The Ketchikan Gateway Borough Assembly on Monday night approved a three-year plan for the school district to pay back a $5.4 million debt to the borough.
That will end up being an annual payment of around $1.9 million with a variable interest starting at 3%. Borough assembly members say the district has acted irresponsibly and needs to be held accountable for financial mismanagement. Assembly member Sharli Arntzen said she acknowledges it will be difficult, but it’s time to “cut the credit card off.”
“This taking from the borough is theft,” Artnzen said. “You didn’t have the right to do that, and you did it anyway. That’s what I’m teaching my kids. And I want to teach the kids in Ketchikan that we can do hard things.”
Borough Finance Director Charlanne Thomas said if the district continues to accrue debt, the borough would have to dip into fiscal reserves by the end of this year.
Assembly member Rodney Dial said he’s not interested in cutting the district any more slack, because the borough has been overfunding the district for years.
“For me, the real thing that was the deciding factor was the realization that we still can’t trust the district,” Dial said. “And I hate saying that, but there has not been a sufficient change in the business culture of the district.”
The school district’s interim business manager, Lisa Pearce, said in a borough-school board liaison committee meeting on Tuesday that she thinks the biggest cost is staff operations. She said although healthcare costs are a significant factor, the district is overstaffed. And last Saturday, she estimated they’d have to cut 45 full-time employees in order to fill that deficit. There are just under 350 employees in the district.
Several parents and school staff members said while they understand the district needs to pay back the money owed to the borough, the consequences of financial mismanagement shouldn’t fall on the backs of staff and students. Kayhi senior Lily Pader spoke in favor of a five-year repayment plan that the school board requested.
“I also recognize that some of you may feel the responsibility to hold district leaders accountable and ensure this never happens again,” Pader said. “But I ask you to think about the hundreds of students in this district that had no part in creating this problem. No matter what repayment plan is chosen, students will feel the effects of budget cuts. The only thing we can control is how badly the effects are felt.”
Some parents testified that they moved to Ketchikan because of the way the community values the youth, seen through borough investments like the Rec Center and athletic fields. But gutting the schools will remove the incentive for people to move to Ketchikan, or to stay long term.
Tiffany Cook is a parent who spoke at the meeting.
“What kind of a high school has no electives and no activities? Because that’s what we’re facing,” Cook said. “That’s not a high school, that’s a prison. And I’m not putting my kid through that.”
She said if too many cuts are made in the schools, Ketchikan will lose its middle class. The people who have the resources to move away will.
“This is your economic development issue,” Cook said to the assembly. “People will not come and they will not stay when your school system is failing, when your school system is bare bones. There are lots of options where people don’t have to bring their families here, and we know what those kinds of communities look like.”
The school board asked the borough for a 5-year repayment plan, with the first year of the plan going solely towards interest rather than the debt. That would give the district more time to plan for any cost-saving measures, like school closures or reconsolidations, and staff cuts. It would also save the jobs of about 5 full time employees and give more experienced, tenured teachers more time to consider retirement so the district wouldn’t have to cut as much new talent.
But the Borough Assembly voted for a faster return, instead approving a 3-year repayment plan, in a vote of 5-2 with Dan Ortiz and Kathy Bolling voting no.
The school district was on a tight deadline for a solution in order to have access to borough and state funds. The repayment plan and the memorandum of agreement came just days after the district received a letter from the state Department of Education and Early Development, informing the district that it would withhold payments until the district’s ending reserve fund balance is no longer negative.
DEED gave the district a deadline of March 6 for the district to come up with a plan in order for the district to receive its monthly payment of around $2.3 million. If signed by the district, the MOA the borough approved Monday night will likely meet that demand and fall into compliance.
It also meets the requirements for the borough to release previously sequestered funds.
Now, the district has to figure out how to make the payments.
Jason House is the president of the Ketchikan Leadership Organization, the district’s administrative union. He said there will be cuts made in schools, and the board has an ethical obligation to let staff know as soon as possible.
“There are folks that are gonna be looking for new jobs,” House said to the school board at last weekend’s meeting. “There’s folks that are gonna have to pack their families up and leave the community. They have a right to know that. And in quickly a time as possible while there are still opportunities to find employment in the field that they have chosen to serve in.”
The school board is planning to let staff know about cuts by Spring Break, which is in around two weeks.
At the meeting, the board discussed closing schools and reconsolidating. Some principals shared what programming they think could be cut from their schools, or how many staff cuts could be made.
The school board asked district administrators to come up with a plan and present it at the next special meeting this Saturday. The agenda for that meeting is expected to include a draft Reduction in Force plan and draft budget.
The board’s next regular meeting is March 11.
