Denali Borough leaders review FY26 budget outlook as state negotiates BSA increase

Denali Borough Assembly members and the Denali Borough School District met in a joint work session to review the district's fiscal outlook and to discuss how state and local revenue signals could affect the FY26 budget.

Superintendent Dan Paul said the district's total budget is "a little bit over $12,000,000," with a local contribution "a little bit under $3,000,000," and that the current draft shows about a $380,000 deficit. He said the administration plans to use unrestricted carryover and a short-term prepayment strategy to avoid breaching the statutory 10 percent carryover limit while preserving reserves to cover the projected shortfall.

The meeting centered on why the discussion matters for local services. Paul and assembly members described the borough's revenue picture as healthy, citing robust tax receipts including recent alcohol and marijuana tax revenue. That local position matters because borough contributions traditionally make up the district's primary local share; the school board approved its FY26 budget in February and is transmitting documents to the borough for formal consideration of the local contribution.

Participants discussed the state-level negotiations over the Base Student Allocation, or BSA, which determines per-student state funding. Paul said current negotiations in Juneau include proposals both to make a one-time increase and to move toward an inflation-adjusted BSA. He cautioned that the timing and size of any change matter: a permanent, inflation-indexed increase would let districts plan multi-year budgets more reliably, while one-time funding leaves districts in the same planning uncertainty.

The district and borough also reviewed federal and formula grants that affect the budget. Paul noted that federal grants account for a small share of the district's revenue (about 2.5 percent, or roughly $304,000 across programs he cited) and that federal impact aid for this district is negligible relative to total revenues. That means shortfalls or policy shifts at the federal level would be unlikely to alter day-to-day operations immediately, although panelists said they will continue to monitor federal activity.

Board members and assembly members asked about timing. Borough staff said a budget amendment will likely appear at the borough's next meeting and must be finalized by June 5 under local scheduling. Paul and assembly members said they will continue to exchange detailed budget pages and capital-project timing so both bodies can align on any local contribution and matching commitments.

Discussion points: the district's draft FY26 shows a $380,000 deficit; the borough reports healthy revenues, including alcohol and marijuana tax receipts; state BSA negotiations could materially affect future planning; federal grants are a small share of district funding.

Next steps: the district will forward detailed fiscal documents to borough staff for formal consideration; the borough expects to consider a budget amendment at its next meeting; both bodies will monitor state BSA negotiations and follow up if the legislature or governor proposes changes that affect local contribution calculations.

Sources: Superintendent Dan Paul (district budget figures and reserve strategy); borough staff (revenue outlook).