School board members started discussing cuts that might be forced two years from now during a budget meeting March 29, where interim superintendent Rich Carlson projected the district’s savings would be used up this time next year, absorbed into the budget for 2017-18.
By late last week, that outlook had grown bleaker with news that the district’s insurance bill for the coming year has increased $206,000. (Staff will cover half the cost of the increase through their required contributions.)
The district’s general fund budget for the coming year is $4.96 million, including $776,376 for insurance, not including the increase.
There are only two insurance carriers for Alaska schools, Alaska Health Trust – a consortium of school districts of which Haines belongs – and Premera, Carlson said early this week. Premera’s rates are “astronomical,” he said.
“There’s a lack of insurance companies in Alaska. That’s one of the reasons we pay the rates we do,” Carlson said.
As presented March 29 without the additional insurance expense, the draft budget for school year 2016-17 would spend down the district’s $831,621 general fund balance to $496,118. Assuming no changes in staffing or enrollment, the 2017-18 budget – to be created this time next year – would consume the remainder of the district’s savings, Carlson said.
The district was projecting a $293,000 deficit in the draft budget for the coming year without the additional insurance costs.
“Professionally, I have an obligation to bring you that bad news,” Carlson told the board. “The financial situation is not inclined to be better in the next year or so and we’re trying to budget for that…. The way I read the tea leaves, there are going to have to be changes, and the only changes where we can take money off the table is staffing.”
Carlson added the caveat that an addition to enrollment of just two or three intensive-needs students “changes the whole budget picture… This really is a moving target.”
Board chair Anne Marie Palmieri broached the issue of funding for the Community Education program. The borough provides $25,000 for the adult education program, but total district expenditures for the program total $41,000.
Though a reduction there might save only $10,000, “if our fund balance is zero, we’re going to be looking at every $10,000,” Palmieri said.
Student activities was another area identified at the meeting for possible cuts. “There’s a handful of ‘do-not-touch’, but everything else should be on the table. It’s all a matter of philosophy and what you want to spend money on. It’s nothing different than what the legislature is doing right now and what other (school) districts are doing now,” Carlson said.
Board member Sara Chapell said, “I don’t know how to wrap my head around what we can do less of.” Carlson replied: “It’s a matter of having a hard discussion, looking at the priorities of the district, and deciding where you want to go.”
Carlson also told the board on March 29 that there’s a move afoot in the Alaska Legislature to make school districts carry a greater percentage of costs paid to the Public Employee Retirement System (PERS) and Teachers Retirement System (TRS). That would add about $125,000 to district costs, under one proposal.
The district is anticipating state foundation funding will drop $316,000, due to a drop in Haines enrollment. Expenditures on teacher salaries are expected to increase $51,000 to $1.08 million with the return of two long-term teachers who are on leave or sick leave.
Besides covering the deficit with the current fund balance of $950,000, Carlson plans to use $138,750 of the balance to pay for next year’s supplies, materials and equipment during the current fiscal year.