001Okay, I'm muted. Now you now you can ask. America, are you there? And are we recording? It says we're being live-streamed. I think the recording is at the top. Yeah, it just so shows. Can we stop the recording until we're ready? Steve, do you hear that? Steve, we're talking about stopping the recording until we're ready. Hey Sven, um the recording is live, but as long as you guys are muted in the room, uh they will not hear you. So, you guys can talk freely with the the room muted. I just started up the recording so that you guys are ready to go when you are ready to start. You do not have to start right now. America, can you hear us? Uh America, it looks like is not in the meeting quite yet. Okay. I
002can hear you. It's Margo. I can hear you. So, Margo, you're online. Is anybody else online? Let's see if that's Let's see if that's See if it actually works. Yeah. So, I've got my hands free. Okay, good afternoon. I believe that we are live and unmuted. It is the April 23rd Finance Committee meeting of the Anchorage School Board. I'm Kelly Lessons, board member and chair of the Finance Committee. We'll go around for introductions to my left. David Hallman, board member. Uh Kristy Stripling, Chief Deputy Chief of Schools. Andy CFO. Superintendent. Chief of Staff. Katie Senior Director of Office of Management and Budget. Christy Anchorage Education Association. Bill Baxter Dickerbill, that's what the FPA gets to call me. Thank you. And then online, I see we have Yep, Margo Bellamy, member, board member. Okay, and are
003there any other board members online? Yes, President Jacobs is online and also we have Marty Lang who has joined us online as well. Okay, and I believe member Higgins is returning. So, we will probably have a full committee shortly. Um we have three items on today's agenda. The first being sort of follow-up to FY27. We had a pretty intense overview on Tuesday during our work session. I wanted to allow board members to have a chance for follow-up. Um the second item is a legislative update and the third item already looks ahead to FY28 with a question of what are our major cost drivers and you know, what's our understanding of the lay of the land. Um and I am aware that the administration, our finance team has prepared a slide deck. So, I don't know
004if that's most appropriate for sort of a FY27 conversation or legislative update conversation. >> [clears throat] >> Yeah, we have all the items we'll do in two our presentation. We'll just put in one slide for the Q&A for the 26-27. See what the board members, if you guys still have questions, want to have discussion around that first. Okay, so this is sort of an open opportunity for any board members in attendance to ask if there are any follow-up questions uh for the administration with respect to our $90 million deficit. We learned a lot about um the impacts to instruction and the increasing pressures we can expect our educators and students will feel as administrative burdens are shifted downward um during in the current model. Are any board members Do any board members have any pressing
005questions that they'd like to address at this time? Okay, hearing none, um we can move on to the second item. Um Actually, before we do that, I will say and and I didn't share this in advance. At some point, it would be very helpful to understand what the effects of the cuts are at school levels. Right, we certainly have heard about the loss of the band program at Betty Davis East High School. I heard through my own student last night that um band and orchestra at Eagle River High School are sort of all of the bands and orchestras are being collapsed. Um I know that the principals are being tasked with making decisions at secondary, you know, for how to allocate FTEs. So, I guess um it would be helpful for me to understand essentially
006what's being lost uh in terms of learning opportunities. And that is a probably complex detailed ask, but if if there's a way of aggregating or summarizing what our principals know at this point in time. I can put that get that put together. I I don't know if it'll be in this board connect. Okay, great. Thank you. I could just add it. I think kind of the broader issue is um it's a matter of what we're localizing to the principal level versus what we're mandating at the system level. So, some of these issues around electives seems to be a result of principals making decisions based off the needs of their schools. So, in some ways it's a very localized control issue rather than you know, future policies that would prevent certain choices. That's how I see
007this playing out in multiple budget years. Right. Um Right, because you know, we know that our principals are responsible for ensuring students have access to graduation requirements. Um We also know that you know, there is interest in expanding opportunities for AP, IB, dual enrollment. You know, is that actually happening next year or do we just have larger class sizes, more students in fewer AP, IB, dual enrollment classes? So, that's just sort of an open-ended request for additional information about how the budget cuts are translating at a school level. And I'm I'm happy to follow up as I develop more particular questions, but I think that would would also help me not be surprised to receive emails from community members as we move forward. Okay, the second item on the agenda really looks for the legislative
008updates. And at this point, I would shift to the administration for that slide deck. I'd be grateful for any Sure, I'm going to turn this over to Katie as thankfully she's been more involved in this political process than I've had to be this legislative session and probably knows considerably more about how these bills are moving through. Maybe not considerably, but um so uh legislative session is in full swing. Um there's a lot of activity, a lot going on, a lot moving, and lots and lots of discussions around um education. Um there's over I think 500 bills kind of in the queue right now. Some of them are moving quicker than others and so, we'll just kind of go over the different categories of bills and give you a very brief overview and give you a
009couple of updates on some of them in terms of where we're at and how that impacts ASD. So, um there's bills moving in all of these areas and this is not a comprehensive list by any means. There are some bills uh that have been introduced or are in committee that were not included in this um presentation because either they're not moving or maybe the the uh bill is a little slightly more inconsequential. So, these are the ones that are kind of some hot topics right now. Um and I'm going to positive Right, member Wilson has joined us online. Okay, great. Um so, we're just going to kind of go by section of, you know, what the the main topic is. Um the first one is related to funding. So, the state operating and capital budgets
010um are are moving through committee being um reviewed and amended by find the Finance Committee. We'll move it to the next slide. Um of note for education, um the state operating budget did include 147 million in one-time funding, and then 11 million that was originally in a one-time funding pocket was moved to pupil transportation. So, generally speaking, that would be around 40 million for ASD to the general fund and that one-time funding pot, and then likely maybe around 3 million for transportation if they provided that on more like a pro rata basis, split between the districts. But, as you know, for transportation funding, it's a hard dollar amount that's set in statute, and so there's kind of a question about how that 11 million dollars would be allocated, but I suspect it would be on
011a pro rata basis. There was some a process that committee substitute by Senate Finance that did include one-time funds to districts after prioritizing and energy relief payments at in a kind of like an addendum to the PFD amount first. So, so they're kind of working within a moving target in terms of how much revenue is actually going to come forward at different price points for average cost per barrel. So, if it was an average of 91 per barrel, it would be around 84 million or 100 million if it's more than that. This also includes 29 million for energy relief to the districts, of which there was kind of a formula calculation done based on high costs of energy and analysis that was done amongst districts, and so that would result in approximately 5 and 1/2
012million for ASD if that moves. Next slide. There's also several bills that include pretty substantial structural changes to the mechanisms of education funding. Not least of those is Andy Story's bill, which has had some amendments and some changes. It's HB 261, and really what this sets out to do is to take out some uncertainty in the way that we have to rely on projections for our ADM to budget. So, for those of you in the public or in listening, we have to establish a budget months and months and months before we actually know how much funding is going to be provided because we're using a projection of our enrollment, and then we start the year, we start paying our bills, we initiate contracts based on those projections, but we don't know what those numbers are
013actually going to be until October, November, sometimes later when we're talking about projecting out our numbers strength and intensive needs students who then have to go through a certification process with the state to to realize those resources. So, what that does is we're always trying to build our spending plan on projections that, depending on what's going on in the economy, in the community, in the world at large, can vary pretty greatly from year to year depending on kind of what's going on in in the environment. So, what this bill seeks to do is to use prior years averages. So, these are known numbers. So, it would be the count would operate as normal, but the funding for the year would be based on the greater of a prior three-year average of ADM or the prior
014year, the previous year's ADM, whichever is greater, with an option to submit and request the current year's ADM if it's a 5% increase or more, kind of acknowledging that when you have these huge fluctuations into your system, you might need to bring on some staffing and expenditures way sooner than the average would kind of bring to the system. Additionally, it allows a similar averaging for prior years or current year's intensive needs numbers to base your funding or being able to submit if you have an influx in that student group, submit a second count in February. We're hearing that would be really cumbersome for the state to navigate a certification process for those students. So, there's a question about how that would be implemented on DEED side and how that would cause it maybe a delay
015in resource or payment to the districts, but that is currently in the bill, as well as kind of some grandfathering in for those districts who are currently in hold harmless status because switching to this model would remove the hold harmless provision for enrollment from from the formula. It also has some other elements. One of the other elements is that that would could impact ASD is that it allows alternative schools under 175 enrollment ADM to be counted as one school, which the current law doesn't provide. And so, there's another provision of the bill for smaller schools to prevent some fiscal cliff. But, essentially, what this bill does is it it achieves some smoothing in the system so that year to year there's not these huge variations that cause big dips or sometimes big increases for districts,
016and kind of provides steady or like certainty in those areas. Next slide. The other one that I know has been discussed is SB 278, which is focused on local contributions to school districts and capping the growth of the required local contribution by 2% year to year. I think that there was just a discussion about this and there's been a request for us to take a look at that. There's concern and support on both sides for how that changes the formula and what that does kind of to those metrics over time and the problems that potentially could arise over applying this over a longer period of time. But, it it is in it is kind of in the mix for discussions about the local contributions. Additionally, there is a revenue bill that's sitting out there related
017to an education tax. So, essentially, a tax that's dedicated to supporting public education. That's Representative Galvin's bill, HB 152, and that would propose a head tax of $160 per Alaska resident, a 4% income tax on high earners, which would also capture some of the revenue from non-residents who work and have their livelihood in the state, but then don't eventually live here, as well as some applicability to trusts and estates, and also gives credit though for other um kind of holds people harmless when they're being taxed in other locations or municipalities. So, it would get a credit for what an individual might be being taxed in their home state. It also includes in taxable income for partnerships and S corps. We've heard a lot about it. There's a standalone S corp bill to bring some of
018those taxes online, and so that include that's included in this one as well. This hasn't been, I don't think, a lot of movement, but it is really relevant to the discussion of there are some discussions about education specific revenue bills. Next is major maintenance, and this is the state's capital budget, which Senate Finance did indicate early on in the session that they were going to prioritize putting some money into the deferred maintenance list and major maintenance for schools. Right now, the amount it covers approximately 15 projects. I also heard 18, but the latest update with it covers about 15 projects, which still captures these four items that are on the list specifically for Anchorage. So, that's Question. So, those are items that have been completed by ASD or need to be completed? That's a good
019question. I believe these projects have been completed and submitted for reimbursement. >> Submitted for reimbursement. And so, if we, you know, if the funds are incorporated into the budget, and ASD receives 21 point, you know, almost 21.5 million from those four projects, do those dollars, are they fungible in the way that one-time school bond debt operating funds from a few years ago truly were or fungible although we allocated them to um nearly all of them to capital projects? Or to to what how would how would we be able to repurpose them? I believe Jim has got his hand raised online to I do. The intent for the major maintenance grant is to reuse that for school construction projects. Um it's supposed to kind of offset when state bond debt reimbursement wasn't here, and of course
020it's still never currently is not back to the 75% it used to be decades ago. the one-time 2022 state bond debt reimbursement that we received, that was that was unique by design. Um but but the this is AS 1411. You can look at the statute and go through it and it's it's pretty clear this was intended to maintain the the uh state school systems. Okay, so we would then receive $21.5 million and to prioritize projects that perhaps were not passed in Proposition One or any other emergent projects the district may have. That's correct. Every almost every year we have gone back to the board with uh prioritized requests and board memos. We would certainly do the same thing um this year depending on how much the final amount ends up being. Okay, so helpful for
021a $1.5 billion backlog in deferred maintenance, not helpful for reducing pupil-teacher ratios next year. That would be correct. Okay, thank you. With Carl's got a sandwich. Yeah, uh President Jacobs. Yeah, thank you. Uh while we're talking about this, I just wanted to flag for board members' awareness and to lower expectations. I believe since Governor Dunleavy has been in office, he's taken a a line item veto to this particular item every single year. And so what is being proposed um then came out of the Senate almost certainly won't end up being received by our district or any district. So just setting expectations. Thanks. Yeah, thank you. Any other comments in the room? Yeah, thank you. Um thank you, President Jacobs, for saying that because I should have disclaimed this whole thing. This is kind of a
022current status of what what is or is currently amended and so some of these bills are being proposed. But of course this goes each one of them goes through a long process for the end of session and many, many of these, all of them I think, are subject to appropriation. Uh so I had a question actually because it is so dynamic and then really this was the question uh with respect to one of the earlier slides um on funding and I heard you sort of the slide the funding slide about House Bill 263 the state operating budget. I heard you say you used the word did um sort of did include uh 147 in one-time funding. But the ADN this morning was reporting that yesterday the Senate Finance Committee made a new version of the
023operating budget and eliminated $158 million in one-time funds. Yeah, so that second portion of that slide kind of shows what the Senate Finance Committee substitutes Okay. >> did and so it's in flux because the other element of that bill that got kind of got included is that the supplemental one-time funding will be up to whatever the difference is after the energy relief PFD payment time. Okay. >> So it's kind of it depends on how much revenue is actually realized um based on the spring forecast and what are whatever fluctuations happen there and then they're going to pay out the amount that it costs to do that. I think it's $150 of energy relief payment and then whatever's left they'll put forward the one-time. So it's kind of like it's hard to know what the amount
024might be. Right. And the other thing that I that caught my attention this morning when I was reading the paper was a comment that said essentially because the funds that we might get are contingent on oil prices, we actually won't know an amount until the end of August, which we've had a lot of calendar committee or calendar conversations. I'm really certain school and classrooms will be in full session at the end of August when and if we know what the price of oil has done for funding in 2026-2027. So we've shifted from one-time funds that would have been available July 1st to funds that may or may not exist in the end of August. From a budgeting perspective, that could be very challenging. And that's kind of why there's not a number of what that
025would be for and we don't know what it will be. We don't know what it will be. Um Okay, so if you move forward to the employee benefits. So Sorry, I see member Jacobs has his hand up. Yeah, thank you. I just wanted to to add a comment while we were talking about the one-time funding and just flag that um our board intentionally did not draft a proposed spending plan um for one-time funds because of the instability of Juno's finances and the lack of cohesion regarding if and how to provide additional funding to school districts uh with their current fiscal house and their being not in order. Um I know we were all very optimistic with the operating budget that passed the house. I know that both our lobbyists as well as I know myself,
026Dr. Brian, and the board members all expressed varying degrees of skepticism regarding what would happen once it came to the the Senate. I just want to flag that thus far those concerns and those words of caution seem to have been borne out that um there is no certainty regarding what amount of one-time funds will be getting and I think the the current mechanism for allocating those one-time funds is especially challenging for us utilizing them in the short term, which is something I think that this board and then our new members once they're brought in in next month will have to consider um as we look to allocate those dollars. And so I'm just flagging that some of those concerns that we've been voicing for a couple months now have come to pass as being very
027valid and unless um and the optimism that initially was expressed has borne out as not something that is is likely to to pass both houses and then a governor's veto. And so um I think we were right to be cautious and clearly the legislature has a lot of work to do um regarding their finances. Thanks. Thank you. Yeah, and and just to reiterate too, I think some of us have received um I guess it's been inferred that they just don't have the votes for a veto override the way that they did last year. So kind of manage expectations. Um but a lot can change in a month, but yes, I think it's it's definitely been showing a lot of caution. Um okay, so for uh employee benefits are another huge topic as as you know,
028um there are a couple of bills uh out there for dealing with health insurance costs um and providing a pathway for um school district and university employees to um join AlaskaCare. Um that's kind of I think been stalled maybe stalled is not the right word, but um they're uh they are seeking some support for that from smaller school districts and other um regions of the state and um I think that the the one that really is garnering a lot of discussion is HB 78 as you know, um which is the defined benefit. We won't talk about that cuz I know that this committee is very well aware of that except to say that there was an amendment that was successful to increase the employer contribution for PERS from 22% to 24%, which I think we
029estimated was going to be um around that $2.5 million mark for cost to the district um across all funds. So um that's something to keep an eye on. Um however, it sounds like um that would bring uh back on a lot of uh recruitment and retention type uh opportunities for the district. Um additionally, there's there is uh some alternative bills uh related to maybe not doing a full defined benefit um package, but something a little bit different, uh which of course this is Senator Stedman's um bill related to opening up social security and an FPS. Um and I think also increasing TRS and PERS contributions, um but it hasn't uh it hasn't been moving recently. So um but I just wanted to put it out there as as people are offering alternatives. Just what is
030the goal behind changing the PERS contribution, which is, you know, real money to us in the end. But is it to dealing with the deficit in it? Is it some other benefit? How is it how how do they anticipate this being used? So Senator Stedman is a um is very protective of the cost of a change back to defined I'm pretty good at defined benefit. Yeah. And so this was actually his amendment. It was it was successful. So I think that what his goal is in this, and I can't speak for him, but in watching him through the years, knowing that he puts forward these other um alternatives, he's trying to be protective of the liability ongoing to the state, not doing something that we can't afford. And if we're going to move forward with
031something like HB 78, um and that employers have a little bit of skin in the game, as he would say. So, did this money go towards the deficit that they had in the past? It would just be an increase to our contribution and go into the pool, the way the 22% So, it does I mean, it it how they apply that, I don't know. I think it would not be applied to the prior um liability to her liability, but it would go toward just improving the health of the program moving forward with all of the other changes that are in 78. It's right now, I mean, all of the state and all of our our contribution employees belongs to the employee because it's a defined contribution uh as opposed to defined benefit, right? So, they
032would pay the 20% or 22% regardless of their defined contribution defined benefit. So, I'm defined contribution like, you know, they contribute 5% on my behalf and then keep the other 17 to make up the unfunded liability. Oh, okay. That's what they're doing. They're not really contributing like Okay, thank you. All right, we can go to the next slide. So, then um I don't think that this one started out as an omnibus bill, but you can see that it's grown into something like that. This is um the committee substitute for HB 28 um Andy Story's bill um is uh at its core a teacher and uh state employee student loan program, but there have been a lot of additions um in doing things that we've we've seen in in the other omnibus bill, I think on
033the Senate side. So, um this bill includes some reporting requirements for correspondence programs. There's kind of a list of things that they're interested in districts collecting and reporting to the state and then D compiling in as part of their annual report to the State Board of Education. Um this also has a provision to permit correspondence students to retain materials um that they purchase or use as part of their student allotment um and to be able to keep those and not have to return them to the district if it's kind of the materials that might be Um this wouldn't include equipment or stuff like that, but it would be things that they would normally be able to kind of keep and take home. Um it also includes an increase per student to transportation of 10%. Um
034it has a small change to how um the retired educators um uh hiring is working to make sure that that includes the regional resource center. Um it also here's a really important thing that I got a little bit confused on myself, so I'll I'll talk about this. Um if you remember that the reading proficiency grants and the vocation um the funding factor increase was a it passed, but it was previously tied to the digital tax It was contingent on the passage of the digital tax um bill. This bill repeals that uh conditional language. So, it make it essentially puts in an effective date of pulls out the the the contingent language on that other tax coming or that other other revenue coming online um and making that effective July 1. So, um that's kind of
035an interesting change on on this one that would affect us. Um it also uh like the Senate uh omnibus bill directs an education funding study um to kind of dig into the formula and how, you know, districts are funded in the state. It and then it creates and modified a student loan repayment program for hard-to-fill positions in sped, EL, and STEM. Um and it kind of put in some guardrails for teachers who are not eligible or not um able to seek loan repayment through other state and federal programs. It caps it at 5,000 per year and then um it or directs the uh reports to the legislature on efficacy essentially. So, it's kind of a pilot program to be able to provide that then study it and then report to the legislature and see if
036that makes sense. And then uh last but certainly not least, there's a one-time energy relief payment um which also, of course, is subject to appropriation. So, that's um an interesting uh package. And then if you go to the next one, of course, there's lots and lots of instructional um or bills related to instructional programming. Um and one of the things that I think one of the messages districts have been trying to carry even for these very, very, very well-meaning, well-intentioned, good pieces of legislation is that it's going to be really difficult if these aren't resourced. So, um there's bills on the Senate and the House side um that are being carried for civics education, financial literacy, mental health education, um CPR education, and then last but not least, the math act um which is kind
037of it's colloquially being called the math act, but it's essentially um a mathematics instruction bill that sets up some structure the way that we um have seen with the Read Act and um I think it it implements some of those strategies plus some. So, some of these bills uh do certainly have a cost to the district. There's an ongoing issue that's being discussed at the legislature at the state level that uh very often with these bills that are requiring districts to do specific things, it comes with a zero fiscal note from the state because it the state is essentially saying this is a district requirement, this is not going to cost the state anything to do, which is a huge uh difficulty and challenge for districts because it will cost districts uh millions of dollars
038to implement some of these. Um just on kind of the a very, very basic um uh you know, back of the napkin math for the math act, um it that might cost 30% more than Read Act and Read Act is in the millions for every. So, um it's not insignificant and we're trying to work through um mechanisms for districts to provide some of that costing to uh legislators um on a front end so that they understand the impact because at this point we're just trying to do basic stuff without any additional requirements. Um but some of these are at the level of being reviewed by the finance committees. So, at at the point that they get to the finance committees, then I think we need to start really paying close attention to um how some
039of these will be. And then last but not least, uh there are many other bills um on things that, like I said, that impact education, but here's a couple that have been garnering support and they're kind of moving through the system that we might want to look at and pay attention to, which is the free breakfast and lunch in public schools. I think later that week it gets a maybe a finance committee hearing, if I remember correctly. The education for deaf and hard of hearing students, that's one that's moving. There's other ones related to uh requirements for providing um services to special education, especially special education students for students with disabilities who are medically fragile, that's another bill. There's all kinds of stuff, but we're getting late in session and so kind of there's some
040ones that are likely not going to move. But two of the uh resolutions that I wanted to point out is there was successful movement for the resolution supporting J-1 and H-1B visa programs um that will be um my understanding is transmitted to the federal government to encourage some um uh opportunity there, as well as proposing a constitutional amendment to create an education fund in the state treasury that's completely separate. So, the the mechanism for that would be um in some ways symbolic, but what that effectively does, it it almost sets up a designated fund. So, that fund for education goes into that pot and the way that it's being communicated by Senate Finance and the sponsors is that it's going to give Alaska citizens a surety of where the money is going. Um and so
041instead of this kind of um being having education lumped in with, you know, growth in government and government government growing, the separate fund could potentially set aside resources and communicate a different message to um Alaskans. So, that's kind of the conversation there. And I would be happy to answer any questions. With this being education for deaf and hard of hearing, what what is she proposing? Any idea what that includes? So, I think some of what that includes and I can pull that up. Um it's it's a good bill that's supported. It's essentially um providing students who are deaf and hard of hearing um required access to services to engage their education. Um and ASD does that, but other districts in the state struggle to do that. So, I think that it it it might not
042change much for us, but I can pull that up and give you specifics. So, they got legally required accommodations. Do we receive students from around the state? We can see Alaska, isn't it like it's the Alaska School for the Indian School that is operated through ASD? Yes. So, we we would we potentially see more students served under this bill? Probably not. I think this probably is the longest bill we've backed up so far. >> Would you Any? Um not on the face of it um because we kind of are set up to provide um these services, it does um so it provides a little bit of um I got I guess language that um would convey hearing technology so that um districts would be supportive in the process of making sure that their students have
043um assistive technology, hearing aids, uh microphone systems, um those kinds of things that um they would have access to a communication style. So communicate they would have access to translators and people that would be able to be on site or helping them or a system that would help them um and other services that would just kind of ensure that there's more protections around children who are deaf or hard of hearing to access an education, which like I said is not as as much of a problem for or not a problem, but it it wouldn't be as applicable to the ASD as other districts in the state. Cool. I guess that's um okay, well thank you. Any other questions online? Um hearing none, let's move to the third item on the agenda, which looks ahead to
044FY28. So the 2027-28 school year, we have not begun really talking about that other than at a 60,000-foot level. There's that agent FY27 budget book, which forecasts uh the next couple of years. And so this is maybe [clears throat] an initial attempt to help us understand what is part of the projected FY28 deficit. I would put it I mean there's Sorry about that. There's a lot of unknowns that we have for FY28 and FY27 for that matter. Uh but just to kind of show you how we do the rough math on it where we get to like a 40-45 million dollar deficit when we start to discuss that. Um really so we'll just kind of walk through how the how the math works on it. So we start off here's our current proposed budget for
045FY27, 604 and a half million dollars. Um we add into it what we think our cost increase is going to be based on contractual obligations, things um that we do know. Um I'll show you kind of some of those big drivers as we go along. But so that gets to a total cost cost for the same services of about 635 million for FY28. Um what's driving that is 80 88% of our costs are salaries and benefits. So as we approve contracts um you know, we approved APA and AEA at a 5% wage increase for that year. We're going to have three contracts that are remaining unsettled. Um so kind of that just goes into that estimated cost that 5% increase is what we provide for our salaries. And I would say a 5% increase is
046generally speaking if the public's look listening this, it's less than what the governor proposed as one-time funding last year for recruitment and he reported a $5,000 uh per teacher bonus for recruitment and retention. Um 5% on average of our like at least our teachers is less than that. Um so I think that we're all in agreement that our teachers do need to be paid fairly and we're trying to get there, but we just have our limited resources. But that is built into our 5% cost increase that gets to our ultimately gets to our deficit. Our medical increases continue to go. We budgeted 5% increase for um FY28. That's on top of the 113 million that we spend for medical. Um I would say that's not the probably total cost of medical as the employee contributions
047will continue to escalate as you know, if we see 8, 12, 15% increases in our renewal rates across our medical insurance. But this is what the board's authorized through our contractual obligations. Additionally, utilities and fuel continue to escalate quickly as does our liability insurance. So those are some of the bigger drivers that really kind of drive that 5% cost increase. Do you have any questions on that piece of it? Uh no, but if I did my math right, it looks like um if medical costs are 113 million out of next year's budget, that's just under 19% of next year's budget is going from ASD to the medical system. Yes. Has that grown over time? I mean over over 20 years if you were to look back. 20 years ago >> Yeah, 20 years ago I
048think the percentage would have been quite a bit lower. of our cost going towards medical. So really one of the things that has eroded our purchasing power is the dramatic escalation in health care costs, which we have no control over or very little control over. And we've tried to contain the district's growth, but it's also I mean families and you know, they have the same our employees have the same and also have seen the growth in their costs, too. Through either you know, increased deductibles, more co-pays, whatever it is, higher employee premiums. Um so just yeah, the medical industry as a whole has been escalating considerably faster than other areas of inflation. And and sorry, at a national level, I mean are we we escalating those costs faster than Um nationally, I'm not sure. I
049assume we're at or above at least. Uh nationally for sure, statewide absolutely definitely. So um about a year ago, maybe a little bit more, we well, prior to that um districts across the state were seeing such skyrocketing health insurance costs that were eating into a larger portion of the operating fund budget or AS flat funding. So um 15 to 20% started really being a pain point for a lot of districts and so um some districts in the state um are seeing double-digit year-over-year uh renewal increases in their programs. Um and some less, but the districts in the state that tended to see a lower rate increase had major restructuring of their programs um to either move to a high-cost deductible program or completely restructure um the tiers of what they were offering, restructure their employee
050benefits. And so um because this was such a pain point, we started talking about it statewide and um 2 years ago we got in the room with uh some like-sized districts um and and had gone through periods of doing like a comparative analysis to see what other districts are are doing and experiencing in this area. And uh there are districts who are fully insured, so they have an insurer, you know, they have a insurance company that handles all of their plans. There are other districts who are fully self-funded, which essentially the district accepts like ASD the risk and pays those claims directly and usually has a stop-loss coverage plan or something to to really deal with the high cost fluctuations as you know. Yeah. All of this all of the districts in the room that
051were fully insured programs were investigating and researching moving to a self-funded plan. All of the districts in the room that were self-funded plans were investigating and researching moving to a fully insured plan. That tells you that there is was a major problem, is a major problem that exists across the entire system where everyone is dealing with such high cost rate increases that's eating into the budget that everyone's looking to do something completely different, but on both sides of the coin the costs were going up no matter what no matter how you were funding your program. So really the only thing is to cut benefits and then you have a situation where you're trying to improve. Right. Yeah, I'm very interested in what the broker is proposing or where we're going because I know we haven't
052done anything in this year on the insurance going out looking at the potentials, but I know we have a different broker now looking at the assessment of this. And uh there were from my standpoint pros and cons to any direction of course at this point. But it's a big financial hit. And I'm just wondering you know, almost would love to hear from the broker but what what we're at and the risk factors and the benefits associated with this because it is a big impact to to ASD. It is a lot of potential both ways. Uh any way you look at it and I know we have some weird options. King County was a weird option uh but for sure, but that would have been Michigan rates. So that would have been a substantial substantial savings
053potentially, but you got a lot of thought into that. But it's just something, you know benefits versus costs versus options. I just would love to hear something from the broker in regards to the assessment both risk factors because we're it's a risk factor for the entire uh school district and I would love to see something like that, some opportunity to to meet with the broker. All right, all right. Yeah, I know. >> [clears throat] >> So this makes up about 30 million dollars of 40-45 million dollar estimate that we're for our deficit. Um the rest of it's going to be on On revenue side. So here's our revenue stock picture for 27. Uh there's some things that fund balance that I know that that's one-time money and then this transfers from other funds which includes
054the school bond debt reimbursement and FEMA dollars. Those are also one-time, so those go away. And this So you lose about 14 and a half million dollars in kind of one-time revenue to get to a total revenue of about 590 million. Uh this doesn't include any changes in enrollment. So as we talked about enrollment declines, um that's really not affected in this version of the presentation. But um just this still kind of gives you the scale of what we're going to be up against for FY28 given no other changes. So considering 590 million dollars in total revenue for 28 if nothing else changes and the 635-ish million in expenditures, you get to almost a 45 million dollar budget deficit for 28. Um there's still some needs that we have that haven't been funded this year
055or previous year for curriculum, IT. I believe Mr. Frankenstein discussed the need for Chromebooks. Those kind of expiring off our system in a couple years. Uh the school maintenance as that continues to that by call continues to grow and then we cut all our money out of the equipment replacement fund or the contributions going into it to replace our generally our white fleet kind of bigger pieces of equipment and um servers, things like that. There are some things that we these things we just don't know for 28. A lot of what we don't even know for 27 yet, but um enrollment changes will could have a big impact, any sort of legislative action, and then we saw the list of bills some of the bills that would require uh kind of unfunded mandates at this
056point. Um and then whatever comes up, emergency needs, you know, there's a lot of things we probably don't know about that are going to come come back. We have contracts that need to be settled and then, you know, there's probably a whole host of things I I don't know at this point. Um So that's really kind of how we get to the 45 million dollar deficit, the rough math on it. So if you have any questions at point, I think that's all I have. So I guess that to think about the next couple of years, assuming we receive $1 or more from the legislature sometime in July first, maybe maybe late August, I don't know. If we were to apply that $1 or $10 million or whatever that towards mitigating some of many things which
057are hurting the student experience and learning opportunities in the 26-27 school year, that additional investment in the 26-27 school year does what to 20 FY28 budget? So I think if you kind of look at this slide, what that would show is we would have a new line for operating grants outside the BSA. So you could show $10 million in additional revenue for 27, still zero on 28. So to the extent that you spend all of $10 million, you're going to spend that, you'll have the 5% inflation on top of that, and then you won't have the revenue to cover it next year. Um of course whatever you add back gives you things to reduce for the next year. But it's uh but again, it does it would increase that deficit. Whatever we get in one-time
058money generally does not. So so every dollar that we that we receive and spend in FY for 20 FY27, knowing that students' learning opportunities are being compromised by $90 million deficit, if we do what we would like to do and shore up those experiences, we are setting ourselves up for a bigger gap in FY28. Yeah. Yes. Okay. Especially if it is a one-time fund goes to one-time funding versus a statutory change. If it's a statutory change, it's yeah, it's different because that money carries over to the next >> And we can predict that and count on it the same way. Thank you. >> [clears throat] >> The the the nightmare to me is the unknowns where you're trying to do a budget based upon how much we haven't gotten from the state, if the legal
059actions out there, you got all this stuff out there, and you how do you make inferences and then even with staffing moving about and changes? Um I just don't know. You got to have a kind of plan of what you're going to do if what if. But I just can't imagine right now what we are missing in regards to contingency planning, but given the variables that are out there, it's just a nightmare to me. I don't know how it maybe it maybe I'm alone, but That's my nightmare as well. Oh, I would think you all had it all worked out by now. Um but it it's an impossible situation, not so much making the changes, but implementing the changes with staffing and locations and all that. Um and then the question is are we making
060changes that are not reversible? Uh and that's the that's a concern I have raised that within that. Um when we get the additional funds, uh what have we done and and what can be changed, what can't be changed? I just I just don't know what I don't know, what I need to know at this point when you're dealing with the public and you're dealing with everybody else and maybe it will, maybe it won't, and in some decisions it's going to happen anyway. Um and and that's difficult to communicate to respond to. Right, it makes it difficult for us to even get these rough estimates and you know, one of the things we see happen, you know, a you know, report there's $45 million deficit for FY28, and that's going to change. I mean, it will
061change at some point and probably by millions one way or the other, right? Some amount, but um so it's never going to be 100% accurate. And that's one of the things we're trying to communicate along the way is here's what caused those changes, here's the new information that we we now have. How many people at this point have gotten layoff notices or pending potential layoffs? 56. Those are actual layoffs. And that's contingent upon you don't find something else or we've got additional funding. Or or all some of these are going to happen in that way. Some things could be um more as other people uh resign or stuff. We have resignations all through the year, right? Other those people come off in order off the layoff list. They're still around. Would board action about the
062middle school model potentially rescind Yeah, we're working on that now. But a few of those Only N C N R and the set Only two or three are maybe middle school educators. Or or would Yeah, the list is there. In the list that you talked about. Okay. So that's not very many. I know that President Jacobs has his hand up and then we're getting close to the end. Yeah, uh so a question for Mr. Rallif. It's the projected deficit for FY28. Um I think I said it was 45 million, is that right? Yeah. Okay. Does does that include the assumption that Anchorage will fund a public education to the to the maximum allowed by law uh or what I think is now roughly 12 million more dollars or no? It assumes flat funding from the
063assembly as well. Okay. There's no reason for us to assume that. So I think we need to adjust that slide and also our figures going forward. Um the only reason that we didn't receive full funding from the municipality this year was the timing of the municipal budget, the state budget, and the calculations within that. Um I for one fully support of the assumption of full and maximum local funding as that's been the history within the municipality and I anticipate Mayor LaFrance and the assembly coming through for us. And deficit at this point um assuming that the assembly will do everything in their power to support public education as they've always continued to do and at least in recent memory and then the mayor will with her [clears throat] staunch support will will do the same.
064Um the other other thing I wanted to note um and please correct me if I'm wrong, Mr. Rallif, if if we invested in specific one-time expenses with one-time funds, that wouldn't necessarily increase the FY28 structural deficit. Um and I'm thinking of um something that member lessons championed which I have become a a huge fan of which is the high-dose tutoring. If we invested in um an expansion of that program for one year, we wouldn't necessarily grow the FY28 deficit. Is that correct or no? Correct. Yeah, if we don't if we plan on just that sunsetting right after the year, then yeah, it would it really kind of go back to where it was. Okay. And I guess my follow-up comment then with that said is I I think this highlights one of the challenges with
065Juno's inability to develop and implement a sustainable long-term fiscal plan is their fiscal instability and the fact that their fiscal house is not in order is indicating and limiting what expenses school districts can make uh to best serve students. Um I think that a reduction in class sizes would be uh with with one-time funds would be uh or with additional funding from Juno would be excellent and something our community staunchly supports. However, if the funding we receive from Juno is one-time, that isn't fiscally responsible um and we might have to pivot to something like high-dose tutoring, which also benefits students, uh, but doesn't offer the same broad, um, data-driven benefit for for all ASD students. And so, um, there is an impact to the to the fiscal instability at the state level, and this is
066what that looks like. So, um, just those comments and questions. Thank you, Madam Chair. Thank you. Did I saw maybe Mr. Abbott wanted to come respond to your comments just a moment ago? Sure. And regarding to the city's contribution on the on the local taxes, we I mean, there's a potential of being in the same situation we're in this year where you know, we have that required local contribution go up so much that we just can't collect it. Um, I guess that would be incumbent on the city to make changes to their budget to reduce their expenses by $12 million to push over to us at that point. Um, so to the extent they could do that, it would you're you'd be correct. It would have reduced our potential deficit. Yeah, Mr. Abbott, I'm tracking
067exactly what you are, and that is my assumption that the uh, the mayor and the assembly will make that happen. Um, it's it's been their repeated, um, repeated preference, and um, uh, something that they have indicated broad support for, that they whenever possible will fund public education to the maximum at the local level. So, I am taking that as an assumption as I mentally, uh, build our budget, um, at least for myself. And I I think the district should plan on the full local max being facilitated through, um, any budget recommendations being required uh, through the MOA uh, to make that happen. Thanks. Okay. Um, if there are no other hands, um, Oh, yeah, go ahead. One little quick question. I know that with teachers basically we can move people around in schools, and we
068have that. Is that What What are the limitations for the other employees? I mean, you've got uh, different union things out there. So, if we close uh, Abbott Lake, and we say those people need to go to Eagle, I mean, River Elementary, can we do have Do we have the right to do that, or they have the option of saying no? And take a layoff, or what? Are you talking about uh, secretaries, or what you're talking >> right. Secretaries, you name it. Staffs, support staff. Uh, in regards to it, do they have the ability to say, "No, I'm not going to be transferred?" If they're if the school closure and they say, "No," then they're probably resigning. Cuz they're School is kept school Okay. So, if the school they don't want to go to a
069different school that may be further away from where they live, they have to resign, or we laying them off, or does that make a difference? Well, I >> [clears throat] >> They We would initially place them in a position, and and if it's a union member, they would retain a transfer right, so that they could transfer to a position You mean what? I mean, not only do they transfer, then they would have the option of selecting a different school. Marcus is online, too, and has to be in Marcus, do you want to That's fine. That That's good enough. Sure. With our with our totem staff at, um, the schools that are closing, talent management has been working, um, on a pretty much individual basis with those folks to, um, find out what their preferences are,
070what their limitations are, um, share with them any known openings, and try to facilitate those transfers in a way that works for them. Um, there may be in some areas not related to closure, but just because the overall budget, um, cuts this year, some folks who will be laid off at the end of the year because we don't have a an alternative position available for them. But, that is something that, you know, talent management works to the greatest extent possible to try to place them based on their preferences. Okay. Um, thank you for the question. Thank you to everyone who helped make today's conversation possible. It's a lot of work. Um, Mr. Abbott especially, Mr. Abbott, thank you. Um, this is, um, I guess the last finance meeting of this board. There will be a
071reorganization in a little bit of, you know, another week or so, and new board will be elected. Uh, but currently the next calendar meeting of the finance committee will be uh, next month, um, on May. About this time of the month. Um, May 28th is the next calendar finance Sorry. Thank you so much.