ASD staff says fund balance is adequate to shore up FY27 but district remains below a 10% reserve target

Anchorage School District finance staff told the finance committee that the district sits about $8.5 million above its 5% fund-balance target but remains well short of a 10% reserve the CFO said would be preferable.

Scott Lee, the district CFO, said the district is roughly $52.3 million below budgeted revenue in nominal terms but that about $49 million of that is the planned use of fund balance and not an actual revenue shortfall. "So, we're really right on par with what we projected," Lee said, while noting specific revenue and expense drivers such as an accounting change to telecom reimbursements (e-rate), lower state revenue tied to enrollment declines, and higher substitute costs.

On the expense side, salaries are generally in line with budget but the district has seen an above-budget spend on long-term substitutes. Lee said benefit savings (approximately $27 million from turnover and vacancies) offset some salary pressures. Services such as travel and registrations and certain insurance payouts are outliers but largely one-time.

The staff presentation described the district's plan to use the approved $8 million of fund balance as included in the FY27 budget to balance next year's spending. "All things being equal, we would end next year with this section minus the 8 million because that would be spent," Lee said.

Board members asked whether finance would prefer to retain a higher reserve; Lee said he would be comfortable closer to 10% and that the district is about $26.5 million below that mark. The committee discussed an 8% minimum as a practical target, and members noted that the approved drawdown is planned rather than an unplanned deficit.

The committee did not take formal action during the meeting; staff said they will continue monitoring enrollment-driven state revenue changes and other variables that could affect reserves and the FY27 plan.