After spending months deciding on major cuts, the Fairbanks North Star Borough School District’s (FNSBSD) Board of Education will likely need to find more ways to trim its budget for the upcoming fiscal year.
That’s because Gov. Mike Dunleavy released line item vetoes Thursday that include dropping state per-student education funding well below the level approved by the Alaska Legislature.
FNSBSD School Board President Melissa Burnett said Thursday that the news prompted her to call a special work session later this month.
“So we will now have to come back together, sit back down, and find an additional $2.5 million in cuts to the district, which will be very painful,” she said.
Dunleavy’s line item veto comes as part of the state budget process. It equates to a $200 per-student reduction, or a $50 million budget cut, in education funding compared to what the Legislature approved in House Bill 57.
That’s the bipartisan education legislation state lawmakers passed this year. The bill contained a $700 permanent increase to the base student allocation, the core part of Alaska’s school funding formula. That represented a roughly $180 million expense for the state and was the first substantial boost to the funding formula since 2017.
In a prerecorded video posted to social media before signing the budget and announcing line item vetoes, Dunleavy said declines in oil revenue forced his hand.
“The price of oil has gone down, therefore our revenue is going down, and basically we don't have enough money to pay for all of our obligations. So as a result of that, you're going to see some reductions in this year's budget,” he said.
Dunleavy’s signed budget retains the equivalent of a $500 increase to the base student allocation. But that actually amounts to a year-to-year decline in state education funding for schools since legislators passed a one-time $680 increase to the per-student formula in 2024.
And the Fairbanks North Star Borough School District, which receives the bulk of its funding from the state, had been budgeting for those 2024 levels again.
That budget assumption still left the district with a $16.5 million deficit. The board has sought to resolve that deficit in recent months by closing three schools, replacing custodial staff with a contracted company, increasing class sizes and cutting programs.
Dunleavy’s line item veto now sets state funding for the Fairbanks area school district more than $5 million less than what the local school board had budgeted for.
That blow is softened by the additional $2.7 million local funding the Fairbanks North Star Borough Assembly recently approved for the school district, which came on top of the $60 million the district expected to receive from the borough. But as it stands, the school board will still have to choose what’s next to go due to the line item veto.
That could be a number of things, Burnett said Thursday.
“A school, a PTR [pupil-teacher ratio] increase, cuts to programs, many different scenarios. The district is awaiting a recommendation from administration, which they are working on,” she said.
Permanently increasing the base student allocation has been a top priority for school districts and state lawmakers for years. Legislative leaders said Thursday they were disappointed in the governor’s decision and that the budget they’d approved already accounted for declining oil revenues.
“The legislature worked hard to balance the budget in an era of lower oil prices. The Governor’s vetoes today were unnecessary and disappointing, but not unexpected,” House Speaker Bryce Edgmon (I-Dillingham) said in a press release from the House’s bipartisan majority coalition.
Dunleavy vetoed the entirety of House Bill 57 in May, but a day later, lawmakers overrode the governor’s attempt to block the legislation. The Legislature is unlikely to take an override vote on the line item veto until lawmakers reconvene in January.