Anchorage School District projects $84 million year-end balance, but only about $7.5 million is truly available

The Anchorage School Board Finance Committee was told Thursday that the Anchorage School District expects to end the fiscal year with about $84 million in fund balance, but only roughly $7.5 million of that is truly unassigned and immediately available. Kelly Lessons, chair of the Finance Committee, opened the meeting and framed the agenda; Andy Rallis, chief financial officer for the Anchorage School District, presented the projections and the key caveats.

Why it matters: the headline number that appears in public reports — and the figure cited in some public discussion — includes restricted and committed funds required by statute, bond covenants and routine transfers. Rallis said those restrictions leave only a small cushion for an operating emergency, and he repeatedly cautioned that several revenue items now listed as revenue remain uncertain.

Rallis told committee members that the district began the year with roughly $121 million in fund balance, budgeted to use about $37.2 million this year, and expects to end with about $84 million after planned transfers and obligations. "That leaves about 7½ million of truly unassigned money, which can be used in case of emergencies," Rallis said. He said that amount would cover roughly a week of district operating expenses at current run rates.

Committee members pressed Rallis on specific revenue uncertainties that affect the bottom line. The district has booked about $12 million in FEMA obligations as revenue because auditors require recognition when the federal agency obligates funds; Rallis emphasized the money has been obligated but not yet received, and cautioned that final federal audits could require adjustments. "We have recorded about $12,000,000 that we haven't received," he said, adding that final payment and any audit adjustments could occur months to years after obligation.

Rallis also reported delays and uncertainty in Medicaid-related reimbursements the district expects to claim. He said the district is accruing reimbursable services in its financial records but has limited visibility into when the state and federal review and payment processes will complete. On federal grants more broadly, he said the district is monitoring continuing reviews of direct federal awards for renewal or other changes but had not been told of imminent losses.

Special education funding also contributed to the shortfall. Rallis said roughly 19 intensive-needs students were denied a funding classification this year after the state review of documentation; that change reduced projected intensive-needs revenues by about $1.5 million. He said the district’s special education staff would pursue the normal reconsideration process with the state when appropriate.

On reserves and insurance, Rallis said the district’s self-insured health and risk funds have modest positive balances but noted the administration plans to trigger an insurance reserve policy to shore up the health fund. He described several small expense-side savings — lower-than-budgeted workers’ compensation and unemployment costs, vacancy-related salary savings, and unspent summer-school allocations — but said those savings do not offset the structural pressures.

Rallis framed the reporting issue that complicates public understanding: state compliance reports and some published numbers show a single ‘‘unreserved’’ fund-balance figure that does not break out restrictions, committed transfers or funds already designated for next year. He cited GASB Statement 54 reporting categories and noted that state guidance does not currently align with GASB’s classifications, which contributes to public confusion.

Committee chair Kelly Lessons said the finance team plans to present the same material to the Senate Education Committee in Juneau on Monday and urged clearer supplemental materials so legislators can understand what the headline fund-balance numbers represent. "That slide that shows how a $121 million beginning balance breaks down into reserves and unrestricted fund balance is the kind of simple information we need to correct misconceptions," Lessons said.

The administration recommended conservative budgeting given the open items; no formal board vote occurred. Rallis recommended holding FEMA-obligated revenue in less-spendable categories until cash is received and said the district is prepared to move capital-designated amounts into capital funds rather than spending them while receivables are unresolved.

Looking ahead, the district’s projection assumes using fund balance this year of roughly $37 million and anticipates next-year expenditures that will continue to press margins unless the state funding formula changes. Rallis and board members discussed federal/state funding scenarios and the timing of legislative action as material to the FY26 starting position.

Ending: Finance staff will bring updated numbers to the board’s next meeting and to the Senate Education Committee presentation. The committee asked staff to produce a short, plain-English breakdown of the components of the reported fund-balance figure for legislators and the public.