Years of flat state funding create budget stress for schools across Alaska
By James Brooks
and Lisa Phu
Alaska Beacon
The Anchorage School District, which is considering the closure of six elementary schools amid a projected $68 million budget shortfall, isn’t the only district facing a major fiscal problem.
At the end of the last school year, Fairbanks closed three schools. In Juneau, the school board is considering whether to fire specialists intended to help students recover reading skills lost during the COVID-19 pandemic. In rural Alaska, districts are trying to balance their books while dealing with high transportation and heating costs.
Local and statewide officials say these decisions are rooted in the same Alaska-wide problem: Most school funding is delivered by the state, and the state’s per-student funding formula has failed to keep pace with inflation.
“Everything costs more. It costs a tremendous amount to heat our buildings, provide electricity, provide transportation. Everything has gone up. Liability insurance, health care insurance have been huge drivers, and we haven’t kept up with it,” Kenai Peninsula Borough School District Superintendent Clayton Holland said.
Federal relief funding forestalled the need for major action during the COVID-19 pandemic, but most districts have exhausted that aid or will by next year. Wrangell received about $1 million in federal pandemic aid schools, and the money will be gone by next year.
Meanwhile, school enrollment statewide is less than what it was before the pandemic, exacerbating a problem created by a funding formula that pays districts per student.
“I think a lot of school districts in the state found the (federal relief) money to be basically the only thing that’s stopping the absolute bleeding of our school districts,” said Wrangell School District Superintendent Bill Burr. “We’re facing a squeeze point.”
School districts have incrementally cut staff and services to keep pace with inflation, but in many cases, those cuts have reached a limit, and the issue is coming to a head as districts prepare their budgets for the next fiscal year.
“Districts are planning their budgets for fiscal year 2024, and they’re just projecting huge deficits, and school board members have to make decisions based on the future projection,” said Juneau Rep. Andi Story.
Even before the COVID-19 pandemic, the state was spending less than the national average per pupil, once Alaska’s cost of living is included in the calculation. (In unadjusted dollars, the state spent the sixth-most per student in 2019.)
“I hear a lot of people say Alaska spends more per pupil than any other state, and if you just look at straight dollars, it’s not true,” said Dayna Defeo, director of the Center for Alaska Education Policy Research.
“When you adjust for (cost of living), our per pupil spending is less than the national average, and we’ve been kind of falling,” she said.
Other than a 0.5% increase in the state funding formula approved by lawmakers this year, the rate has not changed in more than five years, allowing inflation to eat away at its value.
“Flat funding really is education cuts, year after year after year after year,” said Jim Anderson, chief financial officer of the Anchorage School District.
In the Legislature, conservative Republicans have said they first want to see improved performance from public schools before increasing spending. Alaska schools perform at or near the bottom of the nation in standardized math and reading tests.
Alaska’s public-school enrollment peaked in the 2016-2017 school year, with 130,295 students enrolled, according to state statistics.
Since then, enrollment has declined, bottoming out in the pandemic-affected 2020-2021 school year at just over 127,000 students. Enrollment rose slightly last school year, and figures for the current year are not yet available, but administrators say the preliminary figures are mixed.
Some districts have had more severe drops than others. In Anchorage, enrollment is down by almost 10%, from almost 48,000 students in 2016 to less than 43,000 last school year.
Wrangell faced the largest percentage drop in the state between anticipated and actual enrollment in fall 2020. Instead of 308 students, the district’s three schools had only 178. It’s since risen — to 257 last fall and about 263 this fall. But that’s close to 50 students that are no longer in the system.
“A 50-student drop is pretty significant, even if it’s spaced out over three years, because they just aren’t here,” the superintendent said.
Some of the changes appear driven by demographic trends: Alaska’s population is aging, more people are moving out than moving in, and adults are having fewer children per couple.
Laurel Shoop, a special assistant at the Alaska Department of Education and Early Development, said the state hasn’t analyzed the causes of the enrollment decline and isn’t aware of any third-party research on the issue.
Aside from using one-time state or federal funding, the Anchorage School District has taken other measures to manage the budget gaps, like merging programs and reducing staff. The district closed two schools in recent years. Potentially closing six additional elementary schools at the end of this school year could save the district $3 million to $4 million, less than 10% of its budget deficit.
Karen Melin is chief school administrator for the Fairbanks North Star Borough School District, which closed three schools at the end of last school year, partly due to a tightening budget.
Melin said the district examined how they were using facilities, some decades old and not at capacity.
“We took a pretty comprehensive look at it and said, ‘Okay, this isn’t an efficient use of square footage in dollars.’ So, we made that shift. And I think we’ll see more of that happening across the state,” Melin said.
Melin said pandemic relief funding bought them time but it’s not a way to fund a budget. The state had cautioned districts against using the money for operating funds, she said.
“But in reality, it was the money we had and so it was the money we had to use. So, it just kicked the can down the road. And now that the CARES funding is coming to an end, we’ve kicked the can all the way down the road to where, now, we’re out of road.”
The Kenai Peninsula Borough School District will likely be considering cuts when its federal funding runs out next year.
“We’re going to be facing this fiscal cliff. For us, that means that we’re really looking at the possibility of laying off or not filling 65 to 70 positions with the Kenai Peninsula Borough School District, teaching positions,” superintendent Holland said.
Terri Walker is superintendent of the Northwest Arctic Borough School District, which has schools in 11 communities not connected by roads spread out over 39,000 square miles. The district serves about 1,900 students.
Walker said the district has made many cuts over the past several years, including positions in the district office, programs like Career-Technical Education and pre-kindergarten.
“And we cut counselors so then sites had to share counselors. Some of our villages are close to each other, close meaning between 10 to 70 miles apart. The local airline here flies to a couple of the villages and then returns, and so we just had them share counselors so the counselor would spend time at one site and then spend some time at the other site,” Walker said.
“We do need the state to step up,” she said.
The school funding issue has become a major issue in this year’s governor elections. In a televised debate Oct. 19, Democratic candidate Les Gara called the situation “the worst crisis in public education in state history.”
“Education in Alaska, as far as I’m concerned, is swirling the drain,” said independent candidate Bill Walker. “That’s how bad it’s gotten.” He said a reliable state fiscal plan would help the state “fully fund” education.
Gara has advocated automatic inflation adjustments for the base-student formula and said he is the only candidate to do so.
He and Walker criticized incumbent Dunleavy, a Republican, for not acting on the problem.
“I’d be more than happy to sit down with a number of the school districts and have a discussion as to why they are short on their budgets,” Dunleavy said. “Do they have a school district that was geared for thousands of more students? There’s a number of things we can take a look at.”
The Alaska Beacon is an independent, donor-funded nonpartisan news organization.
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