ASD transportation fund faces multimillion‑dollar shortfall; Reliant contract and fleet options under review

The Anchorage School District is projecting a multi‑million‑dollar shortfall in its transportation fund and is preparing negotiations and policy decisions to address the gap, officials told the Anchorage School Board Finance Committee on Thursday.

Andy Rallis, the district’s chief financial officer, said the transportation fund closed FY24 with approximately a $1.5 million deficit largely caused by timing of a master lease for buses and lower enrollment that reduced state per‑student transportation payments. "We ended FY24 with about a 1.5 million dollar deficit shown," Rallis said, noting the district had received buses before the master lease was finalized and the related revenue posted across fiscal years.

For FY25 the district projects a roughly $2.7 million shortfall that is baked into the general‑fund projections. Rallis and committee members traced the drivers of the gap to several items: contract increases for Reliant (the district's transportation vendor), the reconfiguration of route tiers that eliminated some efficiencies (for example, changes affecting pre‑K runs), and wage increases that will follow a higher statutory minimum wage. The district has initiated negotiations with Reliant; the current contract ends in June 2026 and administrators said an extension (commonly a five‑year extension) is a negotiation option.

State transportation funding was described by staff as governed by statute and paid on an average daily membership (ADM) basis; Rallis said the statute currently provides $481 per ADM and that a bill in the Legislature floated a $50 increase to about $529 per student. Committee members said such an increase would help but likely would not fully close the FY25 gap without additional measures.

The committee discussed fleet options. Rallis said the district explored electrification and pursued a federal grant opportunity last year that would not have allowed hybrids; that grant is no longer available. He explained operational limitations of battery‑electric buses in Anchorage’s climate — particularly heater loads that diminish range — and said hybrids or alternative configurations remain a technical and financial question. "For the ones who did the one electric bus, it didn't have the auxiliary generator unit, so the heater alone burned down the battery on route," Rallis said.

Committee members also discussed driver retention and wages. Rallis said the district currently pays bus drivers roughly double the minimum wage; proposed or implemented increases in the statutory minimum will raise district wage costs and contribute to the projected transportation expense growth.

On timing and next steps, Rallis said some transfers to debt and capital funds related to bus equipment leasing may require board approval at the June meeting or could be delayed until August. The administration will continue bargaining with Reliant and will return to the committee with negotiation outcomes and any needed transfer or budget‑adjustment requests.

Ending: The finance committee asked staff to prioritize transportation negotiations and to report back with specific contract options, cost estimates and the effect of any enacted state transportation funding changes.