The school board’s latest draft budget relies on pulling $710,884 from the district’s operating reserves to balance spending for the 2026-2027 school year.

That would leave the district with about $279,000 in the reserve account on June 30, 2027, unless spending comes in under budget and/or revenues exceed projected numbers.

Business Manager Kristy Andrew presented the second draft during the school board meeting on March 16. She informed the board that there were only minimal updates from the first version, which originally showed a $636,000 deficit.

Andrew reminded the board there will be more adjustments and this is not the final version of the budget. The district is required to submit its budget and funding request to the borough assembly by May 1.

In an interview on March 17, Schools Superintendent Joshua Garrett acknowledged the concerns regarding the deficit but remained optimistic about the district’s financial management.

“Is pulling money to cover that gap sustainable long term? Absolutely not. But my question is what are we supposed to do?” Garrett said. “I’m proud of the fact that if you look at the budget, you will see how the district has managed to keep increases to just around 2%. That’s below that rate of inflation. Wrangell is doing much better than a lot of schools in the state. I think it shows that we’re very responsible. I think the question everyone needs to ask is, ‘why isn’t the state funding the schools like they’re supposed to?’”

Garrett said he is hopeful the Alaska Legislature will increase the funding formula to direct more state aid to school districts.

The Legislature last year increased the formula by almost 12%, and although supporters are pushing for more money this year, an additional boost is contentious. Lawmakers face a May 20 adjournment deadline.

The Wrangell district’s operating reserves were at a healthy $1.38 million in June 2024. However, that balance has dropped as the district continues to use the account to balance its books.

In addition to its operating reserves, the district maintains a reserve account for maintenance and repairs, which holds about $850,000.

Garrett stated he is comfortable with current budget projections. He noted that state law limits districts from maintaining an operating reserve larger than 10% of its total budget.

“According to law, that fund balance can’t be over $500,000. I’m happy to have it at $278,000. This budget shows that we aren’t in the negative and that’s a good thing,” Garrett said.

“And I don’t believe we need to have a full $500,000 in the fund all year. Like I said, pulling large amounts from it every year isn’t sustainable. But we have to take care of our kids.”

He also addressed potential criticisms regarding how the school district handles its spending. “Our job is to take what we’re given and be good stewards of it to serve our students. And that’s what we’re doing.”

Garrett pointed to what he considers a significant flaw in the state funding formula. He explained that as the borough increases its financial support, the state formula can decrease the state contribution.

“That’s not a one-to-one ratio, but it highlights one of the problems.”

The district’s spending plan for the next school year totals $6.14 million, with an estimated $3.5 million coming from the state, $1.758 million from the borough and about $120,000 from other sources — leaving the $710,884 gap.

Within the limits of state law that restrains how much communities can spend on schools, the borough assembly could increase its contribution by about $130,000 when it considers the borough’s overall budget this spring.

Garrett argued that deep cuts to balance the school district budget would devastate student opportunities.

“From just a numbers standpoint, could we go in and make enough cuts to bring everything down to zero? Yes, we could, but at what cost?” Garrett said. “I can’t even imagine right now what that might look like, because we would have to cut so many programs, classes, extracurriculars and jobs to make that kind of adjustment. My question to those who want to see cuts is: What specific programs and services would you like to see cut?”