Budget: More than numbers

Posted: Friday, June 07, 2002

The out-of-focus picture that is the Kenai Peninsula Borough School District budget is a little clearer, thanks to the approval of legislative funding for schools.

The school board tentatively approved a balanced budget for the 2002-03 school year Monday night. The new figures reflect guaranteed revenue to the school district, including an addition of about $2.1 million in state funding -- $1.7 million in Learning Opportunity Grants and $400,000 for district operations.

The budget is only tentative, however, because until a final contract is approved for teachers and support staff workers -- whose salaries and benefits use up about 85 percent of the district's general fund -- the district's expenses are uncertain.

But even without those final numbers, the developing picture is bleak.

The current budget proposal is based on a school board approved projection of 9,725 students for the 2002-03 school year. The district ended this year 59 students short of that projection.

On paper, the situation looks stable.

The special fund portion of the budget -- which comes from specially designated grant money for programs such as vocational education, the After the Bell program and remedial education specialists -- is perfectly balanced at about $15.5 million. And the new state money means the general operating fund balances at about $76.5 million.

One problem, though, is that some of those funds are specially designated, so the district cannot necessarily use the money where it needs it, said Melody Douglas, the district's chief financial officer.

For example, the Learning Opportunity Grants will come with very specific use criteria. At present, the money has to be written into an instructional department "other" account until the district receives the state's criteria for the grants. Then the district will have to develop a new budget for the grant money and submit it to the state Department of Education and Early Development for approval.

Douglas also noted the money was guaranteed for one year only, so its use in the budget is even further limited.

Another problem with the current 2002-03 budget is that it does not reflect any possible changes to teacher and support staff salaries and benefits that may result from the ongoing contract negotiations.

The budget is based on the district's initial plan to freeze employee salaries, Douglas said.

The district was able to offer an early retirement option, planned for next year, in February though, freeing up about $700,000 in the 2002-03 budget.

That $700,000 should just about pay for reinstating salary "steps" -- or annual raises based on years of service -- for employees.

The Kenai Peninsula Education Association and Kenai Peninsula Education Support Association have asked for more dramatic increases, though, arguing the district could rearrange its budget priorities.

Douglas said that just isn't true.

The district general fund is made up of federal, state and borough money. Federal money makes up about $175,000 of the fund, while state money, which has been decreasing over the past several years, makes up about $42 million. The borough contributes the other $31 million, funding the district at the maximum level allowed by state law.

The district has investigated more drastic budgeting options, such as closing schools, cutting extracurricular activities for students and increasing the teacher-student ratio in classrooms. However, according to a report recently released by the superintendent, the investigation has found that these measures save little money and cost more in the well-being of students in the district.

And, Douglas said, with employee compensation making up about 85 percent of the general fund expenses, cuts to other areas would not make a significant difference.

"I really don't think there's very much money because of the limitations," she said. "We have fixed costs."

In fact, the district has increasing costs. Fixed salary steps for employees mean the district payroll expenses increase each year. Inflation drives up the cost of electricity, textbooks and other basic operating expenses.

In the meantime, the district faces rapidly declining enrollment, Douglas said. The district receives funding based on the number of students in the schools. For several years, enrollment -- and thus funding -- has been dropping.

That means the district has been forced to cut positions, from teachers to secretaries to specialists, year after year. This year is no exception. (See related stories, page A-1.)

And the future is not looking brighter.

The current budget proposal is based on a school board approved projection of 9,725 students for the 2002-03 school year. The district ended this year 59 students short of that projection.

"That's going to be a problem," Douglas said.

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