Borough agrees to $45 million floor for school district

Apr 22, 2020

Credit KPBSD

 With the school year winding down, the Kenai Peninsula Borough is working on how to fund the next one. With the economy in suspension due to the coronavirus pandemic and oil prices in the basement, the future is unclear.

And not just for the borough. The Kenai Peninsula Borough School District relies on the borough for part of its funding. The first step in determining the borough’s contribution is ensuring a minimum amount of money it will contribute to the district, with the option for the assembly to raise the final amount from there. At its Tuesday meeting, the assembly unanimously passed a resolution to set the floor at $45 million for next year.

The school district requested $52.7 million, about $264,000 more than the borough provided this year. That amount would allow the school district to maintain current positions, including elementary school counselors and interventionists. But with a barrel of oil trading at next to nothing and little other economic activity to bring in tax revenue, the borough scaled that back in talks with the school district. 

Borough Mayor Charlie Pierce said that part of his concern with the funding level was the borough’s fund balance. 

“Keep in mind, Seward floods on a regular basis and we’ve had some fires in the eastern part of our peninsula, and those fires could crank up again this summer,” he said. “We hope not, but if they do, we could spend a million dollars on either one of those events as well. We need to have fund balance on hand to handle those emergencies.”

At the mayor’s proposed funding level, both the borough and district will have to utilize fund balance to make their budgets work next year. The borough’s would be down to about $7 million, the lowest it’s been since the 1970s. Pierce said the administration also doesn’t want to raise sales or property taxes next year.

Board of Education President Penny Vadla says if the assembly provides only $45 million, that might result in a reduction of some services. Assistant Superintendent Dave Jones says the borough and district administration had originally discussed $50 million in funding.

“At a floor of $45 million for FY 21, the school district couldn’t make it with that … and that’s was where we came to the agreement of $50 million as a budget for FY 21,” Jones said. “… And what the $50 million would require is both of us to spend significantly more in fund balance than we had earlier anticipated.”

The assembly will start its budget process at its May 5 meeting, where it can decide whether to raise the amount of school district funding. The assembly also voted to approve the transfer of $1 million from the school fund to the school capital fund to pay for improvements to Homer High School’s theater and to Chapman Elementary School’s special education facilities.