The Juneau School District can keep $2.3 million in supplemental funding it got from the city this year, but a potential amendment to state code could restrict local funding in the future. That’s according to a letter sent Friday from the Alaska Department of Education and Early Development.
The state sets a limit on how much money a local government can give to its school district. The idea is to make sure districts are funded as fairly across the state as possible. It also helps the state pass the disparity test, a federal rule that saves Alaska millions of dollars in education spending.
The City and Borough of Juneau has funded the district up to the local limit for decades. In the last fiscal year, that maximum — or cap — was about $28.5 million.
It also routinely funds “outside the cap.” This spring, the Juneau Assembly gave the district $2.3 million to resolve deficits related to transportation, child care and other non-instructional programs.
In June, the state said the additional funding wasn’t allowed because it went beyond the limit. But the district argued that the cap only applies to instructional costs, and the $2.3 million paid for non-instructional expenses. That money went into separate funds from the operating fund, which pays for things like teacher salaries.
Will Muldoon, who chairs the school board’s finance committee, said this hasn’t been an issue before.
“The state had stated that we had violated, perhaps the spirit if not the letter, of local contributions,” he said. “That caught us by surprise a little bit. These are things Juneau has consistently done.”
In her latest letter to the district, DEED School Finance Manager Lori Weed wrote that a city or borough’s local contribution isn’t limited to the district’s operating fund. DEED wants to make that clear in an amendment to state administrative code, she said.
“Of course, any proposed regulation project must go through the required procedures under state law, including a mandatory time period for public comment, and it would ultimately be up to the State Board of Education and Early Development to consider public comment and vote on whether they would adopt any regulation change,” she wrote.
Weed said DEED would request any amendment take effect for the fiscal year 2026 budget cycle. In the meantime, the Juneau School District can keep the $2.3 million from the city.
“DEED will honor JSD’s interpretation of ‘local contribution’ as only including appropriations to or funds reported in a school district’s operating fund, until a new regulation takes effect, if ever,” Weed wrote.
Muldoon said he doesn’t expect the school board to change how it requests city support for non-instructional costs next year.
“I don’t think it would be prudent for us to make large scale changes of behaviors on unknown proposed code that will most likely not be in effect during that time,” he said. “That being said, we probably only have a year to really figure out what that means.”
The district is already facing a nearly $3 million deficit in its operating fund, between unexpected expenses at the end of the last fiscal year and lower enrollment. Muldoon said the district is also expecting a $2.9 million reduction in revenue next year, as COVID relief funding and one-time state education funding run out.
Salaries and insurance are also expected to cost more next year. Muldoon thinks the total budget shortfall is around $7 million. That’s about 10% of this fiscal year’s budget.
“We have very few levers as a district and as a board that we can work with,” he said. “We do have some vacancies right now that are saving us a little bit, but that’s also a strain. We budget positions because we need them.”
Muldoon said the pupil-to-teacher ratio is the main lever the district can pull. While it doesn’t translate exactly to class size, increasing the ratio usually does lead to more students in each classroom.
A permanent increase in state funding would help districts across the state avoid reducing staff, cutting programs or increasing their pupil-to-teacher ratios. The Alaska Senate passed a bill to increase per-student funding for education last session, and the session ended with the bill in the House Finance Committee.
Gov. Mike Dunleavy is set to share his proposed budget by the end of next week. His budget last year included just a $30 increase to the base student allocation.
