Mat-Su school challenges: Lower revenues, rising costs and now a drop in enrollment

Mat-Su school board and borough assembly members got their first peek at the Fiscal Year 2026 school district proposed budget last Tuesday, Dec. 10, in a joint school board and assembly meeting.

Some good news in the school district’s data presented is that Mat-Su continues to have the lowest administrative costs and spending per pupil among the top five school districts in the state, which include Anchorage, Kenai, Fairbanks, and Juneau as well as Mat-Su.

Also, a high percentage of expenditures, or 93.6%, go to supporting in-class instruction, and only 6.4% to administration, Katie Gardner, Deputy Superintendent of Business and Operations for the district, said.

What’s challenging, however, is that school operating costs continue to rise and revenues fall. For the first time Mat-Su’s enrollment has dropped, which translates into reduced funding from the state, Gardner told school board and assembly members at the meeting.

Enrollment this year is 300 students down from last year, according to the October count of pupils in school that is used by the state to set education funding. Current enrollment is 19,080, Gardner said. It is the first time in years this has happened.

Mat-Su now joins the four other large school districts in seeing fewer students in classes.

However, the puzzle is that Mat-Su’s population including families appears stable, unlike the other communities seeing a loss of working-age adults, typically with families and school-age children.

So, where did the 300 children go? It’s not for certain, but Mat-Su officials believe they may have gone to home-study and correspondence programs including some operated by other districts outside Mat-Su.

The children may still be living in the region but not attending public schools. That costs the school district in state funding.

That’s one challenge, Gardner said. Another is that the assessed value of property in the borough is rising. That requires the borough to provide a higher local contribution the school district budget. It also results in lower state funding, she said.

A third challenge is the uncertainty over funding from the state. The Legislature will again consider an increase in base state funding this year but even if lawmakers approve it Gov. Mike Dunleavy may veto the increase as he did in the last legislative session.

But also, one-time new funding appropriated by the Legislature and approved by the governor may not appear this year, Gardner said.

The starting point in budget discussion is an assumption that if enrollment stays down the district may see a $9.66 drop in revenues. Expenditures, meanwhile, show continued upward pressure from increases in personnel cost, utilities, insurance and other costs, so that spending could be up $9.65 million, assuming status quo in school programs.

The net result could be a $23 million deficit in FY 2026. But this assumes the one-time state funding is continued. If it isn’t, the deficit could be doubled.

However, a lot will change between now and late spring when the final budget must be approved by school board and the borough assembly. A large deficit was also seen last year during the early stages of budget work but that was whittled down through the spring.

One other issue the district is dealing with is the need for major maintenance in some schools, Gardner said. The borough assembly will have to approve funds for this, as Mat-Su has not been able to get state funds to help with major maintenance.

In the current year, FY 2025, the borough supported $2.095 million in school major maintenance. This year the assembly is being asked for $0.00 million.

Ten projects are proposed for FY 2026, including boiler replacements in seven buildings. There is a $600,000 boiler project at Finger Lake Elementary; $350,000 boiler at Snowshoe Lake elementary; a $450,000 boiler for the borough administration building and $350,000 for a boiler at the nutritional services building. $150,000 is proposed for a boiler at Sutton Elementary; a $700,000 boiler for Wasilla high school and a $350,000 boiler at Cottonwood Creek Elementary.

Elevator replacements are proposed at Wasilla High School and Colony High School for $250,000 each, and for Wasilla Middle School for $350,000.