The Unalaska City School District is predicting a deficit and is asking the city for nearly $6 million to fund its fiscal year 2025 budget. That’s about half a million dollars more than last year’s ask, and includes the maximum allowable contribution from the city’s general fund.
Superintendent Kim Hanisch said at a recent city council meeting that the school is projecting an $8.2 million budget and a significant deficit.
“We anticipate being in the deficit by 485,000,” Hanisch told council members. “Our fund balance will be zero, if not just a little bit below zero by the end of this year.”
That balance is projected to drop to around $30,000 in the red, according to information presented to the Unalaska City Council. It’s not uncommon for the district to dip into its fund balance to make up for losses in the budget, but that sum of money has dropped significantly over the last few years. In fiscal year 2023, the district accumulated a final deficit of more than half a million dollars mainly due to major increases in energy costs, which dropped the fund balance to just under $400,000.
School administrators have said in the past the district can’t sustain such large deficits.
Still, Hanisch said the district and budget committee worked hard trying to build a conservative budget.
“The revenues that we anticipate for this upcoming year will decrease by 5.66%,” she explained. “So our projected revenue is approximately $7.7 million. Our projected expenditures will increase only 2.2%.”
Unalaska schools get the majority of their funding from the state and city. The state’s funding is built mainly around the student population. This year, the budget committee projected an enrollment of 350 students.
Hanisch said they built the status quo budget around the assumption that per-student state funding would remain close to where it has been for several years, at about $6,000. That puts the state’s estimated contribution at roughly $3.2 million.
“They aren't inflation proofing the budget — they're not increasing to go along with inflation, which puts us in the situation that we're at right now,” she said. “So we built our projected budget that they'll flat fund because that's what they've been doing.”
Schools across Alaska have been asking for more money from the government for years, and Legislators passed an education bill that would have increased the state’s per-student contribution by nearly $700, but Gov. Mike Dunleavy vetoed the bill last month. The Legislature failed to override the veto by one vote.
Hanisch told council members she doesn’t think Dunleavy will be providing any extra money for education this year.
However, he did approve a broadband assistance grant, which gives the district an unexpected boost of about $125,000.
Hanisch said they built the budget to be status quo.
“With that, we had to take into consideration that we can avoid some increases — increases just due to inflation, as well as our movement on the salary schedule,” Hanisch said. “So we built a budget with a 3% known increase in salary, 5% anticipated increase in insurance, and then a 2% increase in student travel due to inflation, not extra trips.”
She said the budget committee brought the administration a list of places the district could decrease spending.
“Reduce the purchase of library books, not eliminate, but just reduce,” Hanisch said. “Look at supplies in all departments, professional development and maintenance projects. They asked us to consider, very last, any reduction in staff or technology supports.”
While state funding has decreased steadily over the past several years, the city’s contribution has continued to grow. Still, Hanisch told the city council she understands that these are tough economic times for everyone.
“So when we ask this, it is coming with that recognition that it may not be possible to fund everything that we need,” she said.
The state establishes caps for municipal funding for public school districts based on an assessment of the value of local properties. The City of Unalaska caps out at $4.4 million, which comes from its general fund. But the school can accept funding beyond that limit for additional programs. For Unalaska, those include community schools, food services, student activities and preschool, and this year, total almost $1.9 million in requested funding from the city. One area within those programs that is seeing a major increase in funding requests is community schools. That’s shot up more than $700,000 in the last year.
“In the past, the district has, in their operating fund, paid 60% of those costs and the city has contributed approximately 40%,” Hanisch said. “Staying there has been bringing us into the red in that fund balance.”
She said the district believes that deficit has been caused by drastic increases in swimming pool use as well as more community school activities being held at school buildings. She said this request puts the district and the city close to a 50/50 split.
The city generally gives the district full funding, including requests beyond the state’s cap. Several council members spoke at the recent work session in favor of granting the district its full request.
Council member Thom Bell said it’s money well spent.
“In my opinion, the school is probably the very last place we would look at cutting anything in our budget,” Bell said. “And I don't see why we can't fund the schools at what the ask is, but once we get into the budget, we'll have a better idea.”
Council members have until May 1 to determine how much funding they will give to the district. They’re scheduled to make a decision at their meeting Tuesday.
