School district facing budget crunch

WASILLA — Mat-Su Borough School District officials have been forced to adjust projections about the fiscal year 2017 budget following an unexpected increase in the system’s healthcare benefits.

School system officials have appeared at borough budget meetings in the days since the March presentation of the budget and reported that officials with the Public Education Health Trust, which administers the insurance benefits for about 2,300 employees, told the district insurance costs — formerly estimated to increase about $1 million — will instead increase $4 million. That means the district faces about $3 million in unanticipated costs, according to school system assistant superintendent for business services Luke Fulp.

The borough manager’s proposed budget currently includes a 3 percent increase for funding, short of the 6 percent borough officials originally sought to minimize, though Fulp pointed out the ultimate determination will be made by elected officials, not the manager.

“At this time we’re waiting for the borough assembly,” he said.

Officials can’t yet say why the amount increased, though they do know some things about it, Fulp said. For example, other school systems have not been hit with the same level increase, Fulp said.

Fulp speculated the increased costs may be due to more use by district personnel, but said the reason was as-of-yet unknown.

“We’ve not received information that speaks to utilization or cost of care,” he said. “We don’t typically get a report like that from the Public Education Health Trust.”

School officials were working to obtain more information, but hadn’t yet been able to arrange an informational presentation by a representative from the Trust, Fulp said. A call to Trust CFO Rhonda Kitter was not returned in time for this story.

The school system previously released a series of estimates based on certain preconditions. The best-case scenario laid out a $6.1-million dollar operating deficit based on a $50 increase to the state’s Base Student Allocation (BSA) and a 6 percent boost in the system’s education funding. With the addition of the new insurance costs, the best-case scenario is now a $9.1-million operating budget deficit. The school system’s reserves are worth about $6.1 million.

The previous worst-case scenario was based around no increase to the BSA and no increase from borough funding, which set the potential deficit at $11 million, now $14 million.

The BSA increase has so far survived legislative budget negotiations, and a bill that would have shifted pension costs to local districts may no longer be under consideration this year, Fulp said.

If the assembly adopted the proposed budget without any changes to the proposed school funding, the actual deficit would likely be close to about $10.7 million. According to the original budget presentation, that would consume the entire $6.1 million reserves, require the school system to increase the student-to-pupil ratio by one student in the middle school grades, and in high school by two students, and require further staff reductions by attrition, school system officials have said.

In the meantime, school officials are hoping to leverage people power to convince assembly members to increase the level of funding above the projected levels, Fulp said.

“We try to engage the public and make sure that they’re aware of the possible outcomes,” he said. “We try to make sure that everything’s transparent and online and easily accessible.”

Contact reporter Brian O’Connor at 352-2270, brian.oconnor@frontiersman.com, or on Twitter @reporterbriano.

Correction: An earlier version of this article misstated the number of school system employees.