Finance, Facilities, and Potential School Closures

Approximately 80 percent of Little Falls’ revenue arrives via the State of Minnesota. The remainder is split between the local operating levy and various federal allocations. That heavy reliance on state aid makes the district especially sensitive to statewide funding fluctuations.

Little Falls Community Schools is on a trajectory to fall into Statutory Operating Debt unless decisive action is taken. This forecast is built on existing revenues and expenditures only—any future legislative changes could tighten the margins further—so the district must act proactively rather than wait for the state to intervene.

Budget gaps became clear during Superintendent Greg Johnson’s transition in June 2022. By spring 2023, the strategic-planning process identified three key priority areas to address within “Finance & Facilities”:

1. Develop and implement a comprehensive plan to ensure financial stability
2. Develop and implement a comprehensive facilities plan that addresses the district's needs for the next 5-10 years while ensuring safe, secure, and future-ready facilities
3. Enhance safety and security for all students and staff across school settings

The district “right-sized” staffing by leaving many retiring positions unfilled and eliminating others outright. Administrative roles such as Assistant Superintendent, Director of Teaching & Learning, and Transportation Director were cut, along with two instructional-coach positions, a teacher on special assignment, and a technology support specialist. Athletic and activity budgets were also trimmed. Collectively, these moves saved more than $3.5 million.

The district has considered several options, including closing schools, transitioning to a four-day school week, exploring additional budget reductions, selling district property, conducting energy use audits, entering into shared service agreements, and expanding online learning opportunities. Some of these options will only result in one-time cost savings. Other options will continue to be researched, including how to increase district revenues through enhance communication and marketing efforts, actively pursue grants to support and expand programs while easing budget pressures, and exploring a potential partnership with Mid-State Education District to help reduce special education costs. However, none of these options offer the continued significant budget impact that closing a school provides.

Minnesota’s birth-rate slide—down nearly 21 percent from 2007 to 2022—means smaller incoming kindergarten cohorts each year. Coupled with regional population shifts, this demographic trend steadily erodes enrollment and, by extension, state funding.

Despite earlier cuts exceeding $3 million, the district is running out of low-impact ways to balance the budget. With enrollment one-third lower than in 2000 and five schools still open, the fixed-cost burden is unsustainable. Closing a school could help trim costs enough to postpone asking taxpayers for additional levy support.

Eliminating a building cuts fixed costs—utilities, maintenance, custodial staff—while consolidating instructional resources. Fewer facilities also streamline transportation routes and capital-investment needs, producing a compounding efficiency effect over time.

Closing Dr. Knight would save over $1.1 million annually in staffing, utilities, and maintenance. Closing the middle school could yield an additional $600,000 – $1 million.

The district has explored the possibility of an operating levy, which would generate additional revenue by increasing property taxes. However, the amount needed to close the budget gap would result in a substantial tax increase.
For example, a homeowner with a property valued at $275,000 would see an increase of nearly $50 per month in property taxes. Based on results from our recent community survey, there is not sufficient support from local taxpayers for a levy of this magnitude.

In 1994-1995, five schools served over 3,500 students. Today enrollment has fallen to roughly 2,300, yet the district still maintains the same number of facilities. Consolidating to fewer schools would let the district concentrate staff, reduce duplicated services, and free dollars for programming rather than building operational costs.

In Minnesota, closing a school requires a public hearing in which the school district presents the "necessity and practicability of the proposed closing." The public hearing is scheduled for Monday, June 23 at 6:00 p.m. in the Little Falls High School Auditorium.

If the board moves forward with action, a decision regarding the potential closure would take place at the next regular School Board meeting on June 30 at 5:00 p.m. at the District Office.

Dr. Knight Elementary’s per-student staffing cost exceeded the district average by $6,145 in 2021-22 and $2,767 in 2024-25, underscoring its comparatively high operating expense.

The current average class size at Dr. Knight Elementary in Grades Kindergarten through 5 is 18.6 students. At Lindbergh and Lincoln combined, the current average class size is 23 students. If Dr. Knight were to close, the average class sizes at Lindbergh and Lincoln would remain unchanged at 23 students.

If the middle school closes, a potential partner has already expressed interest in leasing or purchasing the site. Should Dr. Knight close, the district would collaborate with the City of Randall and residents to repurpose the facility in a way that benefits the community—options could include a community center, childcare hub, or economic-development space.

While the 2016 referendum did invest nearly $3 million in the building to address mold and indoor air quality issues, those upgrades were necessary at the time to protect the health of students and staff and preserve the building from condemnation.

The east building houses gymnastics, Community Services offices, and the district board room. The west building supports 16 staff members across administration, human resources, special education leadership, finance, and technology services. Concentrating these programs on one campus maximizes space utilization and reduces overhead.