The Iowa City Community School District’s School Board is planning to review a previously undisclosed $10 million interfund transfer at its upcoming meeting on Feb. 10, of which the board previously had no knowledge.
An interfund loan is a transfer of funds from one account to another.
In a school board meeting on Jan. 27, board members approved a fund transfer of $10 million made in August 2025. Board members raised concerns about the transfer, saying they were unaware of this transfer and had been making financial decisions with no knowledge of the $10 million difference in available funds.
The loan has an interest rate of roughly 4 percent and needs to be repaid by Oct. 1, 2026. This means the loan will cost the district $394,000 in interest, board member Mitch Lingo said at the meeting.
According to Iowa’s statutory authority for funds, interest must be paid to the state on interfund transactions. Each of the district’s funds generates its own cash flows, meaning interest has to be paid on the loan.
Board member Jayne Finch raised concerns at the January meeting about the loan transfer not being included in the previous quarterly report and how the board has been making decisions with money it did not have.
“The board needs to have an understanding of our financial situation, and the fact that we had to take out a loan does suggest to me that our cash position is not as robust as we thought it was,” Finch said.
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According to the resolution approving the interfund loan, the district was in need of funds in August 2025 to cover anticipated deficiencies in the general fund, which covers daily operating costs such as salaries and instructional material for the district. The loan was approved unanimously by board members at the meeting on Jan. 27.
“Think of the general fund as our checking account,” ICCSD School Board President Ruthina Malone said in an interview with The Daily Iowan. “Your checking account is where you most likely take care of all your day-to-day expenses.”
On Aug. 22, 2025, the district transferred the money from its health insurance fund as a loan to the general fund. Malone said the health insurance fund is acting as a “savings account” in this situation, in which the district may need to dip into to fund other accounts the district has.
“It’s really hard, as you can tell from the conversation amongst board members,” Malone said.
“We were trying to wrap our heads around what the implication of this is.”
Board members at the meeting expressed confusion and frustration over how the loan was taken out.
“If we are a policy-forward board, we need to make sure policies are being followed,” Lingo said at the meeting on Jan. 27.
The last time an interfund transfer was made in the school district was in 2014, Lingo said.
“It’s been over a decade,” Lingo said. “How did we go over a decade without any issue like this, but have one this year?”