Clock ticking, no solution: Assembly and board fail to bridge budget gap

Following a lengthy joint meeting the Mat-Su Borough (MSB) Assembly and Matanuska-Susitna Borough School District (MSBSD) school board failed to resolve a $22.5M budget deficit. As the deadline looms, the district faces potential layoffs and school closures, with the school board and assembly still unable to bridge the massive funding gap,

The meeting is part of the annual budget process for the district and the Borough, and it came after the school board approved asking the MSB for $9.4M in revenue, instead of the $3.2M previously recommended by the MSBSD administration during the school board meeting on March 18.

To justify the budget, the school board pointed to shrinking enrollment and a shift toward home-based education. These revenue losses are compounded by rising fixed costs—such as insurance and salary increases—combined with flat state funding and borough revenue that fails to keep pace with inflation. “While costs are going up and revenue is declining, we end up with a deficit,” said Deputy Superintendent Katie Gardner.

The district presented three iterations of a budget. The first with the flat local funding--meaning the district receives the same nominal dollar amount in a new fiscal year as it received the previous year, with no increase for inflation, enrollment growth, expanded services, or rising operational costs. Gardner said that looking at this scenario, there is a series of recommended reductions including school closures, staff and roughly 30 teacher reductions across the district, and additional cuts to bus routes, among other things.

Gardner presented a second budget scenario incorporating the minimum required local contribution. While this plan eliminates the need to reduce classroom teachers, all other planned cuts remain in place. This scenario aligns with the proposed budget previously presented to the school board by Superintendent Dr. Randy Trani.

The final budget scenario presented to the assembly was the budget adopted by the school board last week. It included a revenue from the MSB of $9.4M, which would prevent the closure of Glacier View School, Meadow Lakes, and Larson Elementary Schools, would keep the classroom teachers, and would greatly reduce the reliance on the fund balance.

MSB Manager Mike Brown said he wanted to bring the conversation from school district conversation to a community conversation saying “I think it’s important for all of us to understand what’s in play as a community,” before presenting a data-and-demand driven MSB budget preview. He emphasized the need for proactive, lasting solutions to break the cycle of annual school closure discussions, acknowledging that failing to act now will lead to identical challenges in the future. “We have to be looking at the consequences of decisions today on how it might affect the borough tomorrow, five and ten years from now.”

He discussed the idea behind “funding to the cap,” an expression that has gained traction over the past several weeks, but cautioned that it would increase taxes by $700 for the average single family residential homeowner and push the mill rate above the existing cap.

Acknowledging the ongoing revenue challenges, Brown noted that voters rejected his proposed fuel excise tax, and he anticipates similar resistance to the assembly’s current sales tax proposal. He also highlighted that local education contributions have risen 40% since 2017, placing a significant burden on taxpayers. "I’m struggling with this idea of flat funding," Brown said, arguing that the term overlooks the true, rising cost to local taxpayers.

Brown proposed a 2.2% operating increase, totaling $79,761,745, which falls short of the district’s $81 million goal. However, he indicated his office is looking to fund deferred maintenance for Iditarod Elementary’s cladding and Talkeetna Elementary’s roof. Additionally, he said the MSB is also budgeting for 70% of the state’s obligation on top of the Borough’s share of school bond debt, despite uncertainty regarding whether the state will fully fund its share.

He addressed the recent narrative regarding school funding, emphasizing that the borough has actually met the school board's requests in recent years. He pointed to three past resolutions as evidence that the assembly approved requested funding, even as the state increased the required local contribution.

“It feels like there’s finger pointing to the borough that if they had only done their job, we wouldn’t be here today.”

School board member Ole Larson defended the district’s fiscal responsibility, noting that taxpayers supported school funding, and the district contributed significantly to infrastructure projects, including $10M for rebuilding Houston High after the 2018 earthquake and $10M for Mat-Su Central. Highlighting this collaboration with the borough, Larson argued that such efforts to manage costs are overlooked. He highlighted that the district continues to be successful despite the limited funds, adding that without a sustainable funding plan for the next three years, the district risks systemic failure similar to Anchorage or Fairbanks. Larson warned that continued budget cuts and school closures will lead to a failed brick-and-mortar system, despite the district's currently successful mix of charter, private, home, and traditional schools.

“We’re here to say to you ‘we need some help. We really need help this year. And we need a planning period for the next three years.”

Larson said that while the district currently offers the kind of educational variety most of the country dreams of, without a real 'end game' for funding, saying that if public schools collapse, kids lose their chance to graduate and succeed. “We don’t want any of our schools to fail. If we our public schools fail in three years, there’s nothing good that’s going to come out of it.”

While joint members were finally diving into solutions after a lengthy public comment period, recognizing that still more was needed to be addressed during one of the few times both bodies are together, a motion was made to extend the meeting, and while there was a slight majority that voted to extend, the school board stuck to their rules of ending the meeting at 11:00 p.m. citing that they must have a unanimous vote to extend.

A final decision on these closures is expected by May 15, 2026. The school’s budget will not be finalized until the Borough and the State both finalize their budgets and the state budget is approved by the Governor. The final MSBSD budget is expected to be finalized by July 1.