Borough Mayor Dave Carey is calling on the school district to offer a greater level of honesty and transparency in their use of savings, or fund balance, if the district wishes to receive full financial support from the borough next year.
"The public has a right to know the fund balance policy, the school board has a requirement to put into policy what is their fund balance policy, they have not," Carey said Thursday.
Carey's remarks came after he outlined his budget plan on KSRM radio on Wednesday, calling for a reduction in the borough mill rate and changes in the way the borough funds the school district.
Carey on Thursday argued that the school board must put in place a district policy on its usage of the fund balance to receive his support. Carey is referring to the current money the school district has set aside in the general fund fund balance
"As we are asked to provide $43 million of the district's funding, we have every right to say, 'What other groups of money do you have to assist in that?'" he said.
The district has asked the borough to support their fiscal year 2010 budget and fund it to the "cap," the maximum amount local government may contribute to the district budget, according to state statute.
This year that amounts to a little over $43 million, or approximately 35 percent of the district's entire budget.
Carey said he believes the district has been reluctant up until recently to share information regarding the amount they have in savings.
"Up until a week ago the school board was not admitting they had a surplus," he said.
"They give us a budget, they say that we need this, we give them everything they ask for right to the cap because they say that's what they need. Now to find out, and its been greatly increasing the last few years, there's $9 million more that they've been holding on to," Carey said.
Melody Douglas, chief financial officer for the district, said that presently the district has $19 million in its general fund fund balance. She explained that $9 million of that is in reserves per state statute, while the remainder is designated for facility maintenance, charter schools, FY09 maintenance, interest fluctuations and the district's technology plan.
She also noted that information on district's budget is all available for public viewing on the district Web site.
District administrators said that while the school board does not have a written policy on the use of the fund balance, it has been the school's prerogative in the past to use that money for emergency purposes.
"I would offer that we have statute and regulation and that we have an established practice and that it is understandable. The fact that we don't have narrative word written down in an actual board policy is not nearly as troublesome as one might expect," Douglas said.
Dr. Donna Peterson, district superintendent, said the amount in savings could easily be wiped out by any of the unforeseen circumstances it is being set aside for.
"The way I look at it is, the amount of money we have in savings is minimal in our budget. It's more than we've had in the past, but far les than any business should have in savings," she said.
"It would take only a few things to wipe that out, like a couple months on increased healthcare costs, a rise in energy costs or if we miss the enrollment projections for next year. If we miss it, there goes the fund balance. Gone. It is not prudent to not have funds set aside," she said.
Douglas echoed Peterson on those sentiments.
"We're in the middle of a collective bargaining process right now and that will generate additional costs to the district," Douglas said
She noted the district already has allocated $1.23 million of the available fund balance for its FY10 budget and will likely use more, pending the results of the negotiations.
Carey shot back however.
"Our (the borough's) power to tax is particularly to safeguard against emergencies. The state has emergency money and so for the school district to say they must keep millions of dollars stored away for emergencies is not appropriate when it is the responsibility of the borough and it is the responsibility of the state to deal with those emergencies," he said.
He also noted that he was not concerned necessarily with the amount the district had stowed away, but what the policy governing its use was.
"I don't know if they have too much, but I do know, they need a policy," he said.
Carey said he also discussed lowering the mill rate with Central Peninsula Hospital Service Area Board President Neal DuPerron.
In a meeting last week, the two talked about lowering the current rate of .9 mills to .7, DuPerron said in an interview Thursday. He estimated a savings of $800,000 to the taxpayers, should the assembly approve the decrease.
"When we can, we should lower the mill rate," DuPerron said. "We have the ability and it makes sense to."
DuPerron said should the rate be reduced to .7 mills, the service area would still have between $1.4 million and $1.5 million in its fund balance, remaining above the minimum requirement of $1.3 million.
DuPerron said in his six years on the board, he's always advocated for lowering the mill rate whenever possible.
He said the timing is right because the service area has sufficient funds, the hospital has a healthy fund balance and lowering the mill rate would save taxpayers money.
"My philosophy going into the budget this year was to prudently look at all spending," Carey said Thursday. "Look at all areas of which we could appropriately reduce government, that we could become more efficient in government and that we provide oversight for all of the revenues and expenditures that the borough has responsibility for.
"I'm looking at the fund balance for the unused, available funds," Carey said. He said both he and DuPerron agreed on the rate of .7 mills to lower the tax burden on residents.
The proposed reduction would cut the amount received for Central Peninsula Hospital from $3.5 million down to $2.7 million, said Ryan Smith, chief executive officer of CPH.
He said he first heard about the proposed mill rate reduction after reading the mayor's comments online at KSRM's Web site. Smith e-mailed Carey, indicating his willingness to talk with him and DuPerron about the subject. Smith took no official position on reducing the mill rate as he said he wants to meet with Carey and DuPerron before commenting.
Smith said mill rate revenue pays for principle interest on bond payments as well as for capital equipment and operational expenses. Should the rate decrease, he estimated the latter would be impacted.
Carey also spoke of reducing and possibly eliminating funding for all non-departmental groups.
The non-departmental category of the borough's budget is comprised of non-profit organizations, such as the Kenai Watershed Forum, the Kenai Peninsula Economic Development District, Central Area Rural Transit System, Small Business Development Center and Kenai Peninsula Tourism and Marketing Council. The borough has funded these organizations in the past.
"We have had meetings with every single non-departmental," Carey said. "They have been afforded and taken advantage appropriately of providing us with documentation of how their money is used and how they feel it affects the overall quality of the borough."
Executive Director of KPTMC Shnon Hamrick has met twice with the mayor and said he's given her no indication that he intends to provide any funding to KPTMC.
"We're really taking a wait-and-see attiude right now," Hamrick said. "I think we've done what we can at this point."
Jennifer Beckmann, CARTS executive director, said she doesn't know whether or not funding for CARTS will appear in the mayor's budget. During the meeting, she said both her and Carey discussed their side of the issue.
"Now we have to wait until the budget comes out to see where we're at," Beckmann said.
"It was pretty clear he's looking for all opportunities to cut the budget," said Robert Ruffner, executive director of the Kenai Watershed Forum. "We just have to wait and see what the mayor's budget approves."
Kenai Watershed did not request borough funding, but has been approached by the borough in the past to assist it with projects, Ruffner said. He said should the borough need future assistance, we'd be happy to help.
Carey said he plans to request funding made available via Homeland Security grants to create a north peninsula emergency shelter.
The former Nikiski Elementary building, located at the North Peninsula Recreation Area, would house the proposed shelter. The shelter would provide food and beds in the event of a major fire, natural disaster or an industrial event that could potentially separate North Roaders from the rest of the peninsula.
Carey said the shelter would also enhance economic life to Nikiski as it would provide jobs to local workers.
Carey said the shelter could also be used to accommodate borough employees due to overcrowding at the borough building in Soldotna.
Mike Nesper can be reached at firstname.lastname@example.org. Dante Petri can be reached at email@example.com.
Peninsula Clarion © 2016. All Rights Reserved. | Contact Us