District discusses $17M deficit at community meeting

Kenai Peninsula Borough School District leadership on Wednesday hosted the second of three budget development meetings at Kenai Central High School, fielding for nearly two hours questions about the budget deficit and possible cuts.

KPBSD Finance Director Liz Hayes led most of the proceedings, giving an overview of the current budget situation and calling on the community to provide feedback and lobby legislators for increased funding.

“The school district is in a pretty dire strait for this fiscal year,” she said.

She and Superintendent Clayton Holland also took questions from some of the more than 100 people gathered in the KCHS auditorium.

The district is facing a $17 million deficit for the coming fiscal year, which starts July 1. They’ve pointed to stagnancy in state funding since 2011 in calling for an increase in funding from the Alaska Legislature, noting that one-time funding delivered in recent years is both unreliable and has come after the district has to complete its budget.

Last year, facing a deficit of $13.7 million, the district developed a budget plan that included significant cuts. State funding materialized on June 28, only days before that budget was implemented. After so many years of flat funding, Hayes said, the school district also no longer has a savings account to fall back on.

While Hayes said she expects more funding will come this year, the district can’t budget for it because it remains uncertain until the Legislature and the governor act.

“We have to issue contracts to teachers,” she said. “We need to let people know if they’re going to have a position and where they’re going to have a position and what services we’re going to be able to provide.”

Even if funding does arrive from the state, Hayes said that cuts will be necessary.

“This conversation has been ongoing,” she said. “We should be making some cuts. They should not be reinstated after they are implemented.”

The vast majority of the budget, totaling over 80% of district expenditures, is staff, Hayes said. That means there aren’t places to cut to overcome this year’s $17 million deficit without losing people. Compounding financial challenges are large spikes in the cost of health care — the district budgeted for a 5% year-over-year increase last year and experienced a 22% jump.

Holland tackled criticisms of district administration as oversized and overpaid. He said that his contract as superintendent was less than that of his predecessor and less than comparable superintendents at similar-sized districts. A raise he received in 2024 accounted for inflationary raises. Also in recent years, he said, administrative staff has tightened as positions were eliminated — like one of two assistant superintendents, the communications director, a chief financial officer and others.

Many questions focused on the possibility of school closures, which the school board began a preliminary exploration of earlier this month. A document prepared by the KPBSD finance department described possible closure scenarios for nine district schools, including Nikiski Middle/High School, Sterling Elementary, Tustumena Elementary, Moose Pass Elementary and others.

Holland said that the district is still weighing all the possible factors, like transportation and deferred maintenance, as it explores possible costs. He said further information will be available when the school board’s next meeting agenda is published on Wednesday, ahead of their March 3 meeting.

Facing a $17 million deficit, he said, the district has to discuss that possibility.

“This is not going to be pretty,” he said. “It’s going to include some school closure discussions.”

Hayes called for attendees to tell their stories and champion what they care about to legislators. Also, she encouraged them to use the district’s Balancing Act software to attempt their own balancing of the budget — which then is submitted as feedback to the district and its Board of Education.

The school board will continue the conversation on the $17 million deficit and possible school closures at their next meeting on March 3 in Homer. The meeting will also be livestreamed via Zoom.

For more information, visit the KPBSD BoardDocs website.

Reach reporter Jake Dye at jacob.dye@peninsulaclarion.com.