With lower enrollment creating ongoing revenue shortfalls, the school district is seeking solutions and resources to close the persistent gap — particularly as one-time federal pandemic aid money will run out in two years.
On March 7, members of the school board and district employees met with the borough assembly to present what district Business Manager Tammy Stromberg referred to as Version 1.5 of the budget. The work session lasted nearly two hours and consisted of an exchange of ideas and positive remarks as the process moves forward.
“The big topic … is foundation revenues,” Stromberg said during her presentation, referring to the enrollment-based state funding formula which this year will provide almost 60% of the district’s revenues for the budget of more than $5 million.
“(Fiscal year) 2023 foundation revenue is estimated to decrease by about $399,000 from 2022 budgeted figures, and our actual revenue figure is going to decrease $126,000 from our 2022 budgeted number. So, right off the bat, we have about a half a million dollars of revenue that is going away,” Stromberg said.
Wrangell is down almost 50 students from its pre-pandemic count of just over 300 students.
Less revenue coming into Wrangell schools, along with higher expenditures for fuel and maintenance costs, are making it harder to close the funding gap.
One way the district has temporarily patched together its budget is by using one-time federal pandemic relief aid to pay the salaries for two principals and a grant writer over the next two years.
Mayor Steve Prysunka asked if there was any concern about continued funding for the positions once the federal money runs out.
“All we’re doing with this is buying us two years of time,” said Schools Superintendent Bill Burr.
Eighty percent of the district’s expenditures go toward staff salaries, he said. Significant spending cuts would be needed to cover the salaries of the principals and grant writer out of ongoing revenues after the federal money is gone.
“There’s no real other way to do it, except to cut everything is — and I say this with caution — non-essential,” Burr said. “So, a few of the items that you would have as non-essential would be the sports program, professional development, supplies, we could also need to remove electives.”
Due to staffing cuts last year, foreign language classes were dropped at the high school and middle school, Burr said. Vocational education would be another program not deemed by the state as essential, along with fine arts programs. Core subjects such as English, math, social studies and science would be the core essential classes.
“In the retail world, you start cutting your product, people stop coming to your store. You start cutting your staff, there’s no service, people stop coming to your store. Then all the sudden you don’t have a store,” Prysunka noted.
The mayor asked if alternative funding sources had been considered, which launched a brainstorming session.
Ideas such as combining with other school districts to save on administrative costs, seeking grants and consolidating the two school campuses in Wrangell were bandied about. Bringing all the schools under one roof, however, could lead to less revenue, since state funding takes into account the costs of operating three separate buildings.
New grants may also be scarce.
The state’s per-student funding formula was not changed since 2016, Stromberg said. Though some legislators are talking about an increase, any decision will come later in the legislative session, which faces a mid-May adjournment deadline.
Each year, the borough receives funding through the Secure Rural Schools program, a U.S. Forest Service program that tries to compensate rural communities for federal lands exempt from property taxes. The money can be used for schools and roads.
The borough transfers the federal aid to the district, totaling $1.3 million for the past school year.
Finance Director Mason Villarma said the payment to schools this year will be a mix of the federal funds and borough sales tax dollars, since pulling only from the federal money fund isn’t sustainable and the account would be in a deficit by 2026.
The assembly will decide on the borough contribution to the school district later this spring.
Both Stromberg and Burr found the feedback from borough assembly and staff constructive.
“The engagement is a positive factor, and we enjoyed the opportunity to have a foundational conversation about funding and the factors that are influencing the future of the state and community,” Burr said.
Assemblymember Dave Powell said communication over previous school administrations had vastly improved. “I’m kind of excited about the talks (going) forward, rather than telling us … basically, ‘Stay out of our business.’”
Prysunka said he asked school officials seven years ago to look down the road, but the March 7 meeting was the first time he had heard the same sentiment toward planning from the district. “It’s vitally important that the school system survive.”
The second draft of the budget will be presented at the next school board meeting on March 21.
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