The Dixon Public Schools District 170 Board has unanimously approved its fiscal 2026 budget, which projects a $1.7 million deficit largely due to a $4.6 million drop in federal funding.

District 170 Business Manager Marc Campbell is pointing to several factors for the deficit, including reduced state funding, rising health insurance costs and overestimated salaries. In school districts, a deficit budget means planned spending exceeds expected revenue. While the goal is to balance the budget, Campbell said, “it’s not necessary that we balance it immediately.”

“We’ll be looking for cost-saving opportunities to reduce that deficit over the next several months,” he added.

The district adopted a deficit budget for fiscal 2025 as well but balanced it by year’s end.

Federal funding is the biggest driver of the current shortfall. The district estimates that it will receive about $2.6 million in federal funds for fiscal 2026, down 63.6% from $7.3 million in 2025. The loss mainly reflects the end of Elementary and Secondary School Emergency Relief funds, which provided almost $5 million to District 170 during the pandemic to help schools address COVID-19 measures.

“For the last four years we’ve been receiving ... millions of dollars [a year in ESSER funds],“ Campbell said. “All of our revenues had that money in it as well as our expenses.”

Additional losses include cuts to Title I funding – grants targeting high-poverty schools, teacher quality and technology programs.

Federal budget proposals for fiscal 2026 call for steep cuts to these programs. One plan would combine 18 programs, including aid for rural schools and at-risk youths, slashing funding from about $6.5 billion to $2 billion. Another proposal seeks to cut Title I funding by about $4.7 billion.

“The good thing is we have cash reserves,” Campbell said.

The administration is exploring cost-saving measures, such as evaluating the purchase of laptops versus Chromebooks. However, staffing cuts are off the table for now.

“We have rules as it relates to cuts and staffing. The people that we have on staff right now won’t be released throughout the course of the year,” Campbell said. “As a general overall plan, we’ve identified approximately 15 different targeted approaches that we will implement or recommend to implement over the next three to five years.”