Members of the Wrangell Borough Assembly and the Wrangell School District met Tuesday evening, March 10, to hold a work session on the district's newest budget. Both the borough and school district are going through their budget season. As the district is part of the borough, the borough regularly makes a contribution to the budget, and said budget comes before the borough for approval before being sent up to the state; both parties regularly collaborate on the project.
This upcoming budget for FY 2021, as of the workshop, has revenues set at a little less than $5.68 million and expenses set at a little less than $6.07 million. The way numbers stand now, the district would be operating at a deficit this upcoming year. The district's current
budget, for FY 2020, is also operating at a deficit. Spreadsheets shared in the workshop show that the district intends to use about $668,000 in savings to balance the budget at the end of the year, as well as to provide a fund balance for the beginning of next year.
Superintendent Debbe Lancaster opened the meeting by going over some of the assumptions the district was making with the current draft of the FY 2021 budget.
The district is assuming health insurance and property insurance costs will increase. They are also anticipating the same local contribution from the borough as last year, or $1.3 million in total. The district is also expecting to be teaching around 316 children this upcoming year, which School Board Member Aaron Angerman pointed out would continue a multi-year trend of growing numbers.
They are also expecting flat funding from the state level this year. However, the importance of "assumption" was emphasized on this point.
Lancaster pointed out in her presentation that state funding has mostly been flat in
previous years, and there was some talk in Juneau about increasing funding, but those talks have all been preliminary by that point. Current events have also cast some doubt on what the state might do in the future.
"Given what's going on with oil prices right now, what I'm hearing through the municipal side of things is expect shock and expect some significant changes," Borough Manager Lisa Von Bargen said. "The operating budget that passed the House, my guess is, may have to be
significantly altered by the Senate."
Lancaster went into some details of the budget and all its different aspects. She reminded everyone present in the workshop to remember that FY 2021 was still in its draft phase. None of the numbers she was presenting were set in stone. Both certified and non-certified salaries would be increasing in FY 2021, compared to FY 2020.Staff and student travel expenses are being decreased. Spending for operations and maintenance would be cut by almost $50,000, to a total of $771,607. One cut Lancaster pointed out was "supplies, materials, and media" expenses. This will be decreased by about $83,000 in FY 2021, she said, from about $307,000 this year to $224,000 next year. Employee benefits will also be increasing by a little less than $125,000.
"I want you to listen to the word 'reduction,'" Lancaster said. "Because I know it's in everybody's mind because the borough has to cut their budget by $3 to $500,000 this year. These are reductions that we're looking at, so please pay attention to the reductions."
Lancaster also informed the borough assembly that the district was looking into many different ways to potentially cut costs and increase revenue. The ideas being thrown around are quite varied. Some include consolidating the district into two main buildings instead of three, generating more revenue from sports, operating a student-run retail store, charging other organizations for use of school buildings, and simply becoming more aggressive about applying for grants.
The workshop went on for about an hour and a half, with Lancaster and other school board members giving a detailed report of the draft budget, and how it stacked up to previous budgets. It ended with Assembly Member Julie Decker stating her concerns about deficit spending, both in the school district and in the borough, as well as Von Bargen asking the district to supply the actual expenses for FY 2020, compared to budgeted expenses, when they became available.
"I want to say that this is my seventh year on the assembly, and this is the best presentation on the school budget, and I appreciate all the work that everyone has done," Decker said.
After a brief recess, the assembly reconvened to hold a regular meeting. The assembly revisited an item that has been hounding the borough for quite some time. The Bakke family, Arnold and Alice, discovered several years ago that they have been overpaying on their property taxes since 1994. The family has requested a full refund of their overpaid taxes. From 1994 to 2019, the overpaid taxes and interest totals approximately $12,000. However, one of the issues that has stopped the assembly from providing this refund is a question on the statute of limitations. The state provides a six-year statute of limitation on overpaid taxes and interest. The assembly feared that by breaking this statute to fully refund the Bakkes, they could set a dangerous precedent. However, the borough and the Bakke family have managed to reach a compromise.
"What I asked the Bakkes if they would be willing to do was accept a full repayment of the overpaid taxes, but that the interest would be capped at the six-year statute of limitations," Von Bargen said.
In summary, the borough offered the Bakkes full repayment of the overpaid taxes, or $3,736. They also offered to pay back the compounding interest for the six-year statute of limitations, $5,952.96. They also offered to cover $750 in expenses the family incurred preparing calculations and presentations to the borough on the matter. The total cost came out to $10,438.96. After some brief discussion amongst the borough, the item was approved.
Among several other items covered in the meeting, the assembly also approved a senior property tax exemption that was received after the March 1 deadline but before the end of the late filing grace period. They also approved of various changes to the job description of Wrangell's Harbor Master, to more accurately describe the post's duties and to change the job title to "Port and Harbor Director." The assembly also approved of a resolution to create a new tier of health insurance coverage for permanent employees working below 40-hours a week.
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