Finance committee reviews FY26 adopted budget, warns of roughly $75 million FY27 shortfall

At a Sept. 25 meeting of the municipal board finance committee, Kelly Lessons, board member and chair of the finance committee, asked the district’s finance staff to summarize the adopted FY26 budget and prospects for FY27. Mr. Ratliff, the district’s chief financial officer, said the legislature’s actions produced “a $700 BSA increase for FY26” and that when one-time funds are considered the net change was minimal. He told the committee the district has incorporated a $48 per-student transportation increase into the adopted budget and has reallocated some capital-project upper-limit authority to cover non-bond projects. The update outlined cuts and add‑backs made during FY26. Ratliff said the district cut 136 permanent and contracted positions overall, including about 87 school‑based FTE and 31 administrative FTE; he said many holdback positions were allocated back to schools and that roughly 55 teachers were assigned to elementary classrooms from holdbacks. He described reductions to classroom device funding, major maintenance, curriculum replacement and contingency lines. The presentation included current enrollment and revenue signals. As of Sept. 22 the district’s count for brick‑and‑mortar and correspondence students totaled 41,007.88, about 650 students fewer than projected, which staff estimated could translate to a revenue loss “ballparked in the $4 to $6 million range.” Ratliff said the district will refine that estimate after the October OASIS student count. The committee also heard that an appeal to a federal agency was denied earlier that day; Ratliff said, “We just got that, like, an hour ago,” and that the denial means the district must proceed with a plan to move six FTE into classrooms and use holdback authority to cover certain positions. He said the district’s congressional delegation and multiple Anchorage stakeholders submitted support letters during the appeal process and that staff would notify them of the decision and next steps. Looking to FY27, Ratliff presented preliminary math showing reserves and one‑time funds used in FY26 will not be available next year, and that a combination of contractual cost increases, inflation and other factors could create a budget gap he and the district have presented to legislators as about $75 million. He described the district’s FY26 budget as roughly a $644 million plan that included about $50 million in reserves; with projected revenue near $594 million and an assumed 4% cost increase, the model produced the multi‑tens‑of‑millions shortfall. Ratliff listed other unfunded or partially funded items that could increase future costs: Chromebook and classroom device replacement (staff noted $1.5 million to $2.2 million in deferred refresh), several curriculum packages estimated at about $5 million, and the cost to meet the class‑size targets in HB57 (staff estimated roughly $26 million to reach the bill’s 23‑student K–6 and 30‑student 7–12 targets at current enrollments). He said the final FY27 picture will depend on settlement of multiple labor contracts, any action on the state’s local contribution definition, and whether enrollment stabilizes. Committee members asked for follow‑up detail. Member Jacobs requested historical context on the district’s share of direct classroom spending and when the district last reached the 60% threshold for direct instruction. Ratliff said staff will return with additional cost and staffing analyses during the formal FY27 budget development schedule. The committee closed by noting the next finance committee meeting is scheduled for Oct. 23.