As the borough’s school district warns of potential “insolvency,” higher state oil revenue has increased the likelihood of a lifeline.
For years, the state’s school funding formula has stagnated, decreasing 26% in real dollars from 2011 to 2025 if adjusted for inflation.
Last year, the legislature closed some of that gap by increasing the base state funding formula to schools by $700 per-student. But that was well under half of what would have been needed to fully return to 2011 inflation-adjusted funding levels.
Meanwhile, the Haines Borough School District’s finances remain dire, district officials warn.
In testimony to the House Education Committee earlier this month, superintendent Lilly Boron said the district may “not be able to remain solvent” absent another funding formula increase.
The lack of funding has been felt most with “uncompetitive” staff salaries, making it difficult to recruit and retain staff, superintendent Lilly Boron said in an interview this week.
The district has averaged a 40% yearly staff-turnover rate over the past five years, and has been unable to fill vacant special education and technology positions this year.
Some districts in the state have turned to foreign teachers to solve staffing shortages, and Boron said nearly all of the district’s applicants for the upcoming school year would require either an H-1B or J-1 visa. But now H-1B visas are off the table for the district due to a $100,000 per-visa fee put into place by the Trump Administration, and rural districts like Haines are not eligible to sponsor teachers under J-1 visas, Boron said.
“I think what we’re recognizing is, if you have no qualified people applying for open positions and staying in open positions, you don’t have a school,” Boron said in an interview afterward.
Operating costs are also an issue.
During last year’s budgeting process, the district initially projected an $880,000 shortfall.
After the funding formula increase and an influx of money from the borough, the district balanced its operating budget, but continued to run deficits on transportation and food service, district business manager Judy Erekson said. Currently the district has only $233,000 in its main savings account.
As funds dwindle, cuts could be particularly hard because of the Haines district’s size. Having only one school building, and often one class per grade, it’s more difficult for the district to consolidate classes than larger districts.
Boron, who was joined in Juneau by school board member Kevin Shove, is just one of many local officials that have come to the legislature to lay out their districts’ needs. In committee hearings, members of the bipartisan House and Senate majorities have expressed support for sending more money the districts’ way.
In the House Education Committee, Rep. Rebecca Himschoot, an independent from Sitka, described further education funding increases as a constitutional obligation.
The Education Committee, also co-chaired Rep. Andi Story, whose district covers the Chilkat Valley, has introduced a bill to once again raise the base funding formula.
“I am only asking the state to hold up our end of the bargain, which is to maintain a system of education open to all the children of our state,” Himschoot said.
The issue remains money to address those needs, and a governor willing to approve the spending. Last year, the funding-formula boost only went through after the legislature held a special session and assembled a supermajority vote overriding Gov. Mike Dunleavy’s veto.
That scenario remains a possibility for this year. But on the other issue — money to put toward a funding increase — the landscape has suddenly changed.
Through the past month, war with Iran has sent oil prices skyrocketing, including Alaska North Slope crude. According to the state’s Department of Revenue, that could add over a half billion dollars in tax and royalty payments to state coffers this year compared with pre-war projections.
There’s been talk of some of that unexpected cash going toward education funding, said Sen. Jesse Kiehl, whose district covers the Chilkat Valley, and a member of the powerful Senate Finance Committee, which drafts the state’s budget.
“There isn’t unlimited money from this war and the eternal tug of war over where you put it is going on,” he said this week. “But I think we invest in our kids, and there’s a group of us who are committed to that.”
Under the general umbrella of education, a number of buckets need filling.
On the one hand, there’s the House Education Committee bill, which would boost the state’s base funding formula by $630 per student to all districts in the state.
The $630 figure is the average funding needed to erase the operating deficits of the state’s five largest school districts, Himschoot said. Out of those five, Fairbanks is the only one operating in the black. But Himschoot also said the district has cut more than 300 staff since 2019 and closed seven schools to achieve that.
A funding formula boost, however, will have to compete against capital funding for school repairs and rebuilds, some of which are in dire condition. Legislators on the powerful Senate Finance Committee have pointed to schools in the state ridden with black mold, asbestos, and collapsing roofs, problems the state has ignored for decades, according to a ProPublica report earlier this year.
The school repairs would be a one-time outlay, whereas increasing the funding formula would obligate an increased annual flow of money.
“I think the legislators are struggling with revenue, and they might not want to use one-time funds to set up an expectation they can’t deliver on in two years,” Boron said. “I appreciate that, but this is the rainy day. We’re at the breaking point.”
Haines does have maintenance needs, and the district is seeking state reimbursement for roof repairs made last year. But relative to some other districts, the major needs are inside the building, primarily teacher wages and rising fixed costs.
According to data presented to legislators by the district, the cost of property insurance alone has increased 62% in the last five years.
If lawmakers do decide to get behind a funding formula boost or capital improvements at schools, both would still have to get past the governor’s desk. That could be a challenge, Kiehl said.
“I don’t think there’s been much receptiveness from the governor yet, but we continue to talk with him and his administration.”
The funding decisions will need to be finalized before May 20, when the legislature hits its adjournment deadline. Even then, a governor’s veto could leave final funding levels in flux, possibly resulting in a special session to consider a veto override.
Meanwhile, the borough’s school district will have to finalize its own budget in early May, even as state funding is uncertain.
“This reporting from the State Capitol was made possible by the Alaska Center for Excellence in Journalism’s Legislative Reporter Exchange. Alaska news outlets, please contact [email protected] to republish this story.”