The Anchorage School District is facing an important decision: how to spend roughly $100 million in one-time funds from the state while it contends with a significant budget deficit and the continued fallout from a failed school bond earlier this year.
“Everybody wants a piece of the pie,” School Board President Margo Bellamy said Wednesday.
The influx of cash is available to ASD at a moment when the district faces a $68 million budget deficit in the following budget cycle and persistent capital needs after the failure of this year’s bond — a roughly $112 million measure that was narrowly voted down and would have replaced school roofs, added secure entrances to elementary schools and rebuilt one school entirely.
Roofs are leaking amid record rainfall. Schools still need security upgrades and heating and cooling replacements.
And simultaneously, potential school closures and program cuts loom on the horizon as the district tries to balance its budget for the next school year.
The school board is expected to debate how exactly to spend the one-time funds at its Tuesday meeting.
In a plan put together by district officials and board members, much of those funds would go toward capital needs, many of which had been part of the failed bond.
In that plan, there is $37 million that members may decide to hold off on allocating until they get farther into the budget season — as some advocates push for it to be spent on replacing an old elementary school.
The tens of millions of dollars come after years without bond debt reimbursement from the state.
Alaska used to pay around 70% of a community’s school bonds, but in 2015, as oil prices sank, the Alaska Legislature halted reimbursement for any new bonds. This year, as oil prices sprang up, the state used some of its additional revenue to pay back cities and boroughs after years without those reimbursements.
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The Anchorage School District is the only district in Alaska that manages its construction and has its own capital planning department, “so for us, the school board gets to vote on how this money is used. For everybody else, it just goes back to the cities and boroughs,” said Jim Anderson, chief financial officer for the Anchorage School District.
The Legislature made the funds flexible, opening up various options for how the money could be spent. Following an initial plan submitted by district administrators, the school board has put out a proposal for how the funds should be used.
That plan would include $7.5 million in security enhancements at seven elementary schools and $38 million toward “urgent capital improvement projects,” from leaking roofs to seismic upgrades. There’s also $3 million slated for various maintenance projects.
That money is especially needed right now since the district has already used up all of the money it initially set aside for roof repairs this year. Those funds went toward a major repair of Dimond High School’s roof.
Some of the reimbursement funds within the $3 million maintenance chunk of the board’s plan could be used to replenish the roof repair budget, said Rob Holland, the district’s acting chief operating officer.
The city continues to see “relentless” rainfall, and more acute roof issues have emerged, Holland said.
Roof leaks can lead to a host of other issues too, said Andrew Wallace, the district’s maintenance supervisor.
It damages drywall, carpet flooring and ceiling tile. It can also distract students if it’s dripping loudly or visibly.
At Abbott Loop Elementary School on Friday morning, as the rain continued to fall, Wallace pointed toward ponding water on a corner of the school’s roof. Workers set up a drip net within a classroom to contain the water and help stave off further damage. Students still use the classroom — they were in a reading lesson there Friday morning.
Still, Wallace said, there are around 34 other schools that are in worse shape than Abbott.
The $37 million question
While much of the $100 million is accounted for in the board’s plan, roughly $37 million is listed as unallocated, allowing the board to figure out how to use the funds later on instead of on Tuesday.
There are many options — and competing community pressures — on what to do with that money.
Some advocates would like the money spent on building a new school for Inlet View Elementary. Funds to pay for replacing the school were part of the failed school bond.
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But some are pushing to hang on to the funds to give the district leeway as it deals with a major forthcoming budget deficit next year. The district has to pass a balanced budget, required by state statute, in February. And officials are warning of tough choices ahead as they attempt to do that.
They’ve contracted an “expert in school closures,” Shannon Bingham from the planning firm Western Demographics, to present ideas on potential school closures and boundary changes. The district is also presenting the school board with cost assessments for various programs and activities, intending to provide members with options for making cuts and changes to programs as they create next year’s budget.
Bellamy said the board could reserve the $37 million for future projects once it can better understand the details of next year’s budget deficit. Bellamy said she doesn’t know where the board will land. She suspects some members will propose amendments to the plan during the meeting, she said.
“We’ll have to work it through and discuss it,” she said. “I do not foresee that this is going to be a quick or easy process. It’s going to be tough.”