The Kenai Peninsula Borough School District’s Board of Education passed a preliminary fiscal year 2018 budget Monday that assumes status quo funding, despite the district’s request of maximum funding from the Kenai Peninsula Borough and Alaska Senate committing to a 5 percent cut to the Base Student Allocations on Monday.
The preliminary budget projects total general fund revenue at $136.7 million with $87.1 million from the state and $48.2 million from the borough. This left the district with a $3.4 million deficit that the FY18 preliminary budget addresses with $2.6 million in reductions and a $1.1 million transfer from its fund balance, according to budget documents.
The budget passed seven to one and is colloquially being referred to “Scenario A,” since the district is expecting revenues to change, Assistant Superintendent Dave Jones said.
The budget also includes a request for maximum allowable funding from the borough, according to budget documents. If the borough assembly agrees, funding to the district would increase by about $3 million to $51.3 million and allow the district to move forward with “Scenario B.” This scenario addresses the budget deficit with the added revenue and eliminates the need for cuts.
Currently, it seems that neither Scenario A nor B will be the end result of budget talks, Jones said. If the Legislature moves forward with a 5 percent cut to the BSA as proposed by the Senate, state funding would be reduced by $5.29 million. Since state funding directly impacts the amount of money that boroughs are allowed to provide, the maximum funding allowed by Kenai Peninsula Borough would be reduced by $1.2 million. The district, then, would face a total potential $6.5 million cut on top of the projected $3.49 million deficit that was addressed in the preliminary budget.
In order for the district to request maximum funding a preliminary budget had to be passed, even though future changes are almost certain, Jones said.
“Maximum funding will go a long way for any situation, regardless of what happens in Juneau,” said Superintendent Sean Dusek. “I personally think it’s unlikely this 5 percent (reduction) will hold, but I have no idea how long it will take for (the Legislature) to work it out. That’s the very unfortunate part, because it puts a lot of uncertainty on our planning and our staff.”
The Alaska Legislature’s 90-day session is scheduled to end in two weeks, but the Legislature can extend the session if a solution to the state’s budget deficit has not been reached.
The borough’s FY18 budget needs to be finalized before the fiscal year begins on July 1.
At a town hall meeting last Saturday, Borough Mayor Mike Navarre said he plans to propose raising property taxes by 0.5 mills and to increase funding to the school district, but exact funding figures remain uncertain.
“It makes it tough to have two revenue sources, the state and the borough, and neither of the revenue sources know what their action will be,” Jones said.
The district administrators and the board members anticipate having to revisit the budget between now and July.
Before passing the preliminary budget, board member Dan Castimore proposed three amendments with the hope of moving funds to reduce the overall pupil-teacher ratio in the district. The amendments included reducing health insurance from the board members, increasing rent to charter schools and reducing the full-time certified employee staffing at Kenai Alternative High School by half. All three amendments failed.
“I find it upsetting that we continue down the same path, where every year we cut teachers, but we don’t look at any of the other things,” Castimore said. “I don’t understand how we can possibly get there. … In the future, I’m going to continue to advocate for these changes and other changes that place a priority on teachers in the classrooms.”
“I can appreciate the intent of all the amendments put forward… but I’m not going to be supporting any of them tonight because I think we’re at the first step of a process of putting forward a budget, basically so that we can request maximum funding from the borough,” said board member Zen Kelly. “We have big changes coming forward and I believe that the discussion for all of these amendments needs to take place with a broader discussion when we have some final numbers. I think there are going to be larger things to tackle.”
In Juneau, the Senate Finance Committee is honing in on education, which is one of the four major budget drivers, to address the state’s budget deficit, Sen. Lyman Hoffman (D-Bethel) said at a press conference Monday.
He said the Senate is looking to reduce the education budget by cutting BSA by $69.3 million with the 5 percent cut.
“Education is taking up over 30 percent of undesignated general fund dollars, so it’s huge when you hold that large of a department harmless,” said Sen. Anna MacKinnon (R-Eagle River).
During the Board of Education work sessions on Monday, Dusek expressed his concerns that educational funding is being used as a political negotiation tool between the Republican majority of the Alaska Senate and the Democrat majority of the Alaska House.
The House passed a budget in mid-March, which maintains a status quo to educational funding, and is moving forward with plans to fund the FY18 budget with oil taxes and an income tax.
In contrast, the Senate’s budget utilizes budget cuts, including the 5 percent to the BSA, and a restructuring of the earnings of the Permanent Fund to fill the budget gap.
Kelly and board member Penny Vadla phoned in to the work session meetings from Juneau, where they have been speaking with state senators about the proposed cuts.
“There’s a lot of posturing going on right now. We’re being assured by several senators the 5 percent won’t ever stick, that it won’t happen,” Kelly said. “We’re hearing that maybe 2 percent is what it will end up being… but it makes me want to take this 5 percent that they’ve put out there and use that to rally the troops.”
Board member Tim Navarre said that the district shouldn’t be “a pawn in the Legislature’s games.”
“They’re not cutting the quantity, they’re cutting the quality,” Navarre said. “You can’t cut your way out of this, and if they are going to cut education we need to stand up.”
Navarre had recommended that the board send a letter to the Legislature regarding education funding at Monday’s meeting, but the motion failed.
“If we have that cut, we’ll make things work,” Vadla said. “Yes, we’re going to surive, but what is survival? We’ll make it happen, but it won’t be at the quality we all want.”
Reach Kat Sorensen at firstname.lastname@example.org.