Assembly approves supplemental school funding after finance debate; district warns of possible June cash shortfall

The Ketchikan Gateway Borough Assembly on May 5 approved a supplemental FY25 local education payment and moved a FY26 local funding determination forward for additional hearings after prolonged questioning about the school district's cash flow and recurring deficits.

The Assembly voted 5-1 to adopt ordinance 20-65 to increase the FY25 local contribution by $939,156, paid partially in cash ($453,405) and partially as an in-kind payment to district health insurance (not to exceed $485,751). The vote followed extended questioning of the school district's business manager and borough staff about projected shortfalls and the timing of state entitlement payments.

The action comes after the district provided a cash-flow analysis showing a potential shortfall around mid-June if timing of state payments does not shift earlier. District business staff told the Assembly the projection assumed existing expenses, anticipated entitlements and recent changes in special-education counts; they said moving June entitlement payments earlier could avoid a short cash gap.

Assistant Borough Manager Cynna Smith told the Assembly staff would use "not to exceed" language on the in-kind insurance payment so the borough would not exceed its legally allowable cap if final enrollment or state numbers change. Smith also said borough staff is preparing ordinances to remove certain tax exemptions (transient-occupancy tax exemption and sales-tax exemption on shore-excursion commissions) to help support future LEF revenue, with drafts expected this summer.

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