(Photo by Elizabeth Jenkins/KFSK)

Petersburg School District is hoping to buffer some of its expected increased costs and lost revenue with extra money from the borough. As Angela Denning reports, the school district faces inflation while losing some per-student funding next year.

Every student is worth money from the State of Alaska, which pays for a large chunk of Petersburg School District’s budget. But the student population is declining and the district expects $386,000 less in per-student money next year.

The district is budgeting for an estimated 412 students, which is 13 less than this year. That means funding for two schools instead of three.

The state uses a formula that funds districts more if they meet a threshold of 425 students. The state considers that a three school funding level. Petersburg isn’t expected to meet that mark, which puts it into the two school formula.

Finance Director, Karen Morrison, told the school board at their last regular meeting that the state’s formula is complicated and outdated. But essentially, not meeting a 425 student threshold will be a big hit.

“When you fall below that number you see a fairly large reduction in your foundation funding, which is 82 percent of our overall budget,” Morrison said.

Losing students is just one challenge facing the school district next year.

The cost of heating fuel is another. Morrison says the price has more than doubled during the school year.

“We started the year at $2.17 per gallon and we are now at $4.37 per gallon,” said Morrison.

That equals a 47 percent increase from last year.

In a spring budget modification, Morrison added $132,000 more for utilities—for electricity and heating fuel. The district has the funds for it in savings but she says it’s going to be a challenge budgeting for next year.

“It reduces, unfortunately, opportunities for professional development, teaching supplies,” Morrison said. “It definitely goes into our fund balance as well.”

Because of inflation and the state’s current oil wealth, there is some hope that the Legislature will pass some of it’s savings on to school districts.

Some bills are being considered that would raise the money the state gives out per student or what’s called the Base Student Allocation. That figure has been flat for six years at $5,930 per pupil. One bill looks to increase the BSA for two years. Another looks at stabilizing the allocation by increasing it according to inflation.

Morrison supports forward funding education for longer term planning but she says she can’t count on the bills having support at this point.

“These are unknowns,” she said. “We really have no idea when we’re going to know what our funding is going to look like. So, that’s always a challenge every year when we’re trying to create a budget and even more so for this year.”

Another bill looks to restart the school bond debt reimbursement program, which the Legislature froze in 2015. The program was used to reimburse municipalities for capital projects related to schools.

Superintendent Erica Kludt-Painter would like lawmakers to bring back the 60-70 percent reimbursement rate but she says it’s all up in the air.

“There’s some good things moving,” she said. “It’s right in the middle of it.”

The regular session ends May 18. If the Legislature hasn’t agreed on a budget by then, they can go into a special session.

In the meantime, the school district has asked the Petersburg Borough for more money to help ease the financial pain.

The borough has given the district $1.8 million annually for over 20 years and Kludt-Painter says it’s time for a raise.

“This year, looking at our enrollment numbers and some of the other fixed costs as we’re all dealing with price at the pump, our utility and fuel bills are astronomical,” she said.

The borough is proposing to increase the school district payment by $200,000 using $1.4 million from property tax income and $600,000 from Secure Rural School Funds. That’s a federal payment to municipalities near national forest land in place of money that could come from a timber industry.

The school district will be considering its operating budget in June.