Borough contribution to schools depends on what the state pays

The borough assembly has approved a local contribution to the school district that could cancel out a pending increase in state funding.

The assembly on May 14 approved a local contribution of $1.3 million to the school district for the 2024-2025 school year, down from this year’s level, based on the assumption that the state increases its funding to Wrangell schools by $440,000.

The amount of state funding is pending the governor’s decision on the budget passed by legislators last week.

The school board had asked for $1.75 million from the borough, intending that any additional state dollars it may receive would go toward reducing the drawdown of school district reserves.

The assembly voted for the full $1.75 million local contribution but only if the additional state money does not come through.

The school board request was for the maximum local contribution from the borough allowed under state law. The past two years, the borough has contributed the maximum at $1.6 million. The cap is based on a percentage of a community’s total property assessments, which increased last year.

Borough Manager Mason Villarma explained the $1.3 million is the most the borough can contribute to the schools without drawing down its own reserves.

Both the borough and the school district are facing limited fund reserves, and school funding at the state level hasn’t increased in seven years despite high rates of inflation. School districts statewide pushed hard this past legislative for a permanent increase in the state funding formula, but achieved only a one-year boost.

“Even if the assembly gives the full maximum contribution that we are asking, there will be a reduction from the school district, through no fault of our own,” Schools Superintendent Bill Burr said at the assembly meeting.

Even at the $1.75 million local contribution from the borough, the school district would draw an estimated $687,000 — half of its reserves — to balance the budget for the next school year unless the state provides more funding.

Villarma explained that the lack of funding for education is not just a Wrangell problem, but that it’s happening statewide and even nationwide. Other districts in the state have had to consolidate and cut teachers, he said, adding that he doesn’t want Wrangell to get to that point.

At the rate of funding required for the borough to contribute the maximum $1.75 million, Villarma calculated it would only be one to two years before both the borough and the school district are out of reserve funds.

The assembly is starting to work on its budget for the new fiscal year that begins July 1.

The assembly unanimously passed a motion to contribute $1.3 million. The second motion for $1.75 million in case the state doesn’t come through with more money passed on a 4-2 vote, Assembly Members Anne Morrison and Michael Ottesen voted against the amendment.

Decisions to pass the original motion and the amendment came after several community members voiced their desire for the higher funding number.

Dave Wilson, school board president, said that he doesn’t want to count on funding from the state, noting that even the one-time state funding boost barely covers the inflation since the last permanent increase.

“You can’t control everything, but you can control this,” teacher Ryan Howe told the assembly, referring to the decisions that come out of the state’s capital.

The Legislature, which adjourned last week, approved $175 million for a one-year increase in state funding for schools. The budget is awaiting the governor’s signature or veto before the start of the fiscal year on July 1.

If the governor allows the full amount to stand, Wrangell will gain about $440,000 in added revenues. State funds already cover about 60% of the school district’s $6 million operating budget.

Villarma cautioned assembly members that approving the $1.75 million local contribution would mean drawing money from the borough’s Secure Rural Schools (SRS) reserves of federal dollars.

His intent was always to ensure the schools had enough funding, Villarma said in an interview May 15. But he doesn’t want to spend over $400,000 of the borough’s reserves if the state is going to come through with more funding. As borough manager, Villarma added that it’s his responsibility to make sure the borough spends sustainably.

The borough covers its local contribution to the school district with money from sales tax revenues and the federal dollars.

Contributing $1.75 million would mean that none of the borough’s projects to repair roads and the utilities could come out of the SRS fund. This would mean making cuts to the general fund in order to complete the much-needed projects, Villarma said.

 

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