New state money could narrow Mat-Su’s $28 million school budget deficit, but a lot is uncertain

The state Legislature is advancing bills that would put substantial new funding into schools including Mat-Su. New money could make it easier for the school district to handle the deficit for the upcoming 2026-2027 school year now estimated at $28 million.

It’s possible that a new distribution of funds could significantly dent the deficit. However, additional state funding won’t be known for sure by the time the Mat-Su school board must finalize the budget. Also, the money may not show up if Gov. Mike Dunleavy vetoes all or part of it.

Much of the budget shortfall was anticipated earlier this year but an unexpected increase of $5.76 million in health insurance costs, which became known only recently helped drive the deficit from $22.5 million estimated in March to the $28.3 million now expected, school officials said.

Three Mat-Su schools will likely close as a result of the deficit and other spending reductions will have to be made. New state funding won’t be known until the Legislature approves the new appropriations on May 20. The governor’s decision to approve the budget will come later.

Also, it’s not clear how much new money is approved would come Mat-Su’s schools, although it will be enough to take some of the sting out of the deficit.

It’s also possible that the school board could approve the budget in anticipation of new money and then reduce spending if the governor vetoes the funds. However, this could be disruptive in budgeting and making personnel decisions.

Meanwhile, the Legislature has two amounts for proposed extra “on-time” funding for schools that is outside the Base Student Allocation, the annual distribution of state aid to school districts guided by a per-pupil allocation amount. There is $158 million in the operating budget passed by the House and $111 million in the budget approved by the state Senate.

The Senate also has an additional $29 million for school districts to help pay higher fuel costs. There is no fuel cost appropriation in the House budget although it is assumed that school districts will pay for fuel from part of the one-time extra funding. The differing versions of the budget will be reconciled in a House-Senate conference committee. That must be done by May 20.

There are other bills pending in the Legislature that will affect Mat-Su schools. House Bill 28, now pending in the Senate Finance Committee, adds $7 million for pupil transportation, $22 million for reading incentive grants and $10 million for career and technical education.

If HB 28 passes the approved amounts would be added to the budget subject to the governor’s approval.

The bill also has changes on the review of correspondence programs, a matter of interest to Mat-Su parents. HB 28 would require correspondence programs to report each year on administrative expenditures, student enrollment and demographics, to submit an accounting of allotment expenditures, the value of allotment expenditures reviewed and denied by the district and the total value of carried forward allotment funds at year-end.

The bill would also allow students who cease to be enrolled in a correspondence study program to retain textbooks, equipment and other curriculum purchased with their allotment.