Understanding the school district budget shortfall

The Matanuska-Susitna Borough (MSB) is currently grappling with a significant budget crisis, one that is primarily impacting the Mat-Su Borough School District (MSBSD), which faces a $22.5 million shortfall for the 2026-2027 fiscal year. The fallout of this deficit could have far-ranging impacts on families across the Mat-Su as district administration debate closing schools, reducing staff, and discontinuing transportation to extracurricular activities.

What has caused the shortfall?

Alaska Governor Mike Dunleavy’s 2026 education budget proposals and subsequent veto of $76 million from total school funding. This included a $51 million cut to the Base Student Allocation (BSA), reducing the legislature's approved $700 per-student increase down to $500, forcing districts to grapple with tighter, "non-negotiable" cuts to operations. These actions worsened funding gaps, causing major districts like the MSBSD and Anchorage to face multimillion-dollar deficits, potential school closures, staff layoffs, and increased class sizes.

While the legislature previously overrode some of the governor's earlier cuts, the 2026 fiscal environment has continued to put pressure on schools, leading to calls for better, long-term funding stability.

Governor Dunleavy has consistently linked funding increases to his preferred policy reforms, such as charter school expansion and tribal compacting, those critics have argued that these reforms would not address immediate operational crises. Earlier this year, the Governor said he would not be pursuing education policy changes, which were at the heart of his objection to increased education funding last year, even calling a special session in August for lawmakers to address his policy items, but legislators took no action other than overriding two of his vetoes.

Another issue is population growth. Despite the Mat-Su Borough’s reputation as Alaska’s fastest-growing region—with population surging over 20% to more than 107,000 residents between 2010 and 2020—the MSBSD is facing a budget crisis driven in part by declining student enrollment. This contradiction highlights a growing disconnect between the borough's overall population influx and the number of school-aged children in the classroom.

While the population has grown, enrollment into MSBSD schools has seen recent declines and fluctuations. After years of moderate and consistent growth in student enrollment going back to 2015, peaking near 18,900-19,000 around 2019-2020, the district saw a notable dip in enrollment around 2021.

To address a similar shortfall last year, the district used roughly $3 million from its savings. Administrators believe that using these reserves again would leave funds dangerously low.

This has created a conundrum for the district.

As MSBSD faces a $23M budget gap for the next school year, the Mat-Su Borough has adjusted property assessments to track with market trends. Home values have climbed by an average of 7.41%, while land values rose by 15%. When local property values go up, state law often reduces the amount of money the state gives us, assuming the borough can now cover more of the costs. To make up for this $3.3 million loss in state funding, the proposed budget calls for an increase in borough spending

Impacts on Schools

To bridge the funding gap, the district has proposed a sweeping series of cuts that would take effect for the upcoming school year, which includes closing and consolidating three schools--Glacier View School, Larson Elementary, and Meadow Lakes Elementary. It is estimated to save approximately $4.5 million annually.

The district's proposed budget plan includes severe staffing cuts to bridge the current deficit. Key changes involve eliminating secondary school librarians, nurses, and administrators, plus elementary coaching staff. Under this plan, transportation for extracurricular activities would also cease, alongside cuts to various student programs.

Districts are struggling with fixed costs despite declining enrollment, while many schools, especially in rural areas, report crumbling infrastructure, such as broken boilers, unsafe water, and, in some cases, total building losses.

The funding uncertainty and budget cuts are contributing to a crisis in retaining qualified teachers as education leaders and lawmakers warn that the funding cuts are a primary factor in teachers leaving the state, further exacerbating staffing shortages.

Next Steps

Residents of the Mat-Su Borough have several options to address the current budget crisis, including the budget shortfall for the school district, through several active participation channels:

Attend the upcoming Mat-Su School Board meetings to witness preliminary budget presentations and final votes.

There will be a meeting March 4, 2026 at 6 p.m., at the MSBSD administration building, which will include a presentation of recommended reductions, including cuts and the proposed consolidation of Glacier View, Larson, and Meadow Lakes. Attendees will have a limited opportunity to give testimony.

Also scheduled is an MSBSD work session on March 5 at 6 p.m., I which the public is invited to attend.

There will be an additional school board meeting on March 18, 2026 also at 6 p.m., in which there will be a scheduled vote on a preliminary balanced budget.

If attending a meeting is not feasible, residents can submit feedback and comments using the official district feedback form, email the school board and assembly directly with ideas to balance the budget, and send messages using the Public Opinion Message form.