While facing a substantial deficit, the Kenai Peninsula Borough School District passed a $137.3 million budget for fiscal year 2012 at its Board of Education meeting Monday.
"I certainly am supporting the budget but it makes me real nervous for us to use our fund balance in the amount of $3.5 million," said board member Sammy Crawford, of Kalifornsky Beach.
The district's general operating fund budget for 2012 falls short of the district's anticipated revenue streams.
Last month, the Kenai Peninsula Borough Assembly passed a resolution setting the minimum funding for the school district at $43.2 million, which is how much the borough chipped in last year. With collaboration from the school board, the assembly made this decision earlier than in previous years, which gives the district a better idea during its budget process.
Next year's budget is some $8 million greater than that of FY 2011, said Dave Jones, assistant superintendent for the district.
He said the increase was anticipated due to the cost of fuel and negotiated agreements with staff.
But, what wasn't anticipated this year was the closure of the ConocoPhillips-Marathon Liquefied Natural Gas Plant in Nikiski, health insurance policy changes that require coverage for employee's adult dependents, and a large increase to the transportation service proposal from First Student to operate school buses, he said.
At this point, Jones told school board members during a work session prior to the meeting, the closure of the LNG plant should not affect school enrollment numbers.
"We did the same thing when the Agrium Plant shut down," he said.
Principals talked to parents to find out how the closure would affect their families.
Those who lost their jobs are being absorbed into other areas of Alaska's oil industry, like on the North Slope, according to Jones.
The district still doesn't know how the closure will impact the support industry, the contractors that provide maintenance services to the plant.
If there are substantially low numbers in the fall, Jones said, the district would look at staffing needs then.
Health insurance "is an area we still have concerns," he said.
"We increased the budget over a million dollars from this year to next year already," Jones said.
And the district does not know what those increases will mean for the future.
"One safety factor with health insurance was we have some of our reserves designated to health insurance," he said.
In terms of transportation, the district's five-year contract with First Student was up this year and it sent out a request for proposals.
"We ended up receiving one bid for transportation," Jones said.
It was from First Student.
"Their original bid to us would result in an increase of $700,000," he said.
The bus company offered an alternative bid but it would still increase the district's expenses by some $300,000.
"We're in the process of trying to negotiate with them and determine what we have as a need for number of buses, routes for next year," Jones said. "Bottom line is we're still going to have a substantial increase."
Jones urged the school board to move forward with the budget even though there were large uncertainties with the transportation.
"In July you'll be hearing back from us. By then we'll know what the Legislature did and if we got some money, and where we're at with transportation," he said.
Board member Marty Anderson, who represents Sterling and Funny River, said he thinks it's important for the borough to know why the district maintains a fund balance, given the decreasing throughput of the trans-Alaska pipeline.
"In the past few years we've been beat up for having a fund balance," he said. "I think this year is an important year to show how important it is to be educated on our economy and how quickly things can change," he said.
"Not having a fund balance is irresponsible at best," Anderson added.
Board member Tim Navarre, of Kenai, said he was in support of using the fund balance this year because of the positives it means for the district like programmatic staffing. "I'm prepared to support budget but I'm not prepared to not fight the borough for additional funding," he said.
Jones said the district is hoping the state Legislature will provide additional funding for the district, but in order for that to happen parents are going to need to call their representatives if they like what the district has been doing.
Assemblyman Hal Smalley, who spoke during the public testimony portion of the meeting, also implored the public to call their assembly representatives if they want more funding for education.
"I know the floor figure that was given early is a good start," he said.
But there's always the "power of parent persuasion."
The assembly began its budget discussions at its meeting Tuesday.
Brielle Schaeffer can be reached at firstname.lastname@example.org.
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