The Mariner Theatre filled with community members, teachers, school administrators, parents and children on Tuesday, Feb. 11 for the first of three districtwide Kenai Peninsula Borough School District meetings aimed at garnering public feedback on and sharing information about the district’s budget development.

Originally intended to be held in the library at Homer High School, the meeting saw robust attendance, with people funneled into the theater instead, filling about half of the roughly 500-capacity auditorium.

School Board President Zen Kelly remarked that it was the largest crowd he’d seen for a budget conversation. Fellow school board members Tim Daugharty and Dianne MacRae were both in attendance. Kenai Peninsula Borough Assembly members Brent Johnson of District 7, which covers areas from Kasilof to Anchor Point, and Kelly Cooper of District 8, which covers Homer and areas along Kachemak Bay, also attended.

The budget development meetings — also slated to take place in Kenai and Seward — come as the district faces a $17 million deficit. According to reporting by the Peninsula Clarion, the district has spent down its unassigned fund balance to less than a single day’s operating cost and has no assurance from the state that increased funding will materialize. Additionally, the district and other education advocates have said that the base student allocation — the amount of money districts receive per student — has failed to keep up with inflation, forcing the district to draw deeply from its fund balance.

Now, with no savings to draw on, the district says it is considering cuts to staffing, programs, sports and building closures. The KPBSD school board earlier this month cited nine schools that could potentially be shuttered — Homer Middle School, McNeil Canyon Elementary School, Moose Pass School, Nikiski Middle/High School, Nikolaevsk School, Paul Banks Elementary School, Seward Middle School, Sterling Elementary School and Tustumena Elementary School.

The evening in Homer began with a presentation by Elizabeth Hayes, KPBSD’s finance director. Hayes reiterated that this problem is not new.

“We knew last year that there was going to be an issue with next year’s budget. With no additional money in the BSA, we have no fund balance to fall back on,” Hayes said in her presentation Tuesday.

To begin the budget process, Hayes said, the district must submit to the state an expected enrollment number for the next fiscal year. For fiscal year 2026, KPBSD’s enrollment projection is 8,125 kids. Hayes then runs the enrollment number through the foundation formula, which factors in school size adjustments, district cost factor, special education multipliers, career and technical training multipliers, and intensive needs students.

“The last few years we went from $70 million actual dollars for the foundation in FY24 to a preliminary FY26 of $64 million,” explained Hayes. “One of the reasons that number has continued to decline is the full and true taxable value in this borough continues to rise. So, when that number gets larger, the state portion that they can provide gets lower.”

Hayes also pointed out that things like inflation and COVID-19 support funds have complicated the budgetary process in recent years, in addition to the fact that the base student allocation has not been increased.

“You’ll see that this current year we’re getting $11 million in one-time funding. That’s equivalent to $680 inside the BSA. If you recall last year, they passed a bill that put $680 inside the BSA, and what happened? It was vetoed by the governor. It went back to reconsideration vote and failed by one, one vote last year,” Hayes said.

“Thanks, Sarah Vance!” an audience member yelled out, to claps of support. Vance — who represents Homer in the Alaska Legislature and is currently in Juneau for the legislative session — was not at the meeting on Tuesday. Last year, she voted against the reconsideration vote, allowing Dunleavy’s veto of school funding to stand.

Hayes also highlighted a new online tool that asks users to balance the district’s budget. She said it already had at least 280 respondents, as of that night.

“We’re looking for some feedback. What are those cuts going to be and where are they going to happen? None of us like this conversation, but this tool is going to give you a voice,” said Hayes during the question-and-answer portion of her presentation.

Multiple community members asked for clarification about the benefits section of the FY26 budget, which represents 30% of the total expenditures. Hayes said it included things like health care, retirement, and a small percentage toward unemployment and life insurance. When asked directly how much is paid toward health care, Hayes said it was in the range of $30 million last year. A nearly 22% increase in health care costs from the previous year is putting increased pressure on the budget.

A community member asked if it was known how many students were homeschooled in the district outside of a KPBSD homeschool program, like Connections. Hayes said that last year, the number was around 1,400. This is significant because it means there are up to 1,400 children outside of KPBSD schools that would otherwise be enrolled in district schools, resulting in a loss of more than $8 million in potential monies from the state when multiplied by the current BSA of $5,960.

Another community member asked about borough funding for the school district. Hayes said that the borough assembly has chosen not to fund to the cap in recent years, meaning that they gave less money than was requested or less than was capable of being given. Hayes explained that funding caps are a statewide attempt to keep education funding equitable, in essence, from some school districts being given more funds than others.

Attendee Shannon McBride-Morin said she’s a huge supporter of public schools, being a graduate of Homer High School herself and a parent of former students, as well.

“What I’m hearing is that the fight has to be with Juneau,” McBride-Morin said Tuesday, addressing the room during a Q&A period. “When we’re talking about education funding with the legislator and with the governor make sure you say it’s public school education we’re talking about. These discussions of closing schools and consolidating buses, this isn’t what we should be talking and fighting amongst ourselves about. We need to be taking this to the state and the state needs to provide public school funding.

“So, what can we as supporters of public schools do to — basically — raise hell to make this happen?” she asked Kelly, to applause.

Kelly encouraged people to contact those who “hold the purse strings” and said the ultimate power every community member has rests in the ability to vote for and contact their local elected representatives, including borough assembly members and Mayor Peter Micciche.

In January, Rep. Rebecca Himschoot of Sitka introduced House Bill 69. If passed, the new legislation would boost the BSA by $1,000 next school year, as well as provide two additional increases of $404 each in the following two years.

The bill would also adjust for inflation, yearly, based on the average consumer price index over the previous three years.

This means next year’s BSA would total $7,249, a 22% increase. By the 2027-2028 school year, it would reach an estimated $8,510, for a total increase of roughly 43% over three years.

According to reporting from the Juneau Empire, H.B. 69 was being expedited by the House majority, but was halted before its advancement to the House Finance Committee — its last stop before a floor vote — on Thursday, Jan. 30 due to pending discussions by a new working group formed by the Dunleavy administration in an attempt to craft a compromise. The group had two weeks, beginning on Feb. 4, to deliberate. According to the Empire, previous efforts to resolve similar differences have failed in past years.

Rep. Sarah Vance can be contacted by email at representative.sarah.vance@akleg.org or by calling her office at 907-465-2689. Sen. Gary Stevens, who represents Kodiak and areas of the southern peninsula, can be emailed at senator.gary.stevens@akleg.org or reached via his office at 907-465-4925. Borough Mayor Peter Micciche can be emailed at mayor@kpb.us or reached via his office at 907-714-2150.

You can find a complete history of legislative voting records, committee membership, and bill sponsorship — as well as various avenues of contact — for all state legislators online at akleg.gov. You can also stay abreast of current legislative dealings by tuning into KTOO’s Gavel Alaska. The live, unedited coverage of the Alaska Legislature streams for free online as well as on KTOO 360TV across Alaska and is available on Roku and Apple TV.

A budget development meeting was held for central peninsula residents at Kenai Central High School library on Wednesday, Feb. 19 at 6 p.m. The Seward community will meet Feb. 20 at Seward High School.

Chloe Pleznac is a general assignment reporter for the Homer News. You can reach Chloe by email at chloe.pleznac@homernews.com or by calling 907-615-3193.

KPBSD finance director Elizabeth Hayes points to a presentation slide during the Homer budget development meeting on Tuesday, Feb. 11, 2025, in the Mariner Theatre at Homer High School in Homer, Alaska. (Chloe Pleznac/Homer News)