CFY20 General Fund Budget

Background Information:

FY20 General Fund Budget

General Fund

In a normal budget year, the State of Alaska and the Kenai Peninsula Borough have taken final action in regard to K-12 educational funding and a final budget is adopted in July based on those known revenues. FY20 has not been a normal budget year. Funding from the State of Alaska is currently in dispute between the Governor and the Legislature. The State revenue figures being used at this time for the FY20 Budget are based on the Legislatures funding numbers.

Revenue

State of Alaska:

KPBSD is scheduled to receive multiple streams of revenue from the State of Alaska for FY20. At this time, only two of those revenue streams provide a reliable level of certainty. We are scheduled to receive $287,358 for Quality Schools funding, and $10,048,289 in PERS and TRS Retirement On-Behalf funding. It is unlikely that there will be a significant variance in either of these revenue streams for FY20.

In June of 2018, the Legislature passed legislation appropriating $30 million dollars in one-time K-12 funding for FY20. KPBSD’s share of that funding has been estimated to be a one-time payment of $2,100,012. As you are aware, the Legislature and Governor disagree on if that money has been properly appropriated for FY20, and the issue will likely be taken to court for a legal determination. If the Legislature must again appropriate the $30 million dollars and forward to the Governor for his signature, there is concern that the Governor will veto the funding. This would result in a loss in State funding to KPBSD of $2,100,012.

Revenue projections for the FY20 State of Alaska Foundation Funding were created using a flat Base Student Allocation (BSA) value of $5,930. The FY20 student enrollment projection of 8,681 was determined and presented in the Five Year Enrollment Projection document. Using those two figures, the FY20 Foundation Funding has been estimated to be $79,009,719.

Certainty concerns related to Foundation Funding come from the unsettled dispute between the Governor and Legislature, but also from enrollment related concerns. The continued economic downturn in the state combined with funding uncertainty at the state level has created a level of concern related to state and educational services provided in Alaska. Administration is worried that the above concerns will result in a loss of student enrollment as parents leave the state to find better economic opportunities for themselves, and educational opportunities for their children. One noted indicator of this concern is the fact that we have received more resignations this year from non-retirement age employees with children than we ever have before.

For FY19, we had an October twenty-day student count of 8,680.28. Through our normal process, we projected 8,681 students for FY20. On the last day of school on May 28, 2019, we had 8,432 students enrolled. It is historically normal to have an enrollment decline at the end of a school year, but not to the extent we did at the end of FY19. To put a face on this concern, if we were to lose 100 students from random schools across the District, we would lose approximately $843,246 in State Foundation Funding.

Kenai Peninsula Borough:

KPB support was originally budgeted for $52,537,091, which is the projected maximum allowable for FY20. Since the passage of the FY20 General Fund budget in April, KPB passed Ordinance 2019-19 that set funding at $52,512,091, which is $25,000 less than the maximum allowable previously budgeted.

The amount of KPB additional allowable funding is influenced by the amount of State Funding the District receives. If we incur a loss of enrollment as discussed previously, the amount of money the Borough can give us will be reduced as well. The additional allowable amount is determined by taking 23% of State Basic Need. If we were to lose $1 million in State Basic Need, the reduction in allowable KPB funding would be $230,000. This needs to be kept in mind in case of significant enrollment decreases.

Miscellaneous Revenue:

Other budgeted revenues include e-rate, interest earnings, Medicaid and miscellaneous for a total of $1,405,000.

Total General Fund Revenue available for FY20 is estimated to be $145,362,469.

Expenditures

Since the June meeting, Administration is recommending that the Student Success Liaison (SSL) positions be added to the budget at the high school level to help with the PTR reductions instituted at that level. Administration also recommends that the support calendar day reductions that were in Tier 1, be moved to Tier 2, and be funded for the FY20 school year. This includes tutors and aides, high school secretaries, and head custodians that were all scheduled for a 5-day reduction. The above changes are reflected in the budget totals provided.

With continued uncertainty from the State of Alaska on funding, and continuing negotiations, Administration is recommending that the remaining Tier 1 budget reductions in the amount of $2,633,124 be implemented. Those funds have been placed in a district-wide account to be used to address future action by the State of Alaska affecting FY20 revenues, any enrollment declines, and any additional negotiation costs potentially affecting FY20 and FY21.

The In-kind budgets were adjusted based on KPB Ordinance 2019-19, which is $193,789 over prior year allocations.

The total of all expenditures and transfers for the FY20 Preliminary General Fund budget are estimated to be $145,362,469.

Administration Recommendation

Administration recommends FY20 General Fund expenditures in the amount of $144,498,049 with a transfer to student nutrition services of $864,420 for a total expenditure and transfer in the amount of $145,362,469.

Administration further recommends FY20 General Fund revenues from the State of Alaska totaling $91,445,378. A total of $52,512,091 in revenue from the Kenai Peninsula Borough with $1,405,000 in miscellaneous revenues for a total of revenue and fund balance usage totaling $145,362,469 for a balanced budget.