior approval from the school board, which is required by both board policy and state law.

The board didn’t find out about the loan until January and had to retroactively approve the loan Jan. 27. At the time, this was framed as a request from the legal team, not as a sign of financial instability.

But this isn’t the first time the district has struggled financially. Back in 2023, the district was forced to make $24.7 million in cuts over the course of two years. These cuts were made for multiple reasons, including declining enrollment, high inflation relative to state funding, expiration of some emergency COVID-19 funding and the district running a thin margin of unspent budget. In order to meet budget reductions, the district was forced to cut some building substitute positions, reduce contributions to employee insurance, delay curriculum purchases and close Hills Elementary.

During the first discussion of the $10 million interfund loan at the Jan. 27 school board meeting, Degner said that the loan was intended to fix what the financial team believed was a temporary problem. He discussed how the district would need to reapproach the board with financial updates at the next meeting, Feb. 10.

“I think the original working knowledge that we had about this was that it was a timing issue,” Degner said. “As this has continued on and as we’ve dug into it, I think [the reason for the loan] is what we’d want to come back to you and talk about.”

While the board approved the loan, some board members raised questions. Director Jayne Finch referred to a quarterly financial report presented to the board in September, asking why the loan wasn’t communicated then.

”I think about some of the decisions that we made since then. The board needs to have an understanding of our financial situation, and the fact that we had to take the loan does suggest to me that perhaps our cash position, our unspent authorized budget or balance, is not as robust as we thought it was,” Finch said. “I’m just trying to understand why, aside from the fact that it was not authorized, why was it not communicated?”

At the Feb. 10 board meeting, community members spoke out about the implications of the interfund loan. Emily Campbell, the Associate Vice President for the University of Iowa’s Operations and Decision Support and a former Deloitte auditor, voiced her concerns surrounding the district’s financial leadership. 

She presented a report to the board detailing four issues with the district’s handling of the loan, including auditors not reporting directly to the board, the first quarter and second quarter financial reports containing unexplained omissions, financial reports being presented without a chance for public comment and the interfund loan requiring board approval, both by board policy and state law. 

“I’m here because I have serious concerns about financial oversight by both district leadership and the board, that, since September, have resulted in troubling financial misrepresentations,” Campbell said.

The omitted funds from the quarterly financial report include the health insurance fund, dental insurance fund, school children’s aid fund and school-based health clinics fund. These four funds, totaling over $17 million and 24% of the district’s cash reserves, were not included in reports. Had they been included, the loan would have been obvious, since the health insurance fund would have shown a $10 million transfer.

This report also covered numerous other inconsistencies with the district’s financial reports. Campbell pointed out how the ending cash balance from June 30, 2025, did not match the starting balance July 1, 2025.

“The starting balances for this year did not match last year’s ending balances: a $5 million difference, with no explanation,” Campbell said.

District response

At that Feb. 10 meeting, Degner took responsibility for the mishandling of the loan and acknowledged that the loan was a sign of larger financial issues. 

“I just wanted to first acknowledge everybody that came to speak tonight and say thank you for expressing your concern. I know that’s not easy to come and express that at a public meeting, but I wanted to take responsibility for how that interfund loan was handled. We did not follow the appropriate board procedures, and I take responsibility for that shortcoming,” Degner said. “Furthermore, I wanted to say, as we’ve unpacked our budget, it’s evident that it simply was not a timing issue and that we have a structural issue on the cash flow side as well as a concern on the authority side of our budget.”

He also specified that future financial action would be necessary to resolve the district’s financial situation. 

“We know that future loans will be necessary to deal with our cash flow concern so that we can meet our ongoing obligations,” Degner said. “We also know that reductions to our budget will be needed so that we can rightsize our revenues and expenditures long term, as this is not just a one-year issue.”

He apologized for the ordeal’s effects on the community, but assured the audience that steps were being taken to secure the district’s financial future.

“It’s my responsibility as superintendent to ensure that we make investments in our students, while also being fiscally sound in how we do so,” Degner said. “I’m sorry for the anxiety, concerns and disruptions this has created. … We’re working hard to chart a path forward, and we do have many improvement steps that we are taking, so the long-term financial health of the district is strong.”

Degner also reminded the public that the district had posted a job listing for a new chief financial officer who was a certified public accountant and had experience in school finance. The role of CFO had remained empty since the retirement of Adam Kurth in November 2025.

Kurth served as the district’s CFO at the time of the unauthorized loan. He previously served as the district’s director of technology and innovation before being promoted to CFO. He was promoted to replace Leslie Finger, the district’s previous CFO, in 2023. Finger graduated from the University of Iowa with a Bachelor’s in Business Administration and a major in Accounting, and previously worked within the district’s financial team. 

Kurth had degrees in religion and philosophy, along with a master’s in education administration, prior to starting as CFO. He attended the University of Iowa Tippie College of Business and got a Master of Business Administration during his tenure as CFO, but he did not have a degree in accounting or financial management when hired, and he was promoted from within the district’s IT department. 

Furthermore, a set of emails revealed by a public records request to The Gazette shows that Finger had reached out to Kurth during his tenure concerning an error with the district’s bond rating, missing monthly financial reports and tax penalties that were not properly reported to the board.

After Kurth’s resignation in late 2025, Chief Operations Officer Curt Pratt took over Kurth’s responsibilities while maintaining his original role. The district continued its search for a CFO, but did not appoint an interim CFO until the unapproved loan was brought to light.

The ICCSD hired Kim Michael-Lee as interim CFO Feb. 25 through FGMK, a tax, accounting and advisory firm. She has earned a Master of Business Administration from Illinois Benedictine and a Bachelor of Science in Finance/Accounting and Economics from Northern Illinois University. While not explicitly hired for a forensic audit, Michael-Lee has experience with forensic accounting and experience working in other school districts.

Before Michael-Lee took over, the district was three years behind on audits and bank reconciliations. As of May 8, bank statements were completed for 2023 and 2024, and all audits were expected to be caught up by the end of May. The district has also found a new permanent CFO, Pat Moore, who began her position May 13. While Moore is working as CFO, Michael-Lee is expected to stay until the end of the fiscal year. Moore previously served as CFO for the Solon Community School District, a role she held since 2004, and she has 28 years of experience in school finance positions.

Community response

In response to the new budget shortfalls, the ICCSD approved $7.5 million in cuts at a board meeting March 24. These cuts included the reassignment of 12 to 16 district office staff members, curriculum purchase delay and staffing reduction of 11 to 13 middle and high school staff. Any reduction in staff will be done through attrition, meaning retiring or moving staff members will not be replaced. 

“Any teacher in their first three years of teaching can be dismissed without cause. Usually, that is because of performance, but it doesn’t have to be,” West High Principal Mitch Gross said. “There were some teachers dismissed because of their performance, but that would happen regardless of the budget crisis. No teachers were simply just ripped to reduce the force for a budgetary standpoint.”

Public Financial Management did a financial analysis of the district’s general fund, Secure an Advanced Vision for Education fund, Physical Plant and Equipment Levy fund and debt service fund. In a slideshow presented to the board April 1, PFM recommended the district borrow $25 million for repaying the health insurance fund after the $10 million interfund loan, replenishing the SAVE fund for June 1 bond payments and general fund cash reserves, assuming a worst-case scenario. 

The district was unable to acquire an outside $25 million loan due to recent years not being fully audited; however, they later stated that updated projects had removed the need for the loan.

“Based on updated information, there may still be a need for future borrowing, but it would be at a significantly lower amount,” Degner stated in a staff and community message.

In this email, Degner also announced that property tax rates would be increasing, but not as much as originally planned. The new proposed property tax rate is $16.70855 per $1,000 of property value. This is $0.60779 more than the current rate of $16.10076. While still an increase, this rate is below the previously planned rate of $17.10131 and lower than the rate in the 2025 fiscal year.

Johnson County resident Kurt Moore has lived in the area since 1956 and has served as treasurer for a union since 1981. At a special meeting March 24, which focused on possible new tax rates when they were expected to be $17.10131, he expressed frustration at the taxes in the area. 

“I [have] lived in my house since 1987. I’d like to die there, but taxes are killing me,” Moore said. “I’m sorry, Mr. Degner, but you should be the one to go. This is uncalled for. And any of these other people over here that were involved with it should go with you.”

At that same meeting, Coralville resident Kim Christiansen blamed the possible increase, which was estimated to be $1.00055 at the time, on financial mismanagement by the administration.

“We are now facing another increase in property taxes, not because we’re funding students, but to cover the mismanagement of this district,” Christiansen said. “Johnson County is one of the most expensive counties to live in. Now, because of mismanagement of the finance team, you’re going to make it worse.”

The district has also received criticism for its continuous spending on construction and land purchases. In June 2022, the school board approved the $8.75 million purchase of the Tyler Building, a former ACT office. The building would be renovated and turned into the district’s Center for Innovation, which hosts the district’s career academies, the Junior Achievement Dream Accelerator,and classes for the district’s two-year associate’s degree program. The $8.75 million price tag did not include the building’s later renovations and the construction of the Dream Accelerator. 

While the Center for Innovation is one of the most visible projects, it is part of a larger-scale series of construction and renovation projects known as the Facilities Master Plan 2.0. This $270.7 million program was originally planned to be completed in 2030 and involved building purchases, school expansions and renovations to many of the athletic and fine arts facilities.

FMP 2.0 was paused after reconciliation of capital accounts found that some incoming funds had been placed into the incorrect account. This required the retroactive approval of an interfund loan from the Debt Service to the Secure an Advanced Vision for Education fund, and revealed that project costs had outpaced revenue. Facilities planning will be revisited in the 2027 fiscal year.

Before being paused, the FMP was entering phase 2.3, which focused on the fine arts and athletic facilities. For West students, this would include soccer field drainage, track replacement, a new field house, upgrades to the little theater, improved baseball and softball fields, auditorium updates and other large construction projects. 

While the FMP 2.0 has received criticism for its high price tag, the funding for its projects is broadly separate from general fund activities. The money used mainly comes from the SAVE and PPEL funds. These two funds are dedicated capital projects funds, meaning they are limited to spending on grounds, construction, purchase of buildings, remodeling, equipment purchases and rent payments for land and equipment. Along with SAVE and PPEL, funding for capital projects is sourced from bond sales and their debt service accounts. 

Since January, many community members have expressed concern and frustration at the district administration.

West High graduate Angie Rogers is a parent of three kids in the district and has spoken at multiple meetings since the loan was revealed. She expressed frustration with the lack of improvement in the district’s situation since cuts were made three years ago.

“What the ICCSD community has seen since September 2023 is not improvement. It is an escalation of the same failures from disorganized financial systems to continued lack of internal controls to a district now facing a reported financial crisis totaling at least 24 million,” Rogers said at the March 24 meeting. 

Multiple community members also called for Degner’s resignation. One of them was Jon Fogarty, who is a West High graduate and current Shimek Elementary School parent. Fogarty currently serves as the board president of New Pioneer Food Co-Op.

“We also use policy government, much like you do. We had to fire our chief executive a couple years ago, and it was really hard to figure out when we’d reached that point in time that we had to make that very difficult decision. You have reached that point in time. You’ve probably passed it. It’s time to fire your chief executive,” Fogarty said.

Former board member Maka Pilcher Hayek has also been vocal about the district’s financial practices. She spoke at multiple meetings, drawing attention to how much district administration is paid and the potential legal implications of the crisis.

“Everything you’re talking about has legal implications. We’re talking about $2.7 million worth of compensation,” she said at a March 24 meeting.

While the district has claimed that it is on the track to financial stability, they are still facing scrutiny from the community. Community members called not only for administration to be held accountable, but for the district to focus on the education of students.

“We need an administration who has our students’ and classroom teachers’ and para-educators’ interests above all else, all else. That defines fiduciary responsibility,” Coralville resident Dennis Visser said. “May I suggest administrative salaries, reviews and adjustments be considered, so that classrooms and/or schools do not suffer?”