School district seeks ideas on budget

At a series of public meetings Thursday, Oct. 13, the Kenai Peninsula Borough School District will begin confronting a budget for next year that may be between 3 and 20 percent less than the previous year’s.

District Superintendent Sean Dusek invited the public to participate in the budget meetings and offered an overview of problems to listeners at a Kenai Chamber of Commerce luncheon Oct. 5.

The school district plans to spend $140 million in its budget currently in effect for fiscal year 2017. This budget has a deficit of $1.9 million, made up for by money from the district’s $14.8 million reserve. In making its future budget, the school district board and staff will deal again with the issues that have troubled past school budgets: falling student enrollment, less state funding and more expensive employee health care.

According to the school district’s 2015-2016 annual report, 8,935 students were enrolled in its 44 schools last school year — a number that has been gradually falling over the past two decades from a 1997-98 school year peak of 10,396 students.

Dusek said this year’s enrollment had fallen by between 30 to 40 students district-wide — a slight improvement over the loss of nearly 90 calculated during the 2015-2016 school year.

Dusek said enrollment numbers are important, “because that’s how we start the funding process.” The state’s formula for funding school districts uses a school’s size as a basic variable. Last year, the school district anticipated a $1 million loss in state and borough funding from its 90-student enrollment loss, according to previous Clarion reporting.

This year, Dusek said district schools lost 13 teachers because of low enrollment, while a 20 percent budget cut at the district level had reduced district staff by eight.

“So we were able to follow our philosophy of ‘make the reductions as far from the classroom as possible,’” Dusek said.

The amount of money allocated among Alaska school districts has also shrunk. Between fiscal year 2015 and fiscal year 2017, the Legislature has cut general fund appropriations for the Department of Education and Early Development — which along with boroughs funds local school districts — by 8.8 percent, or $124 million.

In this year’s budget cycle the school district’s funding from the state was especially unpredictable. According to previous Clarion reporting, the school district board had already cut approximately $4 million from its 2017-2018 school year budget when Gov. Bill Walker vetoed $18 million from the DEED budget in June 2016, resulting in about a $1.1 million loss to the Kenai Peninsula Borough School District.

At the luncheon, Dusek echoed a resolution the school board issued in October 2015, calling for the Legislature to pass a comprehensive fiscal plan that would allow school districts to make longer-range plans.

“For me, personal opinion, a fiscal plan needs to happen and it needs to happen this year,” Dusek said. “For public education, we’ll need to know early what’s happening so we can make plans. We cannot have happen what happened this year — a veto at the end of June.”

As revenue falls, the school district has faced a problem shared by many large employers on the peninsula: the rising cost of employee health care. According to the 2016 arbitration report in the contract negotiations between the school district and two collective bargaining groups — the Kenai Peninsula Educational Association and the Kenai Peninsula Education Support Association, together representing 1,174 employees — the district contributed 85 percent of an employee’s health care premium under an agreement made in fiscal year 2015.

The rise in the cost of health care is accelerating. In the arbitration report, school district officials state that insurance cost increased by $1.6 million between fiscal year 2013 and fiscal year 2014, by $2.1 million from 2014 to 2015, and by more than $2.4 million from 2015 to 2016 — bringing the current cost of employee health care plans to $27.27 million. In the same report, the two employee groups state the district’s cost estimations are inflated by $1.3 million, because over 70 employees receive salaries and benefits from grants rather than the district’s general fund.

“We’re open to any and all solutions,” Dusek said of the health care cost problem.

Dusek said the school district’s budget is in presently in good shape because of money previously set aside in a fund balance reserve. However, in the event of more drastic state-level cuts next year, greater problems could be ahead. Dusek speculated about a hypothetical scenario in which next year’s school budget is cut by 10 percent, or $14 million.

“We have about $5 million or so in reserves,” Dusek said. “We’re still a long way from those $14 million... I do know that 10 certified staff members is about $1 million. We could decide to reduce our certified staff about 140 teachers — but there’s no way we could do that. First off, losing 140 jobs in our industry would be devastating to all of our economies. Not to say what that would mean to the number of kids in the classroom. Currently we’re 25 or 26 (students per classroom), and we’d have to be well over 30 if we had to do something like that.”

Dusek said the school district’s possible reactions to such a scenario will be subjects of discussion at the Oct. 13 public budget meeting.

“We first have to talk about priorities within our own schools, and community needs,” Dusek said. “We also have to take a look at other ways we try to meet any scenario that’s thrown at us. Lots of ideas will come out of that discussion, and I hope you’re involved in that.”

Ben Boettger is a reporter for the Peninsula Clarion. He can be reached at ben.boettger@peninsulaclarion.com.

 

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