The assembly on April 14 unanimously approved a memorandum of understanding (MOU) with the school district to improve information sharing on fiscal matters, spelling out shared responsibilities toward the goal of sustainable borough funding for the school budget.

The agreement, which has not been accepted by the school board, would require several policy changes at the district in exchange for the assembly’s support for a local contribution to the school budget each year to the maximum allowed under state law.

The assembly and school board will meet in a joint work session to discuss budget matters at 6 p.m. Monday, April 27, at Evergreen Elementary in Room 101.

The agreement, if the school board accepts the terms, would create a formal framework for cooperation between the borough and the school district. As drafted by City Hall, it emphasizes that clear communication is the best way to avoid the financial crises seen in other parts of the state where districts are closing schools to balance their budget.

The agreement was developed by borough officials following a joint work session with the school board on March 5, with the primary goal being to establish clear expectations and processes that would allow the borough to provide sustainable funding.

“There’s a lot of peril that school districts are facing. We don’t want to be one of those communities, and we’re currently not, but I think that a joint commitment to accountability and communication throughout the process is key,” Borough Manager Mason Villarma told the assembly.

Closing schools is not an option for Wrangell, which has only one of each school, as opposed to Ketchikan which is closing and consolidating two of its four elementary schools. However, Wrangell has its financial problems too. The district’s draft budget for the 2026-2027 school year draws $563,000 from reserves to cover a 10% gap in its $6 million spending plan.

The MOU is structured as a three-year agreement that outlines specific responsibilities for the borough and the district. A major focus of the deal is “facility stewardship,” or making sure school buildings are properly maintained.

Villarma was blunt about the need for the district to take care of the assets the borough owns. The borough owns the school buildings and is responsible for major repairs and upgrades; the district is responsible for routine maintenance.

Villarma used a hypothetical boiler replacement as a cautionary tale.

“If, in fact, we go replace that boiler ... and it’s not maintained, which the school would be expected to maintain it, and it fails three years from now, and we’re looking at another $500,000 to replace that same boiler ... we’re going to hold you accountable to replacing that,” he said. “We don’t have the ability for these really large swings because of lack of accountability for maintenance.”

The borough is also asking the district to maintain a prudent fund balance, ideally up to 10% of its annual budget. Villarma said the district must be prepared for “unforeseen events” and the unpredictable nature of state funding.

The state provides about 65% of the district’s revenue in the district’s draft budget for the 2026-2027 school year, and the borough about 30%.

“You need to be prepared for volatility coming out of the Legislature,” he warned. “If you don’t, then the burden, again, falls on this group right here to try to cut other services to fund the schools.”

Under the proposed agreement, the two entities would participate in three joint work sessions each year. Villarma explained that is designed to keep everyone aligned on funding and priorities before the budget is finalized.

The assembly also wants the district to flag smaller maintenance projects a fiscal year in advance — specifically those under $250,000 — so they can be addressed in the borough budget.

“If these five windows are rotten around the framing, are we going to wait till the walls completely rotten too?” he asked, using an analogy from the March work session. “We want to try to address these things proactively.”

Despite the unanimous vote, the process raised questions for Assembly Member David Powell. He noted that usually, MOUs are drafted by both parties together before being brought to the assembly for a vote.

“I just thought this was kind of weird ... it’s just that now we’re going to have another meeting here with them (on April 27), and I thought maybe we would discuss this again with them and try to come up with agreement,” Powell said.

“I read the whole thing, and I don’t have a problem at all. It’s just not now we’re going to have another meeting with them. ... I just thought it was weird that we did it this way.”

Mayor Patty Gilbert clarified, “For the record, we did present this at the workshop, and our next meeting is when they’ll present their budget to us and we’ll discuss that,” she said.