Schools Get Pledge: City Funding to Cap

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Created on Friday, 17 January 2025 16:14

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By SHANNON HAUGLAND
Sentinel Staff Writer
    At a work session with the School Board Thursday, Assembly members agreed that the city would fund schools to the maximum allowed under the state cap for the fiscal year that starts July 1.
    The annual meeting on the school budget was convened as a work session, so no formal action was taken by either the Assembly or the School Board. The actual amount of local funding will depend on whether the Legislature and governor approve an increase to the Base Student Allocation, the state’s formula for allocating education funds to local school districts.
    If the state increase is approved, the city will make a $7.97 million contribution to the school budget. If the BSA increase isn’t passed, the maximum for the city under the cap will be $7.6 million.
    In either case, the Assembly agreed to continue funding local school-related non-instructional items outside the cap. Those are $134,600 for school activities, $67,000 for Performing Arts Center utilities, and the $125,000 contract with the Fine Arts Camp to operate the PAC.
    “If the BSA is raised by $680 we’re looking at $7.9 million,” Mayor Steven Eisenbeisz said near the end of the meeting. “And I think that’s the number we should put in initially. That way, it forces us to be conservative on the back side. Should the BSA increase not go through, the cap is $7.5 million and we can figure out something else to do (with the money).”
    The Assembly will confirm the funding agreement with the adoption of the general fund budget ordinance in votes at two regular meetings.
    The Assembly and School Board also reviewed education appropriations from a special revenue fund, $360,000 from the city marijuana sales tax, which is dedicated to school travel and activities. There was also general agreement for allocating up to $300,000 from the city’s share of the federal Secure Rural Schools program. This funding must be authorized by Congress every year, and this year it was stalled in the House of Representatives after passage by the Senate.
    The city last year took on some school district expenses to ease the district’s financial burden, such as the Blatchley pool ($210,000), and maintenance of all school buildings ($600,000).
    The School Board outlined challenges the district is facing, including declining enrollment and the fact that the major source of school funding, the state’s Base Student Allocation, has remained at $5,960 since 2016.
    “The BSA would have to increase $1,963 to account for inflation,” School Board President Phil Burdick said, using figures from the nonprofit Association of Alaska School Boards.
    A BSA increase of $1,467 would allow Sitka to balance its school budget, Superintendent Deidre Jenson said.
    “That’s just a status quo budget,” Jenson said. “That’s not adding any additional (items) which we need. We need to refresh our technology; we haven’t done a curriculum review or purchase for several years.”
    The tone of the work session was genial, and the School Board thanked the Assembly for supporting the schools, which are facing an up to $4 million deficit in the fiscal year 2026 budget if no additional funding is provided by the state.
    “I want to take this time to remember and remind you this actually shouldn’t be on your shoulders,” Burdick said, addressing the assembled city officials. “This should be on the state’s shoulders and it should have been on the state’s shoulders for 20 years. So any support that you have over there (in Juneau) would be greatly appreciated, because that’s who really needs to hear it.”
    City Finance Director Melissa Haley said today the work session gave her the information she needs to continue drafting the city’s FY26 general fund budget.
    “This is critical information for putting our budget together and giving us a starting point,” she said. The local contribution to schools comes from all city property tax (over $4 million) and a growing share of the city sales tax revenue (about $4 million).
    A continuing problem, Haley said Thursday, is that any growth in the city’s property tax revenues is being offset by the increase in the number of senior exemptions in Sitka. State law allows taxpayers 65 and older to have a property tax exemption on the first $150,000 of the assessed value of their primary residence. Last year the Senate Finance Committee proposed increasing it from $150,000 to $450,000 of valuation, but it never reached a floor vote.
    One unknown at this time is whether Secure Rural Schools, formerly timber receipts, will be reauthorized. If that does happen, Assembly members said they would dedicate 50 percent to schools, up to $300,000. Assembly member Tim Pike noted that this is not counted toward the funding cap.
    Jenson said the budget shortfall last year put a heavy burden on the district, which had to reduce staff and move teachers to different buildings.
    At the end of the 2023-24 school year, the district reduced staff by 18 people, and moved a number of teachers to different buildings.
    “That’s the story the Legislature needs to hear,” Jenson said. “When you say it’s a huge change and a heavy burden on the teachers and it just trickles down to kids.”
    Assembly members expressed support for the School District, and said they were being prepared to fund to the higher level.
    “It’s never easy and I don’t envy your positions, because your funding sources are extremely limited,” Eisenbeisz said. “You have us, you have the state, and you have a couple of very small ancillary pools. ... We have one chance with every student, they have one chance to be in kindergarten, they have one chance to be in first grade. We’ve got to do the best we can every single year for all those students.”
    City Administrator John Leach said today the city will be “sharpening its pencils” to create a budget taking into consideration flat sales tax revenue, the prospect of a successful ballot initiative, the cost of new services added last year, and the city’s taking on an increasing burden for schools.
    “Things are going to be tight this year,” he said.