Rising costs and flat state funding are hammering school districts, state senators told

Rising costs are hammering school districts, and state senators in Juneau got an earful about it in hearings last week. School districts are commonly experiencing a 20 percent cost increase in pupil transportation, for school buses, over the last year.

This means money must be shifted from other programs, Lisa Parady of the Council of School Administrators, told the Senate Education Committee chaired by Sen. Loki Tobin, D-Anchorage. Kenai Borough school district superintend Clayton Holland told the Senate committee that his school board had to shift $520,000 out of the general education budget this year to fund the shortfall in school bus operations.

This is the third year for this. The amount last year was $357,000 to supplement money made available by the state. The deficit was $183,000 the year before. While the state hasn’t increased basic school assistance since 2017 school transportation support hasn’t been increased since 2016.

Inflation has taken a big bite out of the purchasing power of funds that are available. Rural schools are particularly vulnerable to rising costs because they totally depend, for the most part, on state funds. School districts in organized municipalities, like the Matanuska-Susitna Borough School District and Anchorage School District receive funds from their host municipalities. But most rural schools are not within municipalities and depend on the state. Alaska’s Constitution also requires support for statewide public schools, so it’s a problem for the Legislature in years when revenues are lean.

Sarah Sledge, of the Coalition for Education Equity, a group focusing on rural education, told senators that for rural school districts overall fuel costs, mostly heating of school buildings, rose 46 percent from FY 2022 to FY 2023. Utility costs overall rose 38 percent with fuel as the major driver; new construction was up about 20 percent; travel was up 40 percent; supply costs rose 10 percent to 20 percent, while insurance rose 26 percent, she said. Lon Garrison, of the Alaska Association of School Boards, added his perspective: “One superintendent of a remote rural district noted that, generally, for every $100 of materials purchased, they must allocate nearly $200 in freight charges.” Fuel costs are the primary concern, Garrison said.

“The U.S. Energy Information Administration reported in March 2022 that summer heating fuel costs for unsubsidized rural Alaska communities were 26 percent high than the winter 2021 average. Heating fuel prices were reported in many locations at well over $7 per gallon.” “The cost of heating school buildings and transporting goods, staff or students significantly impacts the amount of funding available to hire or retain teachers and other personnel,” Garrison told the senators.

Meanwhile, there’s a major maintenance backlog on rural schools: For upcoming state Fiscal Year 2024, which begins in July, there are 97 projects listed that await $217.6 million in state funding. A similar number are listed for the current year, FY 2023, at $196.6 million. The Legislature has done its best to whittle down the list: In FY 2022 there were 108 projects; in FY 2021 there were 102.

Oil revenues were flush, so legislators were able to make a dent in the deferred maintenance. However, oil prices are down. Between 2015 and 2022, 1,047 school capital projects, mostly major maintenance, were requested. One hundred and fourteen, or 11 percent, were funded over those years. While the current year FY2023 budget included funding to for some of the backlog the number of projects currently on the list is huge.

“There remain many school facilities in serious disrepair, resulting in unsafe, unhealthy environments for children and school staff,” Sledge told the senate committee. “Materials costs are skyrocketing, contractors are scarce and expensive, and even routine maintenance has become a challenge,” she said.

There are meanwhile problems for projects that did get funds. Inflation and the runup on costs and shortages of construction labor, are causing school districts to run out of funds for projects before they are finished. Some rural school projects with bids received in 2018 and 2019 are seeing 20 percent escalation in costs, which depletes funds so that districts run out of money before the work is finished, Sledge told the Senate committee.