After a funding battle during the 2014 Alaska legislative session and years of deep staff cuts, the Anchorage School District announced Monday a different kind of challenge: how to spend a funding surplus.
The projected surplus of roughly $22 million for the 2014-15 school year stems from unfilled staff and teacher positions and the hiring of younger, lower-paid employees. A payroll analysis finalized by the district this weekend revealed its misestimate of costs, said Mark Foster, the district's chief financial officer.
"We're losing people, and they're not getting replaced," Foster said.
News of the surplus follows drastic cuts recently proposed by the Anchorage School Board, including closing and consolidating schools, as it braces for a budget deficit of about $75 million over the next three years.
Over the past two years, the district has slashed more than 300 staff and teacher positions and cut funds for supplies and equipment to balance budget gaps.
But this school year, the district budgeted too much money for personnel, Foster said during an Budget and Audit Committee meeting Monday. It was the first time most School Board members had heard of the new funding figures, which provided an updated view of the district's finances using data collected from the beginning of the school year, instead of projected staffing levels, Foster said.
He said the payroll analysis confirmed that as the district lost more senior staff, it hired younger, less experienced people . The district also failed to hire for all the positions it budgeted for this school year. He estimated that about $18 million reserved for salary and benefits for unfilled positions will go unspent -- enough to cover about 180 full-time positions.
Many of those unfilled jobs are in departments like maintenance, IT and district-wide administration. Some are elementary education positions, special-education teachers and school psychologists.
Foster pinned part of the hiring problem on market conditions. He said wages offered by the district don't tend to keep pace with the city's cost of living. He also said the district has met increasing difficulty when trying to hire teachers from out of state -- about 60 percent of the district's teachers typically come to Anchorage from outside Alaska, he said.
"It's really hard to get people to come here and basically take these jobs," Foster said. "We're losing people as they look at all their options and their family opportunities."
The district has also adopted in recent years what Foster and others at the meeting described as an "aggressive" effort to manage vacancies, often postponing filling positions or looking at ways to combine those unfilled positions. But the district found that once it decided to hire, the process wasn't easy.
Eric Croft, Anchorage School Board president, said during the meeting that the district may have cut "more than we absolutely needed to." He called its actions "prudent."
"It's an issue of having been aggressive in cutting and learning that it's harder to hire people back," Croft said.
Kameron Perez-Verdia, School Board vice president, said news of the surplus presents "a really unique challenge for us as far as external communication."
"It's a doozy," he said.
Foster said the board will have to spend some of the surplus to meet state limits on how much of its "unassigned fund balance" -- similar to a savings account -- it can carry over between fiscal years. He is primarily concerned with surpassing that limit in 2015-16, he said. If the district holds onto more than it's permitted, it must return that money to the state.
Foster provided the board with ways to spend the $22 million surplus, including paying $250,000 for a resource adequacy study, $350,000 for a resource alignment study and $250,000 to hire a business process transformation consultant to streamline the district's operations.
With the district struggling to hire substitute teachers, Foster proposed that the board adjust the substitute compensation budget by $300,000.
"We're not filling all those subs on some of our heavy days and we've got to adjust that," Foster said.
Foster also suggested the board allocate $17 million toward cushioning the district's budget for the 2015-16 school year to help shrink a projected $22.5 million budget gap.
Perez-Verdia said he was "caught off guard" by Foster's proposals, unclear on where they came from. "It's the first I've heard of some of these things," he said.
The proposed expenditures, Foster said, arose from a collection of administrative, staff and teacher comments.
Natasha von Imhof, an Anchorage School District board member, said the budget surplus presents the district with the opportunity to focus on improving efficiency.
"Let's forgo some short-term gains and instead focus on long-term sustainability and that will help us weather future budget environments," she said at the meeting.
Foster will present a draft memo outlining the surplus and budget revisions to the School Board on Dec. 1. The Board is expected to discuss the memo at its meeting on Dec. 15.