ELY — When the Ely school board hired an engineering firm last year to design improvements to the district’s athletic facilities, board members were emphatic: the project could not exceed the $5.25 million state grant funding it.
“We don’t have $5.25 million and one dollar to spend on the project,” board member Tom Omerza said at the time.
That ceiling held until the bids came in.
Superintendent Anne Oelke disclosed at the March 23 study session that the district received two construction bids for the project, and both came in well above the limit. The lower bid was approximately $6.4 million. The higher exceeded $7 million. SEH, the engineering firm the district hired to design the project, had projected construction costs at around $4.8 million.
“This district cannot go one cent over that,” Oelke told the board. “We don’t have any money to put into anything that goes over.”
The gap between SEH’s estimate and the low bid caught the facility team off guard, and SEH is now in negotiations with the low bidder to understand why specific line items diverged so significantly from projections. Under state procurement rules, the district must work with the lowest qualified bidder on a public bid process.
The district’s facility team has already begun meeting with SEH to identify what elements of the project scope can be eliminated to bring costs within the grant limit. A follow-up meeting is scheduled for March 30.
The situation echoes concerns board members raised when they approved a $395,560 contract with SEH in 2024 to design the project. At that meeting, board member Tony Colarich specifically asked SEH project manager Jason Chopp about cost monitoring procedures.
“As far as how we’re watching the numbers ... you’re monitoring the draws, you’re monitoring things. And if you see something, an issue, we want a ‘raise it right now’ type thing, not one month before the project’s supposed to be done and the money’s gone,” Colarich said then.
Chopp had assured the board that the design would include bid alternatives that could be removed if costs ran high, and that preliminary cost estimates would be provided at each design phase before going to bid. 
“If we need to, we have room to expand or reduce, and we can do that before we go to bid,” he said.
The district now finds itself in exactly that position.
The $5.25 million comes from an Iron Range Resources and Rehabilitation Board bond funded through state mineral tax legislation, money given to the district that carries no local tax burden but also cannot be supplemented with district operating funds. The athletic facilities project is entirely separate from the budget pressures driving the district’s consideration of a four-day school week.
Oelke said the facility team’s goal is to present the board with recommended scope reductions at the April 13 regular board meeting. What specifically gets cut from the project remains to be determined.
“We are line-iteming everything out,” Oelke said, “and starting to make preliminary conversations about what might have to come out.”