The Kenai Peninsula Borough School District is facing a $17 million deficit, can’t count on an increase in funding from the state, and isn’t sure it’ll get the level of funding it has asked the Kenai Peninsula Borough for. That’s what members of the Board of Education said Monday as the group voiced its intention to advance a budget that describes significant reductions in staff and programs while assuming a $680 increase in per-student funding from the state.

At a budget work session on Monday, KPBSD Board of Education President Zen Kelly said he would ask the district’s finance department to construct a draft budget that describes the elimination of elementary school counselors, small school counselors, Quest teachers, counseling assistants, student support liaisons, pool managers and theater technicians.

The draft budget, based on one of three scenarios already compiled by the KPBSD finance committee, chaired by Kelly, would also describe cuts to staff for distance education, at Kenai Alternative High School and Connections Homeschool, in the district office and in the district’s warehouse. There would also be significant cuts to the Kenai Peninsula Middle College School, and the elimination of all stipends for extracurricular sports and activities.

The staffing formula for all the district’s brick-and-mortar schools, whereby each school is staffed at a level defined by its student population, would see the pupil-to-teacher ratio increased by one. That change would result in a reduction of nearly $1.2 million in teacher salaries and benefits.

The district will submit a balanced budget to the borough by the end of the month. Kelly said that as the borough and the state provide answers about funding, the board will be able to adjust the budget before the start of the next fiscal year. All the budget scenarios include significant changes to the way the district has operated in recent years and to student programs.

A question of numbers

KPBSD Superintendent Clayton Holland spelled out the challenges facing the district during a meeting of the board on Monday.

The current fiscal crisis, being faced by the KPBSD and by districts across the state, like in Anchorage, Fairbanks and Juneau who all have closed or will close schools this year and last in the face of massive deficits, is a result of stagnant funding from the state, Holland said. School districts receive per-student funding from the state, the base student allocation. That value is currently set at $5,960 and has increased by only $280 since 2011. Holland said that if the BSA had kept up with inflation, it would be $1,808 greater.

The school district doesn’t know how much money it will receive from the state, which is currently considering House Bill 69 that would increase the BSA by $1,000. That number could be changed before passing the Alaska Legislature, and could be vetoed by Gov. Mike Dunleavy either way. There aren’t any other bills currently being considered that would add significant funding to schools.

Rep. Justin Ruffridge, R-Soldotna, said last month he didn’t expect the school funding conversation to resolve until the end of the legislative session in late May. The district has to submit a balanced budget to the borough by the end of April.

In the face of uncertain funding from the state, the school board’s finance committee has assembled three budget reduction scenarios reflecting different amounts of state funding. The most generous scenario reflects a $1,000 increase in the BSA — like the bill currently being considered by the Legislature. Other scenarios describe a $680 increase, like they received last year in one-time funding from the state, or a $340 increase.

Kelly said the challenge facing KPBSD and other districts is a failure to properly fund education by the Legislature and by Gov. Mike Dunleavy. He pointed to the $1,808 increase in the BSA needed to match the buying power the district had in 2011 — that’s not the number on the table in Juneau. Instead they’re looking at only $1,000, and Dunleavy has already said he doesn’t support that number. Rep. Sarah Vance, R-Homer, reposted Dunleavy’s statement in opposition to the increase with a “Ditto” on Facebook.

Questions as to what policy differences could earn support from legislators and the governor, Kelly said, have gone unanswered. Last year, a permanent increase to the BSA of $680 was included in a Senate bill that passed the Alaska Legislature. Dunleavy vetoed the bill and an override attempt failed on a single vote. Kelly said another veto “would not surprise me,” if HB 69 were to pass the Legislature.

There are also other challenges facing districts and draining resources and funding, like similarly stagnant transportation funding that isn’t able to cover the routes KPBSD once offered, deferred maintenance that leaves schools with utility and structural issues, and staffing vacancies across the state driven in part by fiscal uncertainty. Holland said KPBSD right now is withholding contracts from nontenured teachers until they can understand how much money to rely on, “by the time we’re done with this, we’re in May and June and we’re looking for teachers that don’t exist anymore.”

All three of the district’s draft budgets are designed under the assumption that the borough government will fund the school district to the maximum allowable amount. That isn’t guaranteed, didn’t happen last year and wouldn’t align with Kenai Peninsula Borough Mayor Peter Micciche’s stated budgeting plan of 2.5% annual increases to borough departments.

School closures

Newly added to the budget reduction document this week is the closure of Nikolaevsk School in all three scenarios. That comes after a community meeting in Nikolaevsk last week where district leadership said that an increase in enrollment could help reverse the school’s outlook — Nikolaevsk parents are planning an event Friday evening to collect letters of intent to enroll in the coming school year.

Kelly said Monday he doesn’t know what number of students would be necessary to prevent the closure — “it would take a significant amount.” Still, he said, a general budget vote would not be the move that closes any KPBSD school.

“While I am chair of this board, we will have a specific vote dedicated to either closing or keeping a school open,” he said. “I don’t think it’s fair to wrap it in with everything else. I think it deserves its own vote.”

Such a vote, he said, would “probably” be held at the May 7 meeting of the board.

Closure of Sterling Elementary is also included in the $340 scenario. Conversations about school closures, especially in Soldotna, are largely contingent, Holland said, on the ongoing work of a steering committee to develop a plan for combining Soldotna schools. The steering committee has been holding closed-doors meetings in recent months.

If a $1,000 increase to the BSA were to come from the state, the budget scenario wouldn’t include some of the cuts described in the $680 budget scenario. Most pools and theaters would remain open, many of the cuts to teaching staff would not be implemented, and extracurricular stipends wouldn’t be eliminated, among others.

Kelly said that the district cannot afford to keep pools open, and “it is the intent of the district” to work with “any entity” to keep pools open in communities like Seldovia and Ninilchik.

Uncertain path forward

Members of the board said they were frustrated by the state of the budget.

“I am not for any of these cuts,” Virginia Morgan said. “I don’t think any of us are.”

Crafting a budget, Kelley Cizek said, is challenging when each cut program has students that rely on it who are directly impacted. On Monday, the board was faced with an outcry of support for the district’s Quest program for gifted students.

“I’m kind of at a loss as to what exactly is the path forward,” she said. “I know that we’re not going to be able to do this cut without really hurting groups of people that will have long-term effects.”

The position the district is in, Holland said, is making hard decisions, including closing schools and programs, to protect other programs and positions.

“The school board is in a no-win situation,” he said. “There is no answer that is right … No matter which direction we go, there’s somebody impacted, one way or another. A lot of somebodies.”

Ahead of the April 30 deadline to submit the budget to the assembly, the school board will hold a special meeting April 23 to approve the preliminary budget, based on the $680 scenario. The assembly will meet May 6.

The full budget reduction scenario document, and records of board and finance committee meetings, can be found at the KPBSD BoardDocs website.

Reach reporter Jake Dye at jacob.dye@peninsulaclarion.com.

Kenai Peninsula Borough School District Superintendent Clayton Holland speaks during a meeting of the KPBSD Board of Education in Soldotna, Alaska, on Monday, April 7, 2025. (Jake Dye/Peninsula Clarion)