Borough officials said they “will make every attempt” to contribute the maximum allowed under state law to the school district budget, on the condition that the district adopt new policies for its reserve funds, work out clear responsibilities for building improvements and provide an annual performance report to the community.

The deal, if it goes through during budget deliberations, would provide a boost to the district in borough funding, which has not always been at the maximum allowed by state law.

The school board and the district superintendent met in a work session with the borough assembly and manager on March 5 to discuss finances and funding sources for school operations and maintenance.

Under the proposed shared commitment, the borough contribution for the 2026-2027 school year would be about $300,000 more than this year’s funding level, helping to reduce, but not close, the district’s gap between revenue and expenses.

Borough Manager Mason Villarma started the session by saying he hopes the joint meeting will go from being an annual event to a quarterly one.

Schools Superintendent Joshua Garrett followed the sentiment. “The partnership is strong and collaborative, and it’s worth protecting and maintaining.”

The school district receives almost 60% of its revenue from the state, based on its student count and legislative appropriation. The borough contribution covers about 30% and is up to the elected assembly.

Villarma presented a long-term financial strategy designed to stabilize support for the school district while reducing reliance on unpredictable federal payments that the borough uses to cover much of its school funding.

His proposal introduced new accountability measures to ensure that the borough and school district work more closely together.

Under the suggested policies, the school district would be expected to maintain a 10% fund balance for unforeseen circumstances and changes in state aid.

The district’s operating reserves currently exceed that 10% of its annual budget but would drop to less than 4% under the draft budget for the 2026-2027 school year that proposes to draw $636,000 from reserves. The school board likely will revise the budget before submitting it to the assembly.

Another policy recommended by the borough would require the school district to submit a “practical ranked list of proposed projects less than $250,000 for borough funding consideration” prior to Oct. 1 each year. Villarma said the district’s six-year capital improvements project list is not helpful for the borough to determine what needs funding in the next budget cycle.

The borough owns the school buildings and is responsible for major maintenance and upgrades, while the district pays operating expenses, routine and minor maintenance out of its budget.

Board President John DeRuyter said he is concerned that the proposed reporting policy would apply only to projects under $250,000.

“I feel like that would be a difficult thing for us to do, seeing as how the majority of the problems we have are structural and would cost well over $250,000,” he said.

Villarma said the proposal is aimed at keeping tabs on needed maintenance and improvement projects, serving as a good faith effort for the district to show City Hall that school officials are closely monitoring the condition of their buildings.

Also part of the deal proposed by the borough is that the school board clarify “the purpose and intent” of its major maintenance fund, which is a separate account from the district’s operating reserves.

The maintenance account, currently at about $850,000, has been a source of contention in the past between the borough and City Hall. The account had exceeded $1.2 million, which borough officials believed was excessive, as the borough, not the district, is responsible for major projects at the buildings.

The district pulled $250,000 from the maintenance reserves to help balance its operating budget for the current school year.

DeRuyter said he thinks the proposals are all good ideas but doesn’t believe it would be simple to make them official school policy.

“I think that maybe making these proposals as memorandums of understanding would probably be a better mechanism,” he said.

The cornerstone of the mutually beneficial proposal is a funding model that aims to reach the maximum borough contribution allowed by state law every year.

The state sets a minimum and a maximum for what each borough can contribute to its schools — based on total assessed property value in the community — in an effort to lessen the funding gap between rich and poor districts.

Wrangell borough code dedicates 20% of sales tax proceeds to schools, with federal aid under the Secure Rural Schools program adding to the contribution.

The funding landscape changed significantly in 2024 when Congress failed to reauthorize the quarter-century-old SRS program, stopping the payments which had averaged about $900,000 a year for Wrangell. The money is directed to local governments that cannot tax national forest land in their jurisdiction.

Congress in December restored the funding, providing a retroactive payment for last year, funding for this year and then one more year before the House and Senate will need to vote again if the program is to continue.

The long-term funding model presented by Villarma shows pulling in property tax revenues to help fund the schools to the maximum, reducing the dependency on the federal program which is less certain.

Use of the federal money generally is limited to anything related to schools and road projects. Villarma proposed using more of the SRS aid for debt service on school repair and construction bonds and specific renovation projects rather than operating costs.

Several maintenance projects paid by the borough were recently completed or are underway, including a high school elevator replacement ($528,000), a fire alarm upgrade at the high school and middle school ($719,000) and a new aboveground fuel tank and piping system ($331,000).

In addition, work is expected to start later this year on $10.5 million in renovations at all three schools, funded by a state grant and a borough bond issue that will be repaid over time, plus a new roof at the middle school paid for by a state grant.

Assembly Members Bob Dalrymple and David Powell both noted at the end of the meeting that they had been expecting more specific budget-targeted discussion.

“Normally that’s a big part of what we discuss in these meetings,” Powell said.

Kristy Andrew, the school district’s business manager, said the next draft of the budget “should be done soon.”

The first draft showed the district spending $6.1 million in the 2026-2027 school year, with $5.5 million in revenues and withdrawing about $636,000 from its reserves to cover the gap.

“We anticipate there will be some changes in a few areas from the first draft to the next one,” Andrew said at the work session.

She said the final budget would be available and approved by the April 20 school board meeting in order for it to be submitted to the borough before the May 1 deadline.