DULUTH – The school board unanimously approved its 2020-21 budget Tuesday night after more than two hours of discussions about the $112.7 million general fund plagued with uncertainty due to the coronavirus pandemic.

Officials hedged statements about the balanced budget with the caveat: No one knows exactly what classes will look like in September.

“It was really a challenging time because we have to base almost our whole budget on estimates. Usually we can use history and past experience to help us guide those,” said Cathy Erickson, chief financial officer for the Duluth school district. “We’re stepping into a whole new educational environment where we have to be prepared for a lot of different options, which may have other costs that we’re not prepared for.”

State officials plan to announce whether K-12 students can return school buildings in the fall by the week of July 27. Gov. Tim Walz has already allowed summer school courses to use a mix of in-school instruction and remote learning.

Duluth officials said the district spent hundreds of thousands of dollars providing free lunches and child care this spring in the wake of the COVID-19 outbreak. Duluth also doesn’t have devices for every student in the district, so the extension of distance learning would mean significantly more costs related to technology.

District leaders are hoping an expected $2.3 million in CARES funding, which is not accounted for in the budget, will cover many of those expenses directly related to the pandemic. But Erickson has previously warned the board about using a one-time infusion of money to cover ongoing costs

“It’s not just buying a hotspot, it’s the monthly charge for each hotspot that we would have to consider,” she said. “How long can we continue to do that before we run out of funds?”

Duluth is budgeting a $1.7 million increase in revenue from the current fiscal year due to a 2% increase in its per-pupil funding from the state. Erickson said the district is making projections assuming enrollments will stay stable and based on the Minnesota Department of Education’s handling of funds last spring.

“If we lose students but need to continue to offer the exact same education, we might see a funding gap there that I’m not sure how we would bridge,” she said.

Already the district is seeking to make cuts where it can. Duluth middle schools aren’t planning to offer individual music lessons next year. Denfeld and East High Schools are looking at using technology to combine Spanish 5 classes.

The board also decided by a 5-1 vote to freeze a policy that would change how it allocates compensatory education funding for a year. Board Member Sally Trnka voted against the measure and Member Alanna Oswald was absent due to technical difficulties.

In 2018, the board passed a resolution requiring the district to allocate more compensatory education dollars — which come from the state based on the number of students receiving free and reduced lunches — to the sites that generate them. The funding stream sparked controversy in the past when Duluth residents discovered the district was using the money to keep all class sizes down instead of dedicating dollars to more high-poverty schools.

In the 2019-20 school year, individual schools received 85% of the compensatory education revenue generated by its students. That percentage was supposed to bump up to 90% in 2020-21, according to the 2018 resolution, but district officials asked the board to postpone the change to avoid burdening any one school in a year when finances will already be stretched thin.

Denfeld High School, Lincoln Park Middle School, Myers-Wilkins Elementary and Lowell Elementary will miss out the highest amount of these funds this year, while other schools will continue to receive dollars generated by students at those sites.

“If we do not allow this freeze for one year, then we have to be looking for other reductions to the budget,” Board Chair Jill Lofald said. “And I think we’ve reduced a lot, and I’m not really wanting to put that layer there.”

Nabiha Imtiaz and Phoenix Ocean, who serve as representatives for the district’s high schools on the board, also asked members to consider removing school resource officers. Board members said they expect to discuss the issue in depth at a later date.