School Board President Dave Wilson (left) and Superintendent Bill Burr glance at their notes during the school board meeting Jan. 20, where the board considered the first draft of the 2025-2026 budget.
The Wrangell School District could run short of operating funds by 2026 or 2027 if it doesn't receive new revenues or make large cuts to its programs.
The school board discussed the first draft of its 2025-2026 budget on Jan. 20. Barring any notable changes between now and when the budget is sent to City Hall for approval by May 1, the district anticipates a deficit of $767,016, requiring a dip deep into the school district's dwindling reserves.
This would leave the reserves at an estimated $51,299 on June 30, 2026, far from enough to cover the 2026-2027 school year without major new revenues or spending cuts.
The schools anticipate revenue falling short of spending by $559,220 for the current school year, also coming out of reserves, making next year's increased deficit a negative trend.
The district has been drawing on reserves for the past few years as declining enrollment reduced state funding, and as federal pandemic relief aid ran out.
The Alaska Legislature last year approved a one-year increase in state funding for local school districts - giving about $450,000 for Wrangell schools - but the borough assembly reduced its contribution to the district by the same amount, resulting in no gain for the schools.
Kristy Andrew, the school district business manager, said the board could not rely on the state to increase funding for the 2025-2026 school year.
In her report to the board on Jan. 20, Andrew said there are many reasons the district will likely be in a deeper budget hole next year. She cited a 10% increase in health insurance premiums for employees and a $101,357 decrease in the state's base funding as two causes.
The school receives most of its funding from the state, a figure determined based on the district's average daily attendance multiplied by the state's Base Student Allocation, which is just under $6,000 per student. The state also provides additional funding for students who require intensive special education. This year, Wrangell received nearly $3 million from the state. Next year, it will likely be around $2.9 million.
Andrew said the drop is in part due to an anticipated drop in intensive special education students, though she does not expect any changes in the district enrollment of 260 students.
Eligible staff will receive a pay raise next year, as will Superintendent Bill Burr. Burr's salary will exceed $130,000 in 2026 after he received a near-$40,000 raise last year.
Brittany Robbins, who served on the school board from 2021 to 2023, said the board awarded Burr the raise so that his salary was "at least on par" with the superintendent salaries of comparable school districts. She said Wrangell used the Craig superintendent salary as a benchmark.
Andrew's draft budget for 2025-2026 assumes the borough will fund the district at the maximum contribution allowed by state law, which would be split between $885,962 from sales tax receipts and $872,132 from federal money. The borough receives the federal funding through the Secure Rural Schools program, which goes to cities and boroughs to pay for schools and roads.
Though it has "secure" in its name, the federal money is subject to congressional appropriation - which the U.S. House failed to do last year. Over a dozen Alaska municipalities (including Wrangell) are hoping Congress approves the funding retroactively this year. If it doesn't, the borough's own reserves would be even tighter.
Though the draft budget for 2025-2026 assumes the borough will fund the schools at the maximum allowed, continuing down that path has been deemed unsustainable from the borough's perspective. The school board met with the assembly last November to talk about funding.
Borough Manager Mason Villarma forecast that if the borough gave the district the maximum allotment of money for 2024-2025 - as it did for the 2023-2024 school year - City Hall would only be able to fund the schools for about three years before its own reserves went empty.
A lot will turn on whether the Legislature and governor agree to a permanent increase in the state funding formula.
The Base Student Allocation has not notably increased in eight years despite a 30% increase in inflation during that same time period, according to the U.S. Bureau of Labor Statistics.
"Education funding is a state issue," Villarma said at the Nov. 19 workshop with the school board. "Until further appropriations to the BSA are made, (the borough) and (the schools) need to work together for operations to remain sustainable."
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