A comparison Superintendent John Holst reviewed with assembly members at Thursday’s meeting. The left shows how the assembly funded schools last year (FY21). On the right is the funding package approved by the Assembly in February. And in the center is what the School District intended to request, an increase of around $500,000.

Editor’s note: This script was amended from the version originally broadcast to include more context around the general fund budget and clarify where money to cover the projected $1.9 Million dollar deficit may come from, including a $1.5 Million surplus from last fiscal year.

The draft of the city’s budget for next year is finally out, but a lot could change between now and when the budget is finalized later this spring. And last week, the Assembly was informed of a mix-up on school funding.

When the Sitka Assembly met on Thursday (3-4-21), the group took a peek at the 66 page document full of fund balances and spreadsheets. The budget is always a lot to digest, but Finance Director Melissa Haley laid out the big question. 

“The bottom line is a $1.9 Million deficit. I think one of the most core decisions we have to make is are we going to be moving forward with the existing level of services and hope that we start seeing recovery to revenue, or do we make significant cuts now?” she asked.

Haley said, as it stands, they’ll have to rely on reserves to balance the city’s general fund budget next fiscal year, and a $1.5 Million surplus from last fiscal year could cover most of the deficit, if approved. The current budget includes very few capital projects, and the deferred maintenance costs for city infrastructure will continue to grow. She said lots of things can change between now and when the budget is finalized, and more concrete information about federal stimulus money and tourism could lead to additional changes.

And those changes can happen unexpectedly. At its last meeting, the Assembly voted to fund the Sitka School District to the “cap” or the maximum allowed by state law: $7,764,150.

In years past, “non-instructional” costs, like activities and travel and maintaining the Blatchley Pool, were funded separately from the cap because they aren’t subject to the same state funding limit. But due to a clerical error, some of the non-instructional funding needs weren’t accounted for in the school district’s full request to the city. So now the schools are short over $500,000 in funding. Superintendent John Holst said that meant travel and extracurricular activities could be on the chopping block. And he apologized to the assembly for the miscommunication around the school district’s funding needs. 

“It’s on me that I didn’t go back and check those numbers inside of that motion that was made on Thursday night,” Holst said.

“I feel badly that we’ve gotten to this point. I think our board members were very much enjoying the relationship that seems to have developed. And we’re certainly not wanting to do anything to jeopardize that. That probably is more important than the budget, frankly.” 

One bit of good news–Holst said they were relieved to discover earlier that day that their insurance costs would not increase this year after all. The district is anticipating laying off teachers and dipping into reserves to cover next year’s budget deficit.

School Board President Amy Morrison said they were trying to figure out other solutions to shore up the difference. They’re hopeful that more federal stimulus money could provide some padding. 

“We are trying to figure out how to go forward from here. We don’t want to just come to you and say ‘Please give us more money.’ We want to figure out what other options we have,” she said.

The Assembly made no changes to the general funding budget or school funding on Thursday, but it will have several opportunities to review the budget and make changes over the next two months. The budget will likely be finalized in May.