Juneau School District leaders are bracing for tough decisions as they face a projected $9.5 million budget deficit.
“The truth is that this district must make both immediate and long-term financial changes,” Superintendent Frank Hauser told the school board on Wednesday.
After Administrative Services Director Cassee Olin resigned last month, the district temporarily hired Lisa Pearce to manage the budget. Pearce found that this year’s budget overestimated revenues by $5 million and underestimated expenses by about $2 million.
The incorrect estimates were partly due to accounting errors, Pearce said. Some numbers were entered incorrectly in the district’s accounting software. Others were left out — for example, the budget didn’t include the superintendent’s salary or benefits.
Board member David Noon, who was elected to the board in October, said he was “incandescent with rage.” He said the budgeting errors made it harder to advocate for more state funding, which educators across the state say hasn’t kept up with inflation.
“These are appalling errors,” he said. “This makes our advocacy position with the state a lot more difficult.”
Pearce said she didn’t find signs of intentional mismanagement of funds. Instead, she said the district’s revenue estimates were off, which allowed them to avoid budget cuts.
“You didn’t have Hawaii trips and you didn’t have $50,000 bonuses,” she said. “You were being squashed from a revenue side, and the bottom side on the expenditures was not stopping. It was kind of a freight train that was coming from both directions.”
The district’s funding from the state is based on enrollment. Each year, the school board agrees on an enrollment estimate when building the budget. This year’s budget was based on a mid-level projection, which ended up being an overestimate. And that meant the district overestimated this year’s revenue.
“The board has been, I guess, optimistic — not wildly optimistic — but certainly not willing to acknowledge the downward trend in our student population,” board President Deedie Sorensen said. “And I think part of that is that, just like everyone else in town, we don’t want to acknowledge that Juneau is shrinking.”
Pearce told the board she didn’t think it was possible to resolve the $9.5 million deficit in one year. The City and Borough of Juneau already contributes as much as it can to the district’s operating fund.
Hauser called the district’s budget crisis “uncharted territory” for Juneau. He mentioned the Copper River School District, which filed for bankruptcy in 1986 and had to reduce teacher salaries.
The board asked Hauser to come up with a list of all possible budget cuts. Their next meeting is scheduled for Tuesday, Jan. 16.
