The Kenai Peninsula Borough has its spending plan for the fiscal year that starts next month. That’s after borough assembly members passed a budget Tuesday night that lowers property tax rates and fully funds education. But maximum school funding didn’t come without debate.
By the time Borough Mayor Peter Micciche’s draft budget ended up on assembly members’ desks Tuesday, one big issue was still on the table – funding for the Kenai Peninsula Borough School District.
“I think you guys have the votes to fund to the cap,” Micciche said ahead of Tuesday’s debate. “When we get to that point of that budget discussion, I'm going to make you clearly understand what that means to the people of the Kenai Peninsula Borough and how that significantly impacts the finances of the borough – the folks you guys took a vow to represent.”
The “cap” is the maximum amount state law says the borough can give the district. This year, assembly members were inundated with comments calling on them to give that maximum amount.
Earlier this year, the district forecast a $17 million budget shortfall for the upcoming fiscal year. To fill the gap, school board members implemented broad cuts. They planned on getting more money from the state. And they assumed maximum funding from the borough – more than $62 million.
But Micciche says it's rare for the district to get the maximum contribution – it’s only happened once in the last two decades. And, more importantly, he says it’s unsustainable.
“We have no way to make this work,” he said. “If we funded to the cap every year – which would double our tax bill in 10 years, would double our property taxes in 10 years – in two years, we'd be paying more than the state does. That's not how this was designed.”
The difference between Micciche’s proposed funding level and the school district’s request is a little over $4.7 million. Some assembly members said that’s an amount the borough can afford and that the school district needs. And they pointed out that Micciche’s budget lowers the property tax, or mill, rate, arguing the savings could go to education.
Assembly Vice President Kelly Cooper says this is an especially tough year for borough schools.
“I know that the reduction in the mill rate that we've passed, or that we're passing is very much appreciated by our community, but the schools do matter,” she said. “I'm looking at one year. I think this is a transition year for our education funding.”
All eyes were on Juneau last legislative session, where school funding was a top issue for lawmakers around the state. Other than a half-percent increase two years ago, the base amount of money the state gives districts per student hadn’t changed in years. The state has sometimes approved one-time money outside its formula, but districts say that’s unpredictable and not guaranteed.
This year, lawmakers approved a $700 increase to that base rate. And they overrode Gov. Mike Dunleavy when he vetoed that increase. But last week, he vetoed some of the money that funds the bill – down to $500 per student. Now, it’s unclear whether lawmakers have the votes to override him again, or if they’ll even try.
Micciche’s long been critical of the state for what he says is a failure to meet their constitutional mandate to fund education. But he says the borough cannot afford to pick up the slack.
“I agree it’s a downward spiral and it’s getting worse by the year and we all need to fight for that,” he said. “But we can’t do it at risk of the survival of the Kenai Peninsula Borough.”
Kenai representative Ryan Tunseth agrees with Micciche’s concerns. Given the scope of the district’s deficit, he says another $4.7 million won’t prevent the budget cuts being proposed.
“Everybody should at least have already seen all the stuff that the school board has put together, and even at funding to the cap and the $700 BSA, things will still need to be cut,” he said.
Assembly member Tyson Cox pushed back. He says every dollar makes a difference.
“Will it solve the whole thing? Of course, it won't,” he said. “But it will help. It will help put the kids. You know, everybody says we should put it on the state – you're right. But how long is that going to take?”
Assembly members also heard testimony from Cox’ daughter, Kate, who said she’s going to be a junior at Soldotna High School this fall.
“I'm looking forward to taking AP classes and Spanish 2, which are currently at risk,” she said. “Also large roles in our school like theater techs and the athletic director helps us, the students, do what makes school fun and engages kids.”
The assembly vote was 8-1 to fund to the cap, with Tunseth against. After voting against the higher amount, he says he got a text message criticizing his decision. He said that made him want to “double down.” Then he said he’ll call for an audit of the school district’s comprehensive annual financial report, or CAFR, next year if the district proposes budget cuts.
“When there’s any cut announced, before we’ve done anything, I’m going to make a resolution to fund to the minimum and I’m going to make a resolution that we hire an independent person to look at the school district’s CAFRs and school utilization and make recommendations to us,” he said.
The school district’s finance department is audited annually by an independent firm hired by the borough. All of the district’s CAFRs and audits are posted on the district’s website.
Now that the assembly has passed the borough budget, and that the governor has announced his vetoes, the school board’s finance committee will reconvene. The group’s next meeting is scheduled for next Thursday in Soldotna.
