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School board brings back cut budget items after Dunleavy OKs one-time funding

Clayton Holland presides over a meeting of the Kenai Peninsula Borough School District school board on Monday, June 3, 2024.
Ashlyn O'Hara
Clayton Holland presides over a meeting of the Kenai Peninsula Borough School District school board on Monday, June 3, 2024.

Kenai Peninsula school board members undid budget cuts on Monday they’d implemented for the coming school year. The vote came two days after Gov. Mike Dunleavy signed the state budget, which included more than $11.4 million in extra, one-time money for the district.

That money is on top of what the state already pays school districts per student, also called the base student allocation. KPBSD joined school districts around the state in doggedly lobbying legislators last session for a permanent increase to that amount.

Kenai Peninsula Borough School District Board President Zen Kelly says he’s relieved Dunleavy allowed the one-time funding to stand.

“We have big changes to our — thank goodness we have big changes — to our budget moving forward,” he said.

The district faced a nearly $14 million deficit heading into its most recent budget cycle. That grew to roughly $16 million after the board ratified a one-year contract with employees in February.

To fill the gap, the school board passed a budget that would have closed school pools and theaters, eliminated extracurricular travel and deferred upgrades to classroom technology and curriculum.

The $11.4 million dollars coming to the district aren’t enough to cover the entire gap. The district will pay for the rest — about $4.7 million — with savings. That’ll exhaust about 80% of the account, says district finance director Liz Hayes.

“That clearly demonstrates that we are in deficit spending and because this is all one-time money coming from the State of Alaska, we cannot rely on it again next year,” she said. “So just we're going to be back in the same cycle of not having funds to support the needs of this district. Next year, we'll be looking at cuts again.”

Looking ahead, board members say the district will face a more dire budget scenario next year. Superintendent Clayton Holland forecasts a $17 million deficit, and he says it’s unclear how much the district will have in savings.

“We will be thinking about this starting today — what do we do for next year?” he said. “So putting it out there. And we’re going to have a lot of work to do.”

Board members floated going back to the Kenai Peninsula Borough Assembly to ask for more money this year, reviewing the cost of borough-led school maintenance projects and cutting money set aside for unused employee healthcare as potential paths forward.

The district won’t get a sense of how much money it’ll get for next year until October. That’s when the district’s enrollment count takes place. State funding for the district is largely determined by the number of students it serves.

Dunleavy also left in the state budget is $7.3 million in one-time funding for student transportation. Holland told KDLL last week that the bonus transportation money will help prevent further consolidation of school bus routes.

But another $5.5 million the Legislature had set aside for the peninsula’s school district won’t be coming. That’s after Dunleavy vetoed money the federal Department of Education says the state Department of Education and Early Development owes the district. The veto is the latest in a monthslong back and forth between the state and federal education departments.

The feds say Alaska underfunded four school districts by $17,450,118 across two fiscal years. That’s in violation of the American Rescue Plan Act, which said districts couldn’t reduce funding for school districts serving a large number of low-income students.

The feds left it to states to calculate whether they adequately funded districts, and later determined Alaska did not. The outstanding money includes about $8 million for KPBSD. Of that, roughly $5.5 million was included in this year’s budget by state lawmakers.

State education officials contend that they didn’t reduce state education funding. They say they actually increased funding for schools through a $30 bump to base per-student funding. The state drew a line in the sand in May, saying it understands what consequences Alaska will face by not complying with the federal government, according to a letter obtained by KDLL.

To resolve the dispute, Bishop proposed paying roughly $330,000 to the Fairbanks North Star Borough School District. Last month, department officials did not say whether that amount would be in addition to, or in lieu of, the amount approved by lawmakers for Kenai and Anchorage this year.

Prior to joining KDLL's news team in May 2024, O'Hara spent nearly four years reporting for the Peninsula Clarion in Kenai. Before that, she was a freelance reporter for The New York Times, a statehouse reporter for the Columbia Missourian and a graduate of the University of Missouri School of Journalism. You can reach her at