The Seward Phoenix Log - News of the Eastern Kenai Peninsula since 1966

By Heidi Zemach
For The LOG 

School budget prime target for cuts


Heidi Zemach | For The LOG

KPBSD Assistant Superintendent Dave Jones explains the 2014-15 budget to an audience at Seward High School last week.

The Kenai Peninsula Borough School District is expecting a $4.5 million dollar shortfall in the 2014-15 fiscal year, said Dave Jones, the assistant superintendent. He explained many aspects of the preliminary budget to a dozen principals, teachers, and parents who attended the annual Community Budget Meeting at the Seward High School Feb 18.

The $161 million preliminary budget is still a work in progress, as is usual at this point in the year. Because of different budget scheduling, it is created based on the KPBSD administration's and Board of Education members' best guesses, without them really knowing how much money to count on the district getting from the State of Alaska and Kenai Peninsula Borough. Meanwhile principals are trying to figure out their class schedules for next year, and the district is issuing teacher contracts, he said.

"In the last few years we've been running a pretty healthy deficit," Jones said. Last year the school district spent $1.2 million more than it brought in. The board realized that at some point, they should stop looking to the fund-balance, a finite source of funding, and start looking at more painful solutions. Going forward, the board would like to dip no further into the fund balance than $1 million for the FY15 budget.

So last July, the school board resolved to reduce the FY15 budget by the same amount of fund balance that was used in FY13. The board approved an increase in pupil/teacher ratios (PTR) used for staffing formulas by half a pupil, resulting in a loss of 10 and a half teaching positions district-wide. For example, this change would increase the formula for kindergarten class sizes to 20.5 students for one teacher from the previous formula of 20:1. Smaller class sizes are generally believed to provide better learning environments for both students and teachers.

To put the number into perspective, Jones said the $4.5 million deficit is the equivalent of salaries and benefits of about 57 teachers. Cutting that many positions would bring real pain to Kenai Peninsula schools, much greater than the 10 positions lost last summer. But salaries and benefits make up the lion's share of all budget expenditures, so eliminating staff is always a consideration when the district has to look for large savings, he said.

You'd go broke in private industry if you spent 84 percent of your revenue on salaries and benefits, Jones said. "But that's what we do in education, and it's hard to make cuts in your budget (without cutting staff) when 84 percent is in salaries and benefits."

The preliminary budget includes some new savings, such as closing the pool at Skyview, which would result in an estimated $180,000 in savings from salaries, benefits and heating costs, Jones said. The budget also reflects expected reductions in fuel costs in Homer schools from the gas pipeline extension.

The state's contribution, which accounts for almost 67 percent of the budget's total revenues, is projected to be $74 million for the Foundation Funding Program (for the 8,773 students expected to attend school), $275,000 for the Quality Schools grant, and $33.6 million in lump sum payments made directly to the retirement system on behalf of the district.

Jones is hopeful that the state's "base student allocation," (BSA) which is the amount of money a school gets for each child enrolled, will be increased next year, bringing in greater state revenues. It has remained at $5,680 per student for the past four years.

Gov. Sean Parnell's proposed education package, if passed, would not inflation-proof state payments but would raise the BSA in each of the next three years resulting in a FY15 BSA of $5,765 (an $85 increase), a FY16 BSA of $5,823 (a $58 increase) and a FY17 BSA of $5,881 (a $58 increase). The district would need a $268 increase in BSA, if the state were to cover the entire $4.5 million deficit, Jones said. A $200 increase to the BSA would be needed to have $3.4 million more going into Kenai Peninsula schools.

Democratic lawmakers in Juneau proposed even greater BSA increases last week, but they are in the minority.

Although the State of Alaska has flat-funded the BSA in recent years, it has not actually "flat-funded education," Jones said, addressing critics who often wrongly point that out. Lawmakers also have voted the schools $1.7 million in a one-time allocations to help with their increased energy and transportation costs.

If the state's contribution looks more bloated than usual, and the school district's budget has grown despite shrinking student populations, it's because of the $33 million payment that the state made to the employees' retirement systems known as TRS and PERS, Jones said. That sum won't directly benefit the schools, students or the teachers now, but it will eventually help assure that retirees will get their retirement benefits.

For its part, Kenai Peninsula Borough Assembly funded the school district at $43.5 million last year, but could contribute $2.5 million more before reaching its cap. The school district would like to see the increase, but doesn't expect it to fund to the cap, Jones said.

The borough is facing a reduction in its own budget, and is facing cuts in services due to the citizen's proposition that passed in the last municipal election which increased exemptions on property taxes from $20,000 to $50,000. The alternative, which the borough assembly also is seriously considering, is increasing the property tax rate or re-appraising property values.


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