The 33rd Alaska Legislature wrapped up last week, and included among its bills a $175 million, one-time funding boost for schools. That, and other education funding passed during the session, could prevent education cuts in the Kenai Peninsula Borough School District.
That one-time funding is the equivalent of $680 per student — an increase that almost passed as a permanent change earlier this session, but was vetoed by Gov. Mike Dunleavy.
Kenai Peninsula Borough School District board members and administrators advocated strongly for a permanent increase, pointing to a $13 million deficit and a looming deadline to secure contracts for the following year. Ultimately, the board constructed three budget scenarios, accounting for different potential amounts of state funding.
The board temporarily passed the one that included no increase. That budget used 100% of unassigned fund balance, or the district’s savings, and still made almost $8 million in cuts.
“We said look, we’re gonna put out scenarios, and these scenarios dictate our needs from the state, and the borough,” said Zen Kelly, president of the board of education, and the chair of its finance committee. “So it’s kind of like, you can see what’s gonna happen if we don’t get this funding. It’s not an all-or-nothing deal.”
He said the state’s operating budget as currently passed would bring $11.4 million into the district. That allows for the school board to make no cuts, and only rely on about $2.4 from its fund balance.
“So that would be very helpful if that survived all the way through, and I know the governor has said he is favorable to an increase to educational funding,” Kelly said. “Whether it’s that much or not, I don’t know. Last year we had the same equivalence, and he vetoed half.”
He said some one-time transportation funding passed will also offset some district costs. There’s also $5.5 million allocated to the district because of an issue with Maintenance of Equity. That’s related to how the state reduced funding to certain districts when it received COVID-19 relief funds; the federal government says Alaska owes certain districts millions to make up for that, and the legislature included some in this year's budget.
“If the state continues with the $175 million in one-time funding, also the transportation money stays in the budget and we get the maintenance of equity money, then we’ll be looking at using less of our fund balance to balance our budget,” Kelly said. “All of this money, though, it’s truly one-time. I can’t depend on it next year. So we need to be very careful about what we expand, what we wanna do in addition to the status quo.”
Kelly said what districts need is predictable funding, and he’s also an advocate for an inflation-proofing mechanism.
“We’re gonna start this whole process over again next year. It’s gonna be the same talking points, the same thing,” he said. “We need something to be put in that’s adequate, for years to come.”
This month, the Borough Assembly approved a $56 million floor for its contribution. Although the borough can still provide more funding, up to a $58 million cap, Kelly said it's the state’s responsibility to fund education.
“The funding needs to come from the state. That needs to be our primary source of funding, and they have the constitution obligation to fund public education,” he said. “When it comes from the state, I will probably suggest using fund balance to buffer any reductions there, and then if we need to, we have a very favorable assembly when it comes to education, and I know that we could put out a request, and they would seriously consider that request.”
Even though he had indicated that he won’t, there’s still a chance Gov. Mike Dunleavy will cut the funding through a line-item veto, like he did last year. He could also target other budget items, like the transportation funding or Maintenance of Equity money.
For that reason, Kelly said the full board probably won’t approve a revised budget until its July 1 meeting, after the veto deadline. But in the meantime, he’ll direct the administration to fill support staff contracts it's been holding off on.
