The Duluth School District now faces a $6 million deficit.
This comes after changes to how the district's compensatory educating funding is distributed.
In January, the board approved a resolution calling for schools to keep a minimum of 80 percent of the comp ed funding they generate.
The rest would be used to maintain standardized classroom ratios.
Schools generate the funding based on how many students take part in the federal free and reduced-price lunch program.
With the cost shift, the district now needs to make up $3 million in addition to the current three-million dollar deficit.
The district's CFO says the district is making progress in an effort to cut the deficit.
"We believe that we have identified perhaps up to $3.5 million of opportunities within our budget that we can reduce existing budget line items," says CFO Doug Hassler.
Hassler didn't specify what those opportunities are.
The board is expected to approve a new budget in June.