Mat-Su schools draw down savings to balance budget

With belt-tightening and some assumptions for increases in one-time state funding the Matanuska-Susitna Borough School District will run on a balanced budget this year, according to budget documents presented to the borough assembly at a Tuesday, March 26 meeting.

But that includes a drawdown of $10 million from the school district’s reserve balance, or savings kept for emergencies and other unexpected expenses. However, this is better than the $30 million deficit Mat-Su school Superintendent Randy Trani said he expected earlier in a state legislative hearing in Juneau.

School districts around the state, including Mat-Su’s, are struggling due to the failure of an increase in the Base Student Allocation for schools, the formula that guides state education funding.

The Legislature approved the BSA increase by a wide margin a few weeks ago but Gov. Mike Dunleavy vetoed it and legislators failed to overturn the veto with one vote short of the the margin needed to overturn it.

In its FY 2025 budget approved March 20 the school district’s spending plan totals just over a quarter of a billion dollars, or $263.56 million. Revenues totaled the same amount, but that is thanks to the $10 million draw from savings.

The student count for Mat-Su is expected to continue growing but at a slower rate than in recent years, according to the documents.

Total students estimated to be in class are 19,412 for the upcoming Fiscal Year 2025, which begins July 1. That’s up marginally from 19,372 in the current budget year, FY 2024.

Mat-Su is the only school district in the state that is still growing. All other school districts are experiencing enrollment declines.

Having more students, or at least a stable enrollment, helps with finances because state funds are allocated on a per-student basis. However, expenses often rise above those increases, particularly for fixed costs like insurance and fuel for school buses.

As for revenues, funds from the state’s Foundation Formula, guided by the BSA, are expected to drop to $165 million next year from $170.7 million in the current year. The Mat-Su Borough’s local contribution will be up, at $75 million compared with $72.8 million in the current year.

Other state and federal funds are expected to remain at their 2024 levels, at $12.1 million (other state) and $1.13 million (federal).

In its budget belt-tightening, the school district plans to reduce department non-personal budgets by $5.67 million; district management services by $2.14 million; substitute teachers by $1.07 million; and health insurance by $1 million, according to the budget documents. The district will also reduce its contingency for the budget by $1.16 million.

Department non-personnel budgets are reduced by 27 percent but this is partly offset by a 9 percent increase in insurance. The district will also spend $5.33 million to subsidize school bus services.

The state contribution to help support pupil transportation has not been increased in years, resulting in the need to transfer funds from student instruction to help support school buses due to rising fuel costs and wages for drivers.

Salaries and benefits will account for 80.8 percent of the FY 2025 budget or $212.85 million, mostly for teaching staff. Non-personnel expenses are estimated at $25.1 million with $8.36 million spent for utilities.