Assembly introduces FY27 school spending-authority ordinance amid debate over $4.6M shortfall

The borough assembly introduced ordinance 2109 on May 11 to authorize fiscal-year 2027 spending authority for the Ketchikan Gateway Borough School District and set a public hearing for May 18. The motion was moved by Assemblymember Thompson and seconded by Assemblymember Matson and passed on introduction.

During a lengthy discussion the assembly and staff examined an estimated FY26 shortfall commonly discussed in the meeting in the range of about $4.6 million and debated options for covering run-outs while avoiding a detrimental double-hit to the district in FY27. Interim Superintendent Bullard and borough legal and finance staff described evolving figures and said numbers were changing as new information and accounting alternatives were considered. Staff and the borough attorney explained that the borough’s existing MOA requires a recoupment mechanism (the borough to be repaid) and that DEED’s statutory remedy, if municipalities are not repaid, can include reducing the district’s future foundation funding; however, staff said they are exploring accounting approaches that could avoid an additional DEED penalty while providing short-term cash flow.

Assemblymembers emphasized complexity: any borough cash advance to the district for FY26 runouts would be repaid under the MOA (the recoupment discussed was roughly $5.4 million over three years), but repaid funds would not be available to the district in FY27. Members discussed options such as stretching repayments, temporarily forward-funding selected items, or adopting a minimally balanced budget now and revising later as state and district numbers evolve.

Staff was directed to provide updated district budget revisions, DEED guidance on recoupment mechanics and a clear model of cash-flow impacts before the May 18 hearing so the assembly can weigh risks, legal exposure and program impacts when adopting final spending authority.