Petersburg school leaders lay out budget scenarios, warn of steep cuts without state funding

Petersburg, Alaska — Petersburg School District officials and borough leaders met Feb. 6 for a joint work session in which the district presented budget scenarios showing a wide range of outcomes tied largely to state funding decisions and proposed legislation in Juneau.

The district presentation, led by Superintendent Robin Taylor and Finance Director Shannon Barrett, used a “pencil chart” from the Alaska Council of School Administrators to show how the purchasing power of the state Base Student Allocation (BSA) has eroded since February 2011. Barrett said the graphic illustrates that the BSA of $5,680 in February 2011 would have the equivalent purchasing power today of roughly $7,769 if it had kept pace with inflation.

Why it matters: district officials said the BSA and one‑time state funds determine whether the borough must increase contributions, and whether the district can restore positions cut in prior years. Without a material change in state funding, the presenters warned, Petersburg would quickly draw down reserves and face significant program and staff cuts.

Shannon Barrett, the district finance director, walked the assembly through three scenarios. The “worst case” assumes a flat BSA for fiscal years 2026–27 and a continuing decline in student enrollment (from 456.8 this year to projected 440 next year and 434 the following year). Barrett said that scenario would deplete the district’s fund balance and could leave the district “almost $1,500,000” in the red by the end of fiscal 2027 unless massive cuts are made.

A middle scenario assumes the district receives the same supplemental per‑pupil funding next year that it did in fiscal 2025 (the one‑time $680 over BSA and other one‑time funds). That scenario would allow the district to operate longer on reserves but still require spending down the fund balance and eventual reductions if state revenue declines.

The most favorable scenario the district modeled uses the provisions of House Bill 69, the bill under consideration in the Alaska Legislature that school officials said would both “catch up” the BSA and index it to inflation going forward. Taylor summarized the bill’s mechanics: the bill would calculate recent CPI (consumer price index) changes and add staged dollar increases to the BSA (district presenters used simplified placeholders — $1,000 and $404 — because the bill’s CPI adjustments have not been fully calculated). Taylor said HB69 is intended to restore some lost purchasing power and then adjust the BSA for inflation moving forward. She emphasized, however, that the precise amounts depend on CPI calculations that have not been finalized.

Barrett noted the district’s current projected ending operating fund balance is about 15 percent, above the statutory 10 percent cap. She reminded the assembly that the 10 percent cap was waived during the COVID era and that the waiver is in place through June 30, 2025 (the end of fiscal 2026), after which districts must be back in compliance with the 10 percent limit.

On capital needs and bond spending, the district said a $3.5 million bond will be issued this spring; estimated issuance costs are about $25,000, leaving roughly $3,475,000 for projects. The board identified two near‑term priorities: a district‑wide condition survey (LCG architectural firm; last survey noted by presenters was February 2008) and a middle/high school roof replacement scheduled for summer 2025. Presenters said the district expects roughly 65 percent reimbursement from the state’s CIP grant for the roof project. A second security/entry and office remodel door phase was planned for summer 2026, phased to allow contingency if summer 2025 work uncovers additional needs.

Superintendent Taylor highlighted recent construction issues that motivated the condition survey: siding pulled for a covered walk project revealed exterior mold linked to a 2014 project, and substantial wear on a gymnasium floor installed in 2005 — with previous water damage noted in 2007 — now limits the number of refinishes left before full replacement will be required.

On staffing and services, the district said it had cut nearly 7 FTEs going into fiscal 2025 but is rehiring roughly 2.83 FTEs for positions the administration considers mission‑critical, including a full‑time elementary counselor, a full‑time secondary counselor/position in math, an elementary specials teacher (if funding allows), and partial restoration of custodial staff. Barrett and Taylor said vacancies and lower‑cost long‑term substitutes contributed to underspending in fiscal 2024 that boosted the fund balance.

Taylor and Barrett also presented student achievement measures. Petersburg results on the Alaska Developmental Profile (a kindergarten readiness measure) and AK STAR state tests were generally above the state average: Taylor said Petersburg outperformed the state in 16 of 17 testing categories in spring 2024, an outcome she attributed to community early‑learning programs and staff efforts.

Borough officials acknowledged the squeeze on local revenue. A borough staff member identified as Steve said the borough used reserves in the prior year and faces limited municipal revenue options: property and sales tax increases are constrained by voter approval requirements and statutory caps. Several assembly members said they will continue work sessions to explore revenue options, and both borough and school staff agreed further community engagement would be necessary if the district must consider major program or staffing reductions.

What was not decided: the session was a work session for information and discussion. There were no formal votes or binding decisions at the meeting. Presenters said next steps include continuing the district budgeting process, monitoring HB69 and legislative developments in Juneau, and preparing further detail for the borough’s budget process.

Quote highlights

• “This graphic shows if the base student allocation had kept up with the cost of inflation since 02/2011,” Finance Director Shannon Barrett said, describing the “pencil chart” used in the presentation.

• “In House Bill 69 ... the CPI would be looked at from fiscal year calendar year ’21 through ’23, that inflationary rate would be calculated first, added onto the BSA, then a thousand dollars,” Superintendent Robin Taylor said, explaining how the bill is intended to “catch up and true up” the BSA, while cautioning that CPI adjustments are not yet finalized.

• “Our budget’s pretty tough. We used reserves last year to get through the budget process,” a borough staff member identified in the meeting as Steve said, describing limited local revenue options and the possibility of staff changes across borough departments if revenues do not improve.

Ending

District and borough leaders said they will continue budget work this spring and urged community engagement if deeper cuts become necessary. The district will track legislative action on House Bill 69 and state budget negotiations in Juneau; presenters said the bill and the state’s final budget will be determinative for the district’s staffing and program decisions for fiscal 2026–27.