Leaders at the Juneau School District learned during the past week the district is facing a $9.5 million deficit during the current fiscal year that ends June 30. (Clarise Larson / Juneau Empire file photo)

Leaders at the Juneau School District learned during the past week the district is facing a $9.5 million deficit during the current fiscal year that ends June 30. (Clarise Larson / Juneau Empire file photo)

State agrees to five-year repayment plan for Juneau School District’s $9.5 million deficit

District was facing a June 30 deadline to balance books, which local officials said wasn’t feasible.

This is a developing story.

A huge step toward resolving the Juneau School District’s sudden $9.5 million deficit occurred Friday, as the Alaska Department of Education and Early Development has agreed to a five-year repayment plan rather than by the end of the fiscal year on June 30, according to state and district officials.

“The Department of Education and Early Development values our partnership with school districts,” Caroline Hamp, a spokesperson for the department, stated in an email Friday. “As has been done in the past with other districts in similar situations, DEED is available to assist the Juneau School District in developing a deficit reduction plan to allow the district to resolve its negative fund balance over a set number of years.”

[School district leaders express shock, anger at $9.5M deficit, say fix by June 30 deadline unrealistic]

District Superintent Frank Hauser, in a message to district staff and parents of students, stated the agreement with the state was reached Friday morning.

“The Municipal Attorney and I met with the state Department of Education and Early Development (DEED) this morning,” Hauser wrote. “We appreciate DEED’s partnership during this difficult time. DEED has agreed that there will be no penalization or holdback of future funding. DEED has also agreed to up to a five-year plan to repay the district’s deficit. If there is a need, DEED can forward-fund the foundation payments to the district, up to the remaining amount for the fiscal year.”

State law requires the district to have a balanced budget by the end of the fiscal year, or DEED can withhold the amount of remaining debt from the following year’s per-student funding. School district officials, who learned about the deficit during the past week, said it was not practically possible to balance the books by the end of June, and that a three- to five-year plan should be considered.

The district expects about $76.85 million in operating expenses this year — and has a $1.9 million deficit remaining from last year — but only expects about $69.25 million in available revenue. A combination of accounting errors, lower-than-expected enrollment and other factors resulted in the deficit that was presented to the Juneau Board of Education on Tuesday.

Board members are scheduled to have a special meeting next Tuesday, having requested a list from Superintendent Frank Hauser of every non-required expense in order to seek items to cut. Because more than half of the fiscal year has passed many of those expenses — such as salaries — have already been paid — any cuts during the remaining months will have to be proportionately larger to balance the books by June 30.

• Contact Mark Sabbatini at mark.sabbatini@juneauempire.com or (907) 957-2306.

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