The first draft of the 2026-2027 school district budget shows a $636,000 draw from reserves to balance revenues with expenses.

The school board has scheduled a public hearing on the initial budget proposal for 6:30 p.m. Monday, Feb. 2, at Evergreen Elementary School.

The board and borough assembly are scheduled to meet in a public workshop to discuss the budget at 6 p.m. Thursday, Feb. 5, at City Hall.

The initial draft spending plan shows $6.1 million in expenses and about $5.5 million in revenue, about two-thirds coming from the state.

Budget pressures have increased in recent years because of lower enrollment, which determines the amount of state funding. Additionally, federal aid that was provided during the pandemic has expired.

The district expects to draw almost $400,000 from its operating reserves to balance the 2025-2026 school year budget, according to the latest projection from the district’s business manager. It also moved $250,000 from a maintenance reserves account into operations to help balance this year’s budget.

The district expects to receive $3.1 million in state foundation funding for next year. This is a decrease of $150,000 compared to the current year. Part of that loss comes from having two fewer students who require intensive special-education services, which the state provides additional funding.

For now, the school district estimates it will receive about $1.7 million from the borough for next year, which includes $300,000 from the federal Secure Rural Schools program that Wrangell can spend only on schools and roads. The $1.7 million would be an increase of $300,000 over this year, after Congress restored the federal aid program.

On the spending side, the district is budgeting for a 10% increase in health insurance costs, and most staff members will move up one step on the salary scale per their contracts. Other expenses for supplies and services are based on last year’s figures.

Superintendent Joshua Garrett said he feels comfortable with the early version of the budget. “The figures we’re using are conservative assumptions — on the low end — of the revenue side. I think the actual revenue might be higher.”

Garrett said the key to the budgetary work is accuracy. He noted that the school isn’t pulling money from the major maintenance fund as it did for this year.

“As we get further along, expenditures will change, and some of the revenue categories will change,” he said.

He also characterized the deficit in the initial draft budget as part of the normal starting process.

“We just started the process. There is a lot of work to do, but I like where we’re beginning,” Garrett said.