District proposes FY26 budget with $16 million gap; trustees weigh school closures, staff cuts and class-size increases

Superintendent Dr. Luke Meinert and Chief Operations Officer Andy DeGraw presented the Fairbanks North Star Borough School District’s proposed FY26 budget to the board on Feb. 18, detailing a projected $16 million starting deficit and a package of reductions and limited investments to close the gap.

The administration’s proposal assumes a base student allocation of $5,960, a repeat of current-year supplemental funding equivalent to a $6.80 BSA increase, a projected enrollment of 11,626 (a decline of about 179 students from the district’s current projection), and a requested $2 million increase in local borough contribution. Even with those assumptions, the plan relies on multiple reductions to align spending and revenue.

At a glance: Administration proposed closing 2 Rivers Elementary, Midnight Sun Elementary and Pearl Creek Elementary, and reducing Salcha Elementary to a downsized model. The plan also proposes raising Pupil-to-Teacher Ratios (PTR): for grades K–5 from 25 to 27.5, and a similar 2.5-student increase for grades 6–12. DeGraw said the elementary PTR change would equate to about 18 FTE fewer classroom teachers; middle- and high-school PTR increases equate to about 15 FTE classroom reductions. Contracting some custodial services for an estimated savings of approximately $3 million would reduce district FTE by roughly 70 positions tied to custodial work.

Other major line items include: - Benefit-rate increase: approximately $1.6 million to cover rising pension/benefit costs. - Educator laptop replacement: proposed one-time allocation of $600,000 to update staff devices after payments were suspended in earlier years. - Transportation: proposed a subsidy from the general fund to keep the current 90-route system operating; administration recommended a $2 million subsidy in the proposed budget absent additional state aid. - Nutrition services and equipment replacement: food-service balances are largely federally restricted; the equipment-replacement fund showed a negative balance at the end of FY24, requiring replenishment.

Fund balance and timing: DeGraw said the audited, state-calculated unrestricted fund balance was $13.4 million at June 30, 2024 (about 6.8 percent of general fund expenditures). Using year-to-date activity, administration projected year-end unrestricted fund balance of about $8–$10 million — below recommended levels and short of the board’s own cautious targets. That narrow cushion raises the stakes on the FY26 revenue assumptions and any lower-than-expected supplemental funding.

Administration’s framing and next steps: DeGraw emphasized that the district is constrained by three revenue buckets — local borough contribution, state aid and federal receipts — and urged public advocacy to borough and state officials. Dr. Meinert urged parents and residents to contact legislators and borough assembly members to press for stable funding and more state support. Board members asked for additional scenario modeling (lower and higher enrollment, different borough-contribution levels) and for administrative detail on the proposed custodial contract and FTE impacts.

Board action and procedural items: Earlier in the meeting the board adopted the agenda and advanced BP 12-40 (School Connected Organizations) to second reading. Trustees did not take a final vote on the FY26 budget at the Feb. 18 meeting; the board will hold budget work sessions and consider recommended budget revisions in March before sending a local-contribution request to the borough on April 1.

Why this matters: The funding choices and the proposed closures and PTR increases would affect class sizes, staff employment, extracurricular programs and how neighborhood capacity is maintained. Administration’s numbers depend on supplemental state aid that has historically been provided as one-time funding; if that aid does not materialize, the board would face tougher choices or larger reserve draws.

What the public can do: Administration encouraged residents to contact borough assembly members and state legislators to advocate for permanent increases to the Base Student Allocation and for the borough to consider a larger local contribution; trustees asked staff to return to work sessions with alternate scenarios and more detailed cost estimates.