Borough reports $22M above reserve after FY25 variances; $11.4M to move to school maintenance reserve

The Fairbanks North Star Borough administration told the Finance Committee on Jan. 29 that the borough’s audited unassigned general‑fund balance will be about $22 million above the policy target reserve once the FY25 audit is received.

“My reading of the numbers is we’ve got about $3.9 million of positive variance from investment income and about $3.7 million from tax and excise revenue,” said Kuvak Janda, the borough’s chief of staff, summarizing the FY25 revenue and expense variances that produced the surplus. Janda said expense underruns—largely from personnel vacancies and lower contractual spending—added to the increase in unassigned fund balance.

Why it matters: the borough holds a reserve target equal to 17% of operating expenditures. Under the administration’s calculations, once the audit is finalized the borough will hold roughly $22 million above that 17% target, creating one‑time funding the mayor plans to consider when preparing a FY27 budget.

Janda told committee members the borough will move roughly $11.4 million from unrestricted school district accounts into the borough maintenance reserve for school district facilities as required under borough code 7.04.125, which limits the district’s unrestricted fund accumulations to 40% of the borough’s July 1 direct appropriation to education. “About $11,423,000 will be administratively moved,” Janda said, noting the transfer happens after the audit committee receives the ACFR and staff completes the administrative steps.

Assembly members pressed staff on how those transferred dollars might be used. “Could the school district use the other funds they have to lower class sizes instead of drawing on this?” asked Assemblymember Wilson. Legal counsel and administration staff advised that the ordinance and code set the process: the borough’s maintenance reserve for school facilities is intended for major maintenance and capital projects and the assembly should consult the school board for project recommendations before appropriating the money.

Administration cautioned against relying on one‑time earnings for recurring operating costs. “Building an operating budget on one‑time funding can be dangerous and fiscally unsustainable,” Janda said, urging prudence when drafting the upcoming mayor’s FY27 budget.

What’s next: the audit committee is scheduled to receive the annual audit before the assembly’s next regular meeting; after that the ACFR will be published and staff will administratively record the transfer to the maintenance reserve and notify the assembly. Any appropriation of those funds for projects will require separate ordinance action.