The Kodiak Island Borough Assembly voted to reduce the Kodiak Island Borough School District’s funding request by more than $1 million at a regular meeting on Thursday.
The school district requested $10,455,244, but an amendment was submitted by Assembly Member Julie Kavanaugh to decrease the amount to $9,390,089.
“I don't take a cut to the school district lightly,” Kavanaugh said. “I have struggled over the past few weeks. I indicated I would be interested in flat-funding the school district this school year, but I find a mill rate increase to 14-plus mills unfathomable.”
Kavanaugh and other assembly members said that with the current climate of pandemic-related changes to the economy, coupled with decreased state funding, cuts to the budget are necessary.
Due to state funding being vetoed by Gov. Mike Dunleavy, the Kodiak Island Borough will not receive any of the expected $5.7 million from the state in school bond debt reimbursement. The borough will have to cover that loss.
According to assembly members and Borough Manager Michael Powers, the borough cannot use money received from the federal Coronavirus Relief Fund to backfill budget gaps.
In the midst of discussions about how to balance the borough’s budget, and whether to do so by cutting the school district’s funding or by increasing property taxes, emotions ran high during Thursday’s meeting.
Many said a proposed increase in property taxes from 10.75 to 12.75 mills would mean higher costs of living that could cause people to move off island in greater numbers. Others voiced concerns about raising property taxes in the current economic climate, when many people have lost their jobs.
“For the average house value, which was $273,000 in 2018, the increase of 2 mill would be roughly about $540 or about $45 a month,” said Assembly Member Duane Dvorak. “People with more expensive homes would pay more, people with less expensive homes would pay less.”
Some community members who spoke at the meeting voiced fears about what an underfunded education system would mean for their children, while others said that Superintendent Larry LeDoux cuts school funding where he can, and the amount he requests is what the school truly needed.
“In my opinion, it’s either raise the mill rate or look at where we can make some cuts,” Kavanaugh said.
Assembly Member Rebecca Skinner, who supported a cut in school district funding, said there has been a decline in student enrollment since 2008, and there may be another decline going into the upcoming school year.
Because of this decline and the decreased funding from the state that will need to be paid by the borough, Skinner said that the school district’s request for flat funding, with no increase from last year, is not actually flat, she said.
Skinner also noted that because of available fish tax money last year, the borough added $500,000 to the school district’s budget, saying that it has set an “unrealistic expectation” that the borough can continue to contribute that extra amount on an ongoing basis.
“Whenever we have recurring expenses like bond debt or like our obligation to fund the school district, I think those funds should come from a reliable source and not one-time sources of funding,” Skinner said.
”I cannot in good conscience support fully funding the school district’s request because that would require raising the mill rate beyond what the community can afford.”
Assembly Member Andy Schroeder supported fully funding the school district. With inflation, he said, the flat funding request still means a decrease in service.
“Your dollar doesn't go as far in 2020 as it did in 2010,” Schroeder said. ”Costs do go up. And the fact is, the number that the school district is requesting this year does not go up.”
Schroeder also said he does not want to increase the mill rate at this time. As a solution, he suggested that the borough take a loan from the borough’s Facilities Fund.
According to Schroeder, a loan out of $1 million would amount to 2.5% of the entire fund.
“We are not robbing the coffers, we are talking about adjusting the timing of a tax increase,” he said.
“We will have to pay this loan back, but I'm in favor of full funding for the district.”
Dvorak said that fully funding the school district would “paint” the borough in a corner when balancing the rest of the budget.
“If we fully fund the school request tonight, we will be looking at other cuts somewhere else before this budget cycle is done and we will have less options on the table at the time.”
Dvorak also said he understands the financial impact of a 2 mill increase on community members.
“It’s a lot of money,” he said, adding that the school bonds that helped pay for the construction of the high school will have to be paid by the community.
“The community has to pay, it was an obligation made by the community, it wasn't made by the assembly necessarily on these school bond debts. I believe in a balanced approach. Spreading out the impact of that is the way to go,” Dvorak said.
While Dvorak supported Schroeder’s solution of taking a loan from the Facilities Fund, Kavanaugh said doing so would not be a permanent solution.
“Are we going to continue to take loans from ourselves to pay off the school bond debt?” she asked. “We are not making strong decisions now without any plan to fix it in the future.”
She noted that the lower amount of funding in the amendment is about a 2% decrease, and less than other changes she has proposed for future deliberation such as a 9% decrease in the General Fund and a 50% decrease in R&R.
The amendment calling for a decrease in the amount of funding allocated to the school district passed 5-2, with Assembly Members James Turner and Schroeder against it, and Borough Mayor Bill Roberts as well as Assembly Members Scott Arndt, Skinner, Kavanaugh and Dvorak in favor.
Arndt had originally voted against the decrease, requiring Roberts to vote to break a 3-3 tie. Arndt later changed his vote to support the amendment.
The final ordinance allocating $9,390,089 to the school district passed 5-2 with Kavanaugh, Skinner, Dvorak and Arndt in favor and Schroeder and Turner opposed.
The assembly will discuss changes to the mill rate at a work session on May 28 and deliberate the issue at the June 4 regular meeting.