The good news — in a way — is the deficit facing the Juneau School District is now about $8 million, rather than the $9.5 million projected a week ago, due to some further accounting scrutiny. The bad news is that’s not stopping district officials from considering a variety of drastic scenarios presented during the past few days that include multiple school closures.
Three options for consolidating schools, along with measures such as having the city take over some expenses, were presented by Superintendent Frank Hauser during a Juneau Board of Education work session Tuesday. However, those are mostly intended for future years to avoid the current year’s deficit, which must be balanced in some form by the end of the fiscal year on June 30, with officials evaluating a state-approved loan among other remedies.
How a $9.5 million deficit shrunk to $8 million
The $9.5 million deficit revealed to local leaders a few weeks ago was largely attributed to accounting errors, according to a newly hired analyst who spent the latter part of December and early January scrutinizing the district’s finances. While a $1.5 million downward adjustment to the projected shortfall soon afterward might raise eyebrows, most of it is due to “unknowns” about the district’s health insurance as of a couple of weeks ago, said Lisa Pearce, the analyst hired by the district.
“After that point in time (human resources) and payroll departments actually got together, and started looking at the timing, the actual billing, the number of waivers and really tried to hone in more as to what the actual expenditures for health insurance were going to be,” she told the board.
Health insurance costs are over-budgeted by about $1 million for the current fiscal year ending June 30, based on revised estimates, Pearce said.
The school board also last week approved a series of cost-cutting measures including a hiring freeze, travel limits and reducing summer programs that are expected to trim about $350,000 in known expenses plus an additional amount in to-be-determined expenses, according to district Superintendent Frank Hauser.
As of Tuesday, the district is expected to have about $69.25 million in revenue and $75.2 million in costs during the fiscal year, resulting in a shortfall of about $5.95 million, Hauser said. In addition, the district has a $1.94 million deficit remaining from last year that must also be accounted for this year, putting the total shortfall just below $8 million.
Asking the city to pick up some of the tab?
One theoretical solution that would cover most of that deficit is having the City and Borough of Juneau take over costs of maintenance, utilities, insurance and related employee costs in specific buildings, such as those used jointly by the district and city, Hauser said. He said such savings could total nearly $4.6 million, leaving the district with about a $1.35 million deficit this year plus the $1.94 million carryover from last year.
However, there are substantial questions beyond just whether city leaders are willing to cover such costs. The state imposes a strict “cap” on how much municipalities can provide to districts for instructional purposes, with Juneau providing the maximum amount for many years, and the state had already within the past year questioned about $2.3 million in additional city spending for purposes such as student transportation and Community Schools.
The state dropped its challenge to the Juneau School District — thus keeping that amount from potentially being added to the current deficit — and others around the state late last year.
But adding millions more of supplemental city funding is likely to renew already intensified scrutiny since the state is currently conducting a financial stability analysis of all districts that is expected to be published soon. Juneau’s crisis also helped prompt legislators to add a provision requiring four districts to be randomly audited each year to a pending education bill.
Even if such spending is outside the restrictions of the state’s funding formula it’s naive for board members to assume city leaders will be willing to take on that amount of additional expense, said Deedie Sorensen, the school board’s president.
“The city wants to help us, but I don’t envision them helping us to that degree,” she said. “So I want us to be really kind of clear-eyed and realistic as we look at those numbers.”
A special joint meeting of the Assembly and school board is scheduled next Tuesday at 5:30 p.m. in the Assembly Chambers.
Consolidating schools, other options for future savings
One option consolidates the two middle schools into one and reduces the number of students by transferring sixth grade to elementary schools. Another would additionally “pair” neighborhood elementary schools into grades K-3 and 4-6. The third includes the K-3 and 4-6 pairings, and consolidates grades 7-9 at Thunder Mountain High School and grades 10-12 at Juneau-Douglas High School: Yadaa.at Kalé — with both existing middle school buildings closing.
The models would roughly save between $850,000 and $960,000 a year in staffing costs, plus other potential savings related to reduced facility use, according to Hauser. He had also proposed possible additional savings by increasing the ratio of students to teachers.
Hauser said he prefers the second of the three consolidation options.
“Model number two does provide not only the ability to bring our kindergarten to third-grade students together…especially as we’re rolling out and working on the Alaska Reads Act…but also being able to support staff with really targeted professional development to support that specific grade level that they’re teaching at,” he said. “It also provides more grouping of teachers so you’d have the ability to have more peer collaboration in a school that only services kindergarten through third grades, or fourth through sixth grades.”
Also, consolidating the middle schools into one will allow more elective courses since the resources for them won’t be as spread out, plus there will be an overall savings in staffing as redundant positions and some functions such as maintaining closed facilities Hauser said.
While school board members generally accepted the likelihood of consolidation — due to long-term declining enrollment as well as the financial crisis — opinions varied widely on the best approach, including options beyond those presented by Hauser.
“While it’s lovely having two high schools for a variety of reasons the offerings at those high schools for the students are becoming more constrained and more constrained and more constrained, to the point that I worry that we have two high schools and neither one of them have robust offerings,” Sorensen said. Due to the declining enrollment “I think that we can kind of do our projections out to the point where we will be back down to one high school.”
• Contact Mark Sabbatini at mark.sabbatini@juneauempire.com or (907) 957-2306.
