With Bankruptcy Looming, Iowa District Receives Unprecedented State Bailout

By Robert C. Johnston

Facing $10.6 million in unpaid bills and the threat of bankruptcy, the Waterloo, Iowa, school district has received an unprecedented bailout from the state.

The state's School Budget Review Committee voted last month to give the 11,000-student district authority to spend an additional $7.5 million in state education funds this school year--the state's largest school bailout ever.

The state also gave the district permission to spend extra money over the next five years, but the annual allotment of $1.5 million is far less than the northeast Iowa district had sought. In return, the district has agreed to trim its budget, which is...