Facing a gap of several hundred thousand dollars between available funds and its draft spending plan, the school board will hold a special meeting Wednesday, April 30, to adopt a final budget — which could include spending cuts.
The latest draft budget presented to the board at its regular monthly meeting on April 14 showed about $6 million in spending versus just $4.7 million in projected revenue from state, municipal and federal sources for the 2025-2026 school year.
The district expects to start the next school year with $990,000 left in its operating reserves. Even draining that account entirely would still leave the district short $310,000 of a balanced spending plan.
The operating reserves account had been at $1.377 million a year ago, but the district is on track to draw it down by $380,000 to balance spending for the 2024-2025 school year.
State funds provide the largest single source of revenue for the district, and the Legislature and governor are fighting over how much to increase the state’s per-pupil base funding formula for aid to local school districts. The base formula has been essentially flat for a decade.
School districts across the state have been pushing lawmakers and the governor for a significant boost in state funding, warning that teacher layoffs and program cuts are unavoidable without more help.
Wrangell’s draft school budget assumes no increase in state aid, though lawmakers are looking at a boost in the formula that would send between $400,000 and $600,000 more to Wrangell for the 2025-2026 school year.
The school board, however, has to make its spending decisions without knowing the outcome of the debate between lawmakers and the governor. The legislature faces a May 21 adjournment deadline and the state budget likely will be the last thing decided.
The Wrangell district has $1.17 million in a fund for capital improvement projects at the schools — separate from its operating budget reserves — and the board could vote to draw from that account to balance next year’s spending plan, regardless of any pending legislative action.
The special school board meeting is calendared on the district’s website for 6:30 p.m. April 30 at Evergreen Elementary School.
The district must submit its budget to the borough assembly by May 1.
The assembly, which has its own financial strains, is scheduled to hold a workshop May 14 to discuss the overall borough spending plan for the fiscal year that starts July 1.
The loss of a quarter-century-old federal aid program for communities hit by the steep decline of the timber industry — called Secure Rural Schools — has struck Wrangell particularly hard.
The borough had expected to receive about $800,000 this year from the program for schools and roads, but the Republican-led U.S. House declined to reauthorize the funding last year. Restoration of the program this year is uncertain.
The Secure Rural Schools money provided about half of the borough’s annual contribution to the school district budget. A portion of sales tax revenues covered the rest.
With the loss of that federal money and continuing uncertainty over other state and federal funding sources, the borough is targeting a spending cutback to the level of a few years ago, Borough Manager Mason Villarma said last week.
But even at that, the borough’s early spending plan still shows an estimated $300,000 deficit, he said, requiring further work before staff present it to the assembly next month.
The school district’s capital projects reserve account has been a point of contention with borough officials, who believe it could be smaller and still meet the district’s needs for repairs and improvements at the buildings.
The borough owns the buildings and is responsible for major work, with the school district picking up the tabs for smaller projects.
“Board approval and careful consideration” would be required before transferring any money from the $1.17 million reserves into the operating account, Kristy Andrew, the district’s business manager, said in an email last week.
For example, she said, the district will look to the capital projects reserves “to help cover anticipated cost increases in the upcoming capital projects,” which include a new roof at the Stikine Middle School.
The district deposited $250,000 into its capital projects reserves in fiscal year 2023 when it received additional state funding from “an unexpected increase in special education intensive needs enrollment,” Andrew explained. The state pays districts additional money to cover the higher costs of providing services for intensive-needs students.
“Now, with … a projected decline in special education intensive students in fiscal year 2026 — leading to a significant drop in (state) foundation revenue — we are considering transferring those funds back into operations,” to help fill some of the budget deficit, she wrote in her email.
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