During the budget process next year, the school district will need to cut about $500,000 from its current $5.1 million operating budget to maintain financial sustainability as it prepares for the end of federal pandemic relief funding.
This could mean staffing cuts and major changes to school facilities and programs, unless new sources of money are found.
Over the past three years, the district has relied on pandemic aid to help cover its costs, but this funding is ending soon. Those federal aid grants, which will run out in fall of 2024, currently cover $304,000 worth of salaries and benefits for the district’s two principals.
Based on projections for federal rural community funding and sales tax revenues that the borough appropriates for schools, the district “will not have any money in two years if we continue to spend like we do,” said Borough Finance Director Mason Villarma.
In addition, state funding, which covers more than 60% of the district’s operating budget, has not kept up with inflation in recent years, and an enrollment decline of about 12% since before the pandemic has reduced the amount of state money coming to Wrangell schools.
At an assembly and school board work session Sept. 11, borough officials and elected representatives discussed substantial cost-saving measures, like consolidating roles or facilities, sharing services with the municipal government and partnering with Wrangell Cooperative Association to pursue additional grant funding.
The idea of combining the elementary, middle and high schools into one has been suggested before. The hope is that the district could save about $266,000 yearly on heating and maintenance for the Evergreen Elementary building — over half the amount it needs to cut from its budget by next year.
However, Capital Facilities Director Amber Al-Haddad believes this solution is impractical because the district likely wouldn’t break even on its moving and remodeling costs for several years.
“When I looked at your budget for the elementary school this fiscal year, the costs to operate that building were very low,” she said. “So when you consider low cost savings … versus the cost to make the other campus ready to accept the other students … at some point there might be a break-even point, but it would take several years.”
The disruption such a move would cause for students, she argued, would outweigh the limited financial benefits. “What are the ways that we can eliminate those ideas that impact the students and focus on things that are a little more business-centered?” she asked. “Shared services, things that aren’t so impactful to the students.”
Combining the district and borough health insurance plans and a combined audit were mentioned at the meeting as possible ways to save money with shared services.
Assembly and school board members have expressed concern about high school and elementary students being educated in the same space. “I can see parents backing up and saying, “No, I don’t want my 8-year-old in high school with a 17-year-old,” said school board member Angela Allen. “People are going to pull their kids out and go to homeschool and then where’s that money going to go?”
Superintendent Bill Burr added, “There are cost savings that could be done” by consolidating schools. “But as I’ve said, pretty publicly, we would not be consolidating schools for an educational reason. It would be a financial one.”
Board and assembly members also criticized the idea of combining one of the principal positions with the superintendent position, since the stresses of the combined role would be unmanageable, they suggested.
Some assembly members proposed a school-sponsored child care program as a potential money-maker for the district that could also provide an economic boost to the borough — this idea was also deemed impractical.
Many child care programs are “heavily subsidized by the federal government,” explained Borough Manager Jeff Good, and much of that funding has been slashed recently. Over 70,000 programs nationwide are at risk when federal pandemic aid cuts off at the end of September.
“Child care is a tough one,” he continued, and typically not profitable due to high costs.
The assembly and school board planned to meet again in November to continue their discussion of potential cost-saving measures.
“The good news is, it’s forecasted,” Economic Development Director Kate Thomas said of the district’s financial future. “It’s on paper. We can see it, we know it’s coming, it’s important to take heed with that and start developing a plan. A plan that if things don’t change, we can swallow. Because if we wait until a point when we’re passing the budget and we’re right at the end of the fiscal year, it’s going to be a lot more uncomfortable than it is right now.”
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