Dillingham school district asks the city for an additional $400K to offset inflation
Each year for the past decade, the Dillingham school district has received $1.3 million dollars in funding from the city. Now, the district is requesting more. Phil Hulett, the school’s financial director, said that while school funding from the city hasn’t changed in 10 years, inflation has increased dramatically – up by about 30%.
“With our inflation rates the way they are, we've just kind of worked it out,” Hulett said. “So this year we're actually just trying to recoup the inflation amount, and so we're asking for $1.7 million. So [that’s] a $400,000 increase for this next year with our current budget.”
Hulett said that the $1.3 million previously allocated to the district can no longer keep the school running. Without the additional money, the school would face cuts to its athletics, music and after school programs. “You know, 90% of our budget is salaries and insurance. The other 10% is the extra stuff and there's not a lot of extra stuff to cut anymore,” he said.
The City of Dillingham actually provides more school funding than it legally must. In 2022, for example, Dillingham was required to contribute about $525,000 to the school each year. The state mandates that cities contribute a 2.65 mill tax levy on properties, or $2.65 for every $1,000 of property taxes. But the city paid an additional $774,000. It financed that by allocating about $550,000 of the sales tax revenue and another $220,000 in additional funding to the school.
The school district has received millions of dollars in federal grants in recent years, including a $2.5 million dollar grant toward community education, a $3.2 million dollar mental health grant for more councilors, mental health resources and training shared with the Lake Peninsula school district, and a $3.4 million dollar literacy grant. But that funding can’t be used for other services. Hulett said the school needs more funding from the city for its baseline academics.
“Those grants are for those extras that we’re able to do. Those grants do not cover your math teacher, your second grade teacher, [or] the core curriculum,” he explained.
Dillingham’s recent history with school bond debt started in 2008, when the city took out approximately $15 million with a 5% interest rate to renovate school facilities. Mayor Alice Ruby said significant renovations were needed; the school closed the high school gym due to its poor condition.
“Actually having to close the gym opened our eyes to the general condition of both buildings,” Ruby said. “The bond provided funds for major repairs to both buildings.”
Dillingham voted in favor of the school bonds with the caveat that the city would not raise taxes specifically to pay the debt — a promise Ruby said the city has kept.
“The community supported the bond because they placed a high priority on education and realized that it wasn’t likely the funding would come from other sources,” she said.
At that time, a state program reimbursed up to 70% of those debts to districts like Dillingham, which had purchased school bonds for facility maintenance. “We were also influenced by the state’s bond debt reimbursement,” she said.
In 2019, Gov. Dunleavy cut $49 million from the reimbursement program, and in recent years, the city has had to make those payments. Mayor Ruby says that with reimbursements the city paid off between $300,000 - $400,000 a year in debt. In 2020, those payments rose significantly. But last year, the state legislature passed a bill that paid out the reimbursements from 2019 on. Dillingham received $3.1 million.
But Ruby said Dillingham must also consider other expenses; it has deferred financing for major building repairs, equipment replacements and wage increases in order to pay the bond debt. Further, she said, the city’s job vacancies produce a temporary surplus that will disappear when they hire new employees.
The school district and city met on March 20 to discuss the school’s proposal for more funding. Hulett said one of the city’s major concerns was whether it could continue to pay out more money each year.
“A lot of their questions had to deal with the sustainability of it — If the city could maintain $1.7 million for years to come," he said. "And you know, that's a great point.”
Hulett said decisions will depend, in part, on the state legislature, and to what extent the state increases the base student allocation, or how much funding school districts receive per student. If state funding is increased, the district wouldn’t need as much money from the city.
“There's a House bill and a Senate bill that's in public comment [last] week and both of them have different numbers and it's just kind of going to be — where does it end up?” Hulett said. He thinks the city’s decision is still relevant to how the school will move forward.
“We're not trying to build a castle,” he said. “We're trying to maintain our cottage.”
The school board and city council will meet again at the school district central office at 5:30 p.m. tonight to further discuss the budget. The next regular city council meeting is April 6.
Disclaimer: The Dillingham City School District owns KDLG's broadcasting license, but it does not influence or direct our coverage.
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