School district outlines 2026-2027 budget shortfall

Published 1:30 am Thursday, February 19, 2026

Kenai Peninsula Borough School District administration and staff hosted a community meeting last week, Feb. 10, at Homer High School to share with the public the district’s current financial outlook on fiscal year 2027. The meeting in Homer was the first of a series, with two additional meetings held this week in Kenai and Seward.

More than 40 people were in attendance, in person and virtually via Zoom, at Homer’s community meeting. According to KPBSD assistant superintendent Kari Dendurent, this number included most Homer-area principals and KPB Assembly vice president Kelly Cooper.

During the meeting, district Finance Director Czarina Voivedich outlined the $8.6 million budget shortfall the district is currently facing for FY27 and shared information about projected enrollment and the returning Balancing Act tool, which is now live on the KPBSD website and allows community members to provide suggestions on ways to address the deficit.

Dendurent explained at the start that the meeting was an “output presentation,” and while the district took questions from members of the audience, discussion on ongoing matters such as school consolidations or district support of school pools was not part of the meeting.

“Those questions are directed to the Board of Education,” she said. “They are the ones who ultimately do make those decisions.”

To explain how the district is facing another year of budget deficit, Voivedich began by describing how they calculated FY27 revenue. Revenue is largely based on projected enrollment, which the district estimated by moving the grades at all school sites up one grade level.

“That’s pretty normal, and of course, we receive input from our administrators when it comes to that,” she said.

Charter school projected enrollment, she added, is based off of the district’s contractual agreement with the charter schools. Enrollment numbers for alternative schools like Homer Flex High School or Kenai Alternative High School are established by Board Policy 6183. Projected kindergarten enrollment is estimated based on the average enrollment of the previous three years.

“For the feeder schools, we adjusted the enrollment for the sites affected accordingly. Of course, we also use the input from our administrators,” Voivedich said.

Overall KPBSD enrollment for FY27 is projected to be 8,104 students. The district uses this number to calculate what Voivedich called their foundation funding.

“As a district in the state of Alaska, we are required to submit our enrollment projection every year … so the state can calculate the revenue that they’re going to provide,” she said.

She further explained that the district receives three types of revenue from the state — foundation funding, based on projected student enrollment; quality schools funding, which is a type of grant provided specifically to target student achievement; and TRS/PERS on-behalf, which is funding for the retirement system for teachers and certified employees and non-certified employees.

The district received $268,803 in quality schools funding from the state for FY26. In FY27, they are expecting to receive $266,597.

Voivedich described TRS/PERS as an “offset,” since the district records it in their books as both a revenue and an expense.

“The state is requiring us to do that just to show in our books that we’re not really receiving this revenue, but (we) still have to record it,” she said.

Once the district’s basic need for state funding is calculated, Voivedich said that’s when the required local contribution comes into the picture.

“That doesn’t mean it will add to the funding. Actually, it will reduce the foundation funding from the state,” she said, referring to the rise in taxable value of borough property.

The local contribution comes from the Kenai Peninsula Borough in two ways — what Voivedich called appropriations and in-kind services.

“Appropriations is the dollar amount that we receive from the borough. The in-kind services … is services — it’s not really a dollar amount that we receive from the borough, but it’s audit services, maintenance, custodial, workers’ comp and other insurance services that go through our borough,” she said.

The district also receives e-rate funding for telecommunications and internet access in the schools; interest earnings on the central treasury the district has with the borough; and local revenue such as rent income and building use.

Voivedich compared foundation funding levels provided by the state in FY26 and FY27. The district received over $76 million in state foundation funding for the current fiscal year, but is only expecting to receive $71.8 million for FY27.

“The reason why there’s a difference of $4.5 million, even though they gave us an additional $700 in our BSA, is because there’s a cost-shifting because of the increase in our real and personal property tax value,” she said. “So that means they’re going to reduce the foundation money by that amount — it’s $3.6 million that is shifting from the state to the borough.”

The remaining $900,000 is due to a decrease in student enrollment.

On local funding, the district received $62.3 million in borough funding for FY26 after the KPB Assembly voted to fund the district to the cap. This number includes $46.8 million in appropriations and $15.4 million in in-kind services. For FY27, the borough is currently proposing $59 million dollars in funding — $43.5 million in appropriations and $15.4 million in in-kind services.

“That is almost $3.3 million less than they funded us this year,” Voivedich said. “The maximum appropriation that the borough can fund us is almost $68.7 million. That is a $9.6 million difference.”

In total, the district saw $147 million in revenue for FY26. In the FY27 preliminary budget, the district is seeing only $140.9 million.

Voivedich outlined FY27 preliminary expenditures, which includes staffing, healthcare, utilities and supplies. Staffing is based on projected enrollment and the district staffing formula, and employee salaries were calculated with what she called step increases. Healthcare calculations were based on FY26 rates plus 5%, and Voivedich said this amount may be updated at a later date if more information is received. Utility costs are based on a three-year average, and supply and copy budgets are based on projected enrollment.

According to the presentation, employee salaries and benefits make up the largest portions of the district’s expenditures, at 47.13% and 31.03% respectively. Purchased services, including in-kind maintenance and charter school rent, makes up 9.64%, and utilities make up 4.87%. Other expenditures range from less than 1% of the total expenditures to just over 3%.

“Our salaries and benefits are always the biggest percentages here — it’s almost 80% of our budget,” Voivedich said. “We are a labor-intensive organization, so our expenditures are always right there.”

Total expenditures calculated in the preliminary FY27 budget equal $149.5 million.

Voivedich also touched on the base student allocation, which is currently set at $6,660. However, if the BSA had been adjusted with inflation since 2011, she said, it would equal $7,943 for FY26.

“The school district remains approximately $1,300 below the funding that we could have right now if this had kept up with inflation,” she said. “We’re still below the funding that we need to support our operational costs and things like that.”

Voivedich reviewed the district’s fund balance, which contains five categories including nonspendable funds, or funds not in cash form, like inventory; restricted funds, which can only be used for a specific purpose; committed funds, which can only be spent through formal action by the KPBSD Board of Education for a specific purpose; assigned funds; and unassigned funds.

“‘Unassigned’ is a fund balance that we can use for anything, there’s no restrictions or designations,” she said. “That is the fund balance that we can use for any shortfall that we will experience during the following year.”

Currently, the unassigned fund balance is approximately $2.6 million.

“Pretty much, this is our savings as a school district,” she said.

Voivedich then reviewed in more depth how to use the Balancing Act tool, which procedurally is largely the same as last year. She asked that community members provide feedback and suggestions using the tool prior to the Board of Education’s March meeting. Results and analytics of the Balancing Act will be made available to the public, as well as being presented to the board.

The next KPBSD regular board meeting is scheduled for March 2.

Find the meeting recording and additional information and resources related to the FY27 budget on the KPBSD Finance webpage.