MSBSD presents preliminary budget ahead of Borough budget discussions planned for the spring

On Tuesday, during the last joint meeting of the Matanuska Susitna Borough School District and the Matanuska Susitna Borough Assembly meeting of the current school year, the school district presented a preliminary discussion of the annual school district budget.

One of the challenges when creating the annual budget lies in the unknown. When Superintendent Dr. Randy Trani gave his budget presentation, he pointed out that the budget was created while estimating what the state of Alaska is planning to fund.

“Our state funding follows the Governor’s budget, with some minor exceptions,” said Katie Gardner, Deputy Superintendent for Business and Operations. “We are assuming that the $30 increase to BSA (Base Student Allocation), which was part of the Governor’s budget, is included.”

For clarification, the funding the state gives to school districts —the Base Student Allocation, or BSA — has not changed since 2017. Meanwhile, consumer prices for groceries, fuel, and housing has risen, meaning school districts across the state face major budget deficits, which may force cuts to staffing, increase in class sizes, or even closures.

Currently, with the projected $30 increase per student, the BSA could be $5,960 starting next school year. The increase would be the first since 2017. There is a proposal, Senate Bill 52, which would increase the BSA by $1,000 that, if passed, would raise the amount to $6,960, and represent the largest BSA increase in a single year.

The other unknown factor for the budget is the student enrollment, and what that may look like next year.

“The most important part of the budget always starts with a look at enrollment. A lot of our revenue is based on enrollment,” Gardner said “Our project for enrollment for Fiscal Year 2024 is at a record high of 19, 530 students.”

One area that Dr. Trani told members was going to be a big ask was the local contribution:

“What the state requires the Borough to do is going to go up about $6 million dollars. That’s pretty dramatic.”

“What’s working against us from the school district perspective for 2024 is a significant increase in the minimum local contribution,” explained Gardner, who stated that while there have been modest increases in local contribution since 2019, based on the assessed value of property in the Borough, this will go up to the $6 million dollar figure Dr. Trani reported.

“This is important for the district because this is money that is taken away from the state entitlement,” said Gardner.

In simpler terms, any increase in the local contribution is a decrease in what is provided by the state of Alaska to the Mat-Su Borough school district.

This projection, according to Dr. Trani, means that while on paper, this district would come out $1 million ahead, with a projected increase in students, and ultimately the district ends up even. And that is before taking into consideration any changes to the consumer price index.

One area that seems to remain consistent is the transportation funds, which have remained stagnant since 2016 while gas prices and inflation have only risen.

“Funds have been flat since 2016, and we don’t know if that’s going to change. It’s a big deal in our current budget because it’s over $4 million dollars that we would use out of general funds to support full transportation for students,” Dr. Trani said. While he hopes that transportation funding will increase, the district just doesn’t know if or when that might happen.

None of the projections that were presented included any salary changes, including collective bargaining from the Teachers Union or the Classified Union. Meaning, if there was to be a pay raise for either groups, at this juncture, it is not part of the annual school budget.

Dr. Trani also told members that operations are able to be maintained at their current levels for the FY2024 as a result of the nearly $14 million in federal stimulus funds still available. He did point out that these funds will not be available in 2025.

“These are the funds that have really allowed the district to maintain operations without significant cuts. And these will be the funds that we will be relying on for FY 2024 without having reductions in services, without having to cut staff. These funds do expire at the end of next year, so we will be exhausting them.”

Gardner said that the district will have to look at modifications if there aren’t changes in revenue, specifically reductions in spending and/or a continued use of fund balances in 2025.

“I think everyone recognizes that we are in an unprecedented time of inflation.”

When looking at long-term budgeting for the school district, Gardner presented 3 different perspectives-pessimistic, moderate, and optimistic- but said that the farther out the plans, and the more changes to assumptions of enrollment, BSA, etc., the harder it is to be accurate on what the future holds for the district.

“As we look at what will change with enrollment, the Borough appropriation, the BSA, in terms of our revenue, these are the realities we may face.”

Gardner went on to say that under a pessimistic scenario, the district is looking at a $38 million deficit in 2028. Conversely, in the optimistic scenario that project the passage of SB 52, there would be a surplus in 2028.

“We know these are an important part of long-term planning, but we have to understand the variance that exists within these numbers.”

The proposed budget will go in front of the Assembly as they begin working on the annual budget for the Borough during the next month.