There are a lot of “ifs” in the fiscal year 2014 preliminary budget presented to the Kenai Peninsula Borough School District’s Board of Education Monday.
If the Legislature fully funds the governor’s budget, just over $1.7 million in one-time funding will help cover a portion of the district’s projected deficit.
If the Kenai Peninsula Borough decides to allocate the school district an additional $1.6 million over last year’s budget appropriation, that will also cover a portion of the district’s deficit.
Finally, if the Board of Education voted to approve the budget, an additional $1 million would be pulled from unassigned general fund balance — essentially school district savings — to cover the remainder of next year’s deficit and result in a balanced budget.
If the borough does not allocate any additional money, $2.6 million will be pulled from the district’s fund balance to cover its budget deficit for the upcoming year.
And, while the board ultimately approved the preliminary budget — despite having previously stated it would only use a maximum of $1 million in fund balance to cover next year’s deficit — Assistant Superintendent Dave Jones said it is not a good idea to rely on savings to cover budgetary shortfalls.
“That fund balance, once you spend it, you don’t have it to spend again,” Jones said. “... The best way to spend unassigned fund balance is to spend it on one-time type of expenditures, not recurring expenditures. The problem with our deficit right now is, it includes recurring salary and benefit kind of debt.”
If the district spends fund balance to pay for that type of recurring expense this year, it will very likely need to pay for those expenses again, Jones said.
When the district runs out of unassigned fund balance — about $6.8 million at the beginning of the year, Jones said — it will have to make cuts.
“We used a significant amount of fund balance last year,” Jones said. “Our overall fund balance last year decreased by $2.9 million.”
The school district’s budget, as passed by the board Monday evening, contains the same programs and same staffing formulas that the school district currently has and stands at about $149 million. It will be presented to the borough at the April 16 assembly meeting.
From there, the borough has 30 days to respond to the school district with an amount that it will fund.
Borough Mayor Mike Navarre said the borough is waiting to present its own budget to the assembly some time in May and it has not yet decided how much money will be allocated to the school district.
“Since it has a big impact on our budget too — since it’s a significant portion of our budget — we’re sort of waiting to see what the state does with their budget process,” Navarre said. “If they put more money in at the state level, then it reduces the need for the borough to come up with the difference.”
Navarre said once the borough tells the district how much money it will be receiving, it cannot go lower than that amount.
“Once they formally request funding from the borough, we’re supposed to pass a resolution (with) how much we’re going to provide them,” Navarre said. “If we say we’re going to give you $44.5 million and the state comes in with an addition $1.5 million we can’t (just) give them $43 million.”
The borough can, however, tell the district it will fund at the same level it did last year and then choose to allocate more money at a later date.
Navarre said it was likely that the state’s budget would be finalized within the 30-day window the borough has to respond to the school district, so the borough would have an exact amount of state funding being awarded to the school district before presenting its own budget to the assembly.
“We will know what the state is going to provide and we’ll just give them the amount that’s necessary to provide for their budget needs,” Navarre said.
If the state does not appropriate any extra funds to cover all — or a portion — of the district’s deficit, Navarre said the borough would likely step in and cover some of the costs.
“We recognize that there’s cost increases ... because of salary increases and utility cost increases and things like that,” Navarre said. “It is our single biggest funding item at the borough and it’s a priority.”
Rashah McChesney can be reached at firstname.lastname@example.org.