Assembly turns down school district request for funds to keep three schools open; school district deficit goes to $28 million

The failure of the Mat-Su Borough assembly to fund a special $6.1 million request from the school district leaves the district with almost no other option than to close three schools, school district officials said Friday.

The school board meets May 27 for a budget work session and will approve a final budget on June 3 but unless an unexpected pot of treasure is found, the Mat-Su Borough School District will proceed with plans to close three schools, district spokesman John Noestine said.

The three schools are Meadow Lakes Elementary, Larson Elementary and Glacier View School.

Some additional bad news, however, is that a 26% increase in health care costs for school district employees will add $5.7 million to costs for the district, bringing the revised budget deficit to $28.27 million, up from $22.52 million estimated earlier.

The estimated rise in health insurance became known to the district recently, district officials said. Premera Blue Cross/Blue Shield is the district’s insurer.

The Mat-Su Borough Assembly turned down borough manager Mike Brown’s recommendation that the borough’s increase in local school funding to meet an increase required by the state be kept to $1.73 million instead of the $3.3 million required under a state formula.

Brown had wanted to keep the increase to 2% above the current year local contribution, according to sources.

The decision does gives the school district $1.56 million in additional funds, however. The local contribution increased because state funds declined due to a rise in local property valuations in the borough last year. Similar problems are affecting other municipalities like the Municipality of Anchorage and the Kenai Peninsula Borough.

There are a few silver linings, however, if they can be regarded as much. The recent school bus strike, although painful for parents and children, did result in a $3.37 million savings mainly in payroll. Another $2.1 million in savings is expected due to the district’s current freeze on spending. Those affect the current FY 2026 budget but the savings will help offset the red ink seen in the upcoming FY 2027 budget.

There are also some positives in additional state fund possible through the state budget now being finalized by the Legislature, which will approve the budget before legislators adjourn their session on May 20. Included in these are additional state funds for school busing, a nutrition services subsidy and compensatory education services due the school bus driver strike.

There are also planned increases in state funding to schools for energy, and possible reading proficiency grants and vocational and technical education that could go to Mat-Su along with other school districts.

The state budget must be approved by Gov. Mike Dunleavy, however, so there could still be reductions through vetoes by the governor.