By Melinda Munson

A memo from the Department of Education and Early Development (DEED) dated July 27, sent to all superintendents and municipal managers across the state, could cause consternation for districts that receive funding outside the cap, or maximum amount of local funding. Skagway School received $500,000 in special revenue funding for Fiscal Year 2024.   

The memo reads: “This letter is to remind districts that local appropriations and in-kind funding being applied to special revenue fund(s) are considered towards the maximum local contribution or ‘local cap’ set out in AS 14.17.410.”

The Skagway Borough Assembly funded the school to the cap at $2.3 million. The school asked for an additional $1.1 million to cover current programs such as vocational technology and music. The assembly declined that request but provided $500,000. The district had approximately $1.1 million in reserves at the time of budget discussions.

The back and forth between Skagway School Superintendent Josh Coughran and Mayor Andrew Cremata during budget readings was sometimes tense, with the municipality just emerging from the economic crisis of COVID-19.

According to Coughran, the school has historically used  direct funding outside of the cap for established special revenue funds. 

“I took a quick look at our archives and found documented evidence of special revenue funds dating back to at least FY2010, specifically student activities, food service, preschool and technology improvement,” he said. “I’m certain that the practice dates back farther than that as I remember special revenue funds being part of the lexicon as a brand new teacher in 2003.”

The Juneau School District also used money from its local government to fund outside the cap. The Juneau Assembly recently awarded the school an additional $2.3 million to fill deficits for transportation, childcare and community education.

In a letter to DEED dated July 28, the Juneau Board of Education President Deedie Sorenson and Clerk Will Muldoon state that “inadequate funding from the State of Alaska has harmed students.” Among other issues, the board argues that transportation costs should not be counted towards the cap. 

While Skagway’s recent funding from outside the cap is not as large as Juneau’s, it is sizable and the legality of future budgeting practices remain unclear.

“This is a significant development that threatens the way we do business as an organization,” Coughran said. “Our seven special revenue funds (student activities, food service, preschool, vocational education, technology, music, foreign language) represent over a million dollars each year in expenditures. The municipality gave us $500,000 for FY24 to fund all of these programs – our reserves covered the balance. If the state takes a hard line on this, it could be devastating to our fiscal position. Thankfully, it seems that DEED is willing to engage in conversation with districts to sort this out.”

According to Coughran, school administration will meet face-to-face with the commissioner of education on Sept. 6, “to discuss what sort of revenue request to the city will pass muster with the state. I’ve got a lot of ideas that may help us structure a revenue request and subsequent budget that will retain all of our employees and keep each of our programs intact.”

Coughran said the school has not undertaken any immediate cost saving measures.

“Truth is, we don’t have enough information yet to react to the memo appropriately,” he said.

The budget issues will be discussed at the regular board meeting, Aug. 29, at 7 p.m.

Cremata remains satisfied with the assembly’s school budget decision.

“Considering the intense scrutiny that the governor’s office is bringing to supplemental school budgets, I’m encouraged by the fact that the assembly brought intense scrutiny to Skagway School Distict’s supplemental budget during last year’s budget cycle,” he said.

 “It’s likely the assembly saved the school board from some difficult decisions. It also underscores how important it is for elected officials to pay close attention to all funding requests, even when they’re presented by neighbors, friends and colleagues.”