Kodiak Island Borough School District asks assembly for $12.98 million as officials warn of multi-year shortfall

Cindy Mika, superintendent of the Kodiak Island Borough School District, asked the borough assembly on May 8 to support the district's full FY26 funding request of $12,979,556.50, saying the request is critical to maintaining programs as costs rise.

The district's preliminary budget was built on a projected $10 million deficit identified in the FY24 audit, Mika told the assembly, and assumes a 3.40 increase to the base student allocation and the use of $5,000,000 from fund balance. The district closed North Star Elementary in February as part of cost reductions, an action the district estimates will save about $3,000,000, Mika said.

Why it matters: Assembly members and staff repeatedly framed the request against two constraints: (1) state-level funding uncertainty and (2) the borough's local property-tax limits ("Maptor"). Finance staff warned that changes to the state foundation formula could reduce the district's state contribution and that the borough's allowable property-tax revenue is tied to assessed values, complicating local budgeting.

During the discussion, assembly members asked how proposed or pending state actions would affect the district. Amy (borough manager) and Dora (finance director) explained that recent legislative debate could add between roughly $700 and $1,700,000 to school funding at the state level depending on what the legislature and governor decide, but that if the change to the foundation formula becomes permanent, some of that money is contractually promised to employee salaries under collective bargaining agreements. Dora and other staff said the district's local ask to the borough does not automatically decrease if the district receives additional state funds.

Assembly members pressed the superintendent and finance staff on the district's multi-year outlook. Staff said the district is projecting use of several million dollars of fund balance to balance FY26; using those reserves this year would require the district to make even deeper cuts the following year, because the fund balance would no longer be available to offset recurring personnel-cost increases. Superintendent Mika said the district has projected a shortfall even after the school closure and heavy use of fund balance.

Multiple assembly members recommended a joint long-term planning effort between the borough and the school district to address a multi-year structural gap. Several members said they want to avoid a situation where a district or the borough has to react to sudden, large operating deficits that result in painful layoffs and service cuts.

No formal vote or commitment on the district's FY26 ask was recorded at the work session. The assembly's manager said the manager's preliminary budget presented to the assembly did not reflect the increased ask; the assembly will address the district request again at the May 29 meeting when it is scheduled for a formal vote.

The assembly also discussed related revenue and policy factors: local-burden calculations tied to assessed values, the borough's ability to adjust mill rates within Maptor limits, and uncertainty around state school bond reimbursement levels.

Ending: Officials said they will continue the discussion at the regular meeting later this month and urged continued coordination between borough finance staff and the school district to model scenarios for FY27 and beyond.