Mat-Su Borough School District faces $7 million budget deficit

“A nickel ain’t worth a dime anymore,” quipped the late Yogi Berra.

Although such clever quotes by Berra are usually good for a chuckle, no one is laughing about the $7 million budget deficit faced by the Mat-Su Borough School District and the continual “flat funding” offered by the local borough and state.

This constant cash conundrum is, however, eliciting some creative solutions from district number crunchers that hadn’t been explored before.

One of those solutions brought before the Mat-Su Borough School Board Wednesday night came in the form of a resolution supporting the acquisition of school facilities through the issuance of “Certificates of Participation” (or COPs) involving Mat-Su Central School, future bus terminals, and possibly three charter schools.

Instead of the leasing of facilities and properties to the tune of more than $1.8 million per year, the district is exploring the option of lease-purchase agreements that would be structured such that securities could be issued and marketed to investors similar to tax-exempt debt.

Similar to the way the borough funds fire stations, there would be a dedicated funding stream in which a COP acts as a security through a banking institution, explained the district’s assistant superintendent of Business & Operations, Luke Fulp.

“There would be no need for the borough to levy additional taxes. It would be repaid internally,” Fulp said, adding that district funds that had been set aside for past leases would be used to repay the loan. “What we’re looking for is a competitive rate on that debt. If we can bundle more projects we can market those and obtain a competitive rate.”

The bundling concept is why the district approached American Charter Academy, Birchtree Charter, and Midnight Sun charter schools as they consider the expiration of their own leases at the end of June of this year, the end of June of 2025, and September 1 of 2024, respectively. ACA’s annual payment is $219,240, Birchtree comes to $608,016, and Midnight Sun amounts to $387,600 each year. Mat-Su Central’s current annual lease of $641,647 expires June 30, 2021.

District staff are specifically focusing on the prospect of using 20 unused acres of Pioneer Peak Elementary’s 64-acre parcel for a new Mat-Su Central School building and a satellite bus terminal facility. A second main bus terminal could be built on a 156-acre borough parcel at the corner of Church Road and Seldon.

“This would improve our ability to drive competition for a contract and improve transportation for our student body,” Fulp said. He had explained that the district experienced a nine percent increase in transportation costs during the 2016-17 school year when bids were sought from busing providers and only one company submitted a proposal and that company happened to own the terminal. This would give the district greater control over such expenses.

Fulp added that the Anchorage School District has three separate bus terminals, so it makes sense for Mat-Su to look into expanding its options. The district’s current Pupil Transportation Services contract expires June 30, 2021.

The district is awaiting an analysis on such projects by HDL Engineering Consultants, LLC.

“There’s a great opportunity for collaboration,” MSBSD Superintendent Monica Goyette told the board. “We can find some win wins here.”

The district also hopes to work with the Mat-Su Borough Assembly on solving a funding issue tied to the borough’s property taxes. Currently, the State of Alaska contributes 74 percent ($169 million) to the district’s revenue and the borough chips in 25 percent (or about $55 million).

Through a complex funding formula based on minimum required contributions and mil rates, however, the state has started resisting providing additional funds to the borough due to an increase in the borough’s property tax income. The state expects the borough to pick up more of the tab.

Therefore, the district is working with the borough to raise the local contribution to more closely align with the funding levels experienced by Alaska’s other four large districts.

“We’re funded at the lowest amount of the Big 5 districts,” Fulp said. “Other communities have commercial and industrial properties they can tax … but we still think this is a relevant point to bring forward.”

The district held Budget Open Houses at Academy Charter Feb. 6 and at Wasilla High on Feb 8. There is another one at Dena’ina Elementary Feb. 13, 5:30 pm to 6:30 pm, and on Feb. 15 they will do a Facebook Live event.

The district is encouraging input and advocacy by community members as it approaches its March 31 deadline to draft the budget. The board and the borough assembly will have a joint meeting on the budget April 3.

Wednesday’s board meeting also included a unanimous vote to approve the school calendars for the next three years with students returning back to class on Thursday, August 16, and being released on May 23 for the 2018-19 school year. The following two years had similar start and end dates.

Board Member Debby Retherford said she expects some parents will question the decision to start so early in August, but this decision came after an ad hoc committee of parents, teachers, classified staff and administrators mulled over three different calendar options and held a discussion with the community on Dec. 8th where 18 people were in attendance.

“People had a lot of opinions and thoughts going into the process and people were all over the board with their needs,” Rutherford said before the board voted. “When they heard about all of the requirements we had to meet, it was pretty easy to come to an agreement.”

Goyette stressed that the district would like parents to make an effort to have their children in school for at least the first week in order to get oriented and then if they need to pull students out for family activities and obligations before Labor Day, the district will work with them.

“They shouldn’t be afraid to ask,” Rutherford echoed.

The board also considered whether it should end its membership in the Alaska Association of School Boards to save the $22,987 in annual dues to belong.

Board Member Kelsey Trimmer said he wasn’t sure what they are getting for their money, but Member Sarah Welton defended the organization. Welton serves on the statewide board.

“I know a lot of people question the fees and the services,” Welton said. “I do know that I personally have gained a lot from the Alaska Association of School Boards.”

Welton added later in the discussion that she remembers when MSBSD dropped out of the AASB and “all kinds of issues came up and it was absolutely necessary to join back as soon as possible.”

Board President Donna Dearman told the board she planned on contacting the AASB before the end of week to express the board’s concerns and determine the benefits of membership.