The Kenai Peninsula Borough School District is now facing a nearly $1 million deficit for the next school year.
While the Legislature restored a base student allocation increase that had been eliminated in the eleventh hour a budget conference committee, the Kenai Peninsula Borough Assembly chose not to fund the entire maximum allowable contribution, escalating the school district’s projected deficit from $200,000.
Assistant Superintendent Dave Jones told the Board of Education there is still an opportunity to counter the shortfall. The assembly could still decide to fund to the cap, or borough Mayor Mike Navarre said he may redirect funds, as much as $1 million already allocated for the school district, from the borough’s deferred maintenance fund for general use.
Navarre said the money has not been approved yet, but that he and the assembly would discuss and consider setting it aside for the school district to use for maintaining services over time.
“This is all un-trodden ground because this hasn’t happened before,” Jones said. “Once the designation has changed…from that point in time it cannot be moved back.”
While the redirected funds may not amount to much out of this year’s $140 million board-approved operating budget, it will help the school district reduce services slowly instead of all at once.
With further, possibly more dramatic cuts to education expected from the Legislature in coming years, it is pertinent the school district not draw down its reserves, Jones said.
Additionally, collective bargaining with the Kenai Peninsula Education and Kenai Peninsula Education Support associations has not concluded and may result in even more fund balance use. Advisory arbitration between the negotiating teams was held June 1-2, but Oregon-based arbitrator Gary Axon will not likely issue his report until August, and said he could not comment on the meetings beforehand.
The school district’s unassigned fund balance currently hovers around $8 million. Per board policy a reserve of 3 percent, nearly $4 million, of the annual budget must be consistently available in the fund balance account.
In April, the board approved a $4 million reduction in school district services, including cutting nearly 12 full time certified teaching positions. Originally, administrators had proposed eliminating 25 full time teaching positions, but added 13.5 back in at the last minute because the BSA increase had made it through most of the legislative session intact.
“It allowed us to minimize our use of fund balance which will allow us to minimize negative impacts to the classroom,” said Sean Dusek, school district superintendent. “This increase will provide a smoother path on addressing overall budget reductions over the next few years as the state works to develop a long term fiscal plan.”
No further increases to the BSA are expected.
“That is a serious problem,” school board member Marty Anderson said. “… The school district has been as creative as possibly can. You can only cut costs so much.
In the early 2000s, when Anderson was first seated on the board, the school district consolidated Nikiski Elementary and Nikiski North Start Elementary into one school, and did the same with Sears Elementary and Mountain View Elementary to offset a nearly $5 million fiscal gap created by declines in enrollment.
Anderson said closing and consolidating schools does not equal much cost savings, and even comes with additional costs such as busing the previous school’s students to the closest site. He hopes that won’t be an option reviewed in the future, he said.
With the way the state and federal funding formulas work, the school district only has control over 5-6 percent of an annual operating budget, Anderson said. Programs and positions are the only areas where reductions will make much of a difference, and there are only a few years left of significant fund balance use, he said.
“It’s always on all of our minds,” Anderson said. “We definitely don’t want to look in that direction.”
The board did not take any action at Monday’s meeting regarding the budget.