The Wrangell School District is proposing to draw down about half of its reserves to balance the upcoming year’s budget, and Schools Superintendent Bill Burr warns that the solution is not sustainable for the long term.
The school board at its Feb. 26 meeting reviewed with district business manager Kristy Andrew the first draft of the budget for the 2024-2025 school year.
The budget shows general fund revenues of approximately $5.2 million — of which about 60% is from the state foundation funding formula — and expenses of more than $5.8 million. To balance the budget, the district would draw a little over $600,000 from its reserves, currently estimated to total $1.2 million at the end of the fiscal year on June 30.
There are no plans to cut programs or staff for next year, though Burr cautioned on March 1 “the money’s not infinite.”
Of the proposed budget, 75% would go to salaries and benefits for faculty and staff. “The biggest expenditure that we have is staffing, and right now we’re not looking at cutting any staffing,” Burr said.
Regardless, the district will reevaluate its long-term financial strategy. “Anytime you’re running in a deficit, you can’t sustain that forever,” Burr said. “So, we look at the budget every year and adjust to it.”
For the past few years, the district has balanced its budget with the help of federal pandemic aid, using the one-time grant money to cover the salaries and benefits of the two school principals. With those grants exhausted, the district will need to cover those costs of about $300,000 from its general fund dollars.
The school district and board had planned for the eventual loss of that federal funding, however, saving as much as was allowed.
Although the state ordinarily sets a limit on how much school districts can hold in reserve, a waiver from the cap was granted through June 2025 to help districts cope with pandemic disruptions to their finances.
Burr explained that the current budget plan, with its $600,000 deficit covered by reserve funds, assumes the borough will provide the district with the maximum contribution allowed under state law, as it has done in recent years.
Still, even if everything goes according to plan for the coming year, the district’s reserves will be much lower the next time. “All we did was get a breather for next year which buys us a little time … if everything goes right,” Burr said.
Additional financial assistance from the state would help relieve the budget stress, but that is dependent on the Legislature and Gov. Mike Dunleavy approving a bipartisan education funding bill which would send about $440,000 more in state funding to the Wrangell district for next year.
While the measure to increase the state’s per-student funding formula passed through the House on Feb. 22, and the Senate on Feb. 26, Dunleavy has threatened to veto the measure unless legislators also approve the governor’s priorities to allow new charter schools to bypass local school boards and his plan to pay one-time recruitment and retention bonuses to teachers.
Even if the governor and lawmakers can agree on the funding increase, Burr said, it would fall short of covering the inflation that has piled up since the state last boosted the funding formula in 2017.
After hearing from faculty, staff and students, the district will prepare another draft of the budget for board consideration and then submission to the borough assembly before the May 1 deadline in state law.
The numbers in the second draft, and the date of its completion, will depend on the governor’s decision whether to sign into law or veto the school funding bill, Burr said. The governor has until March 14.
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