Fairbanks ordinances would rewrite school district savings limits

Two borough ordinances would change how much money the Fairbanks North Star Borough School District can keep in reserve, and one would dissolve the borough fund that collects the excess.

The Fairbanks North Star Borough Assembly takes up both measures at its regular meeting Thursday, Sept. 24, at 6 p.m. in the Juanita Helms Administration Center on Terminal Street. Assembly members Garrett Armstrong and Nick LaJiness sponsor 2026-39; Presiding Officer Scott Crass sponsors 2026-40. Both are consent-agenda items, which the agenda says require two assembly members to remove for separate consideration. Both are set for Finance Committee referral Oct. 1 and public hearing Oct. 8.

Ordinance 2026-39 keeps the 40 percent ceiling but stops counting four funds toward it, including transportation and food service, saying the present rule "has created burdens on the School District's budgeting process." Ordinance 2026-40 repeals the ceiling. Any balance above 40 percent would instead have to be spent before the district asks the borough for local support, and the maintenance reserve would dissolve June 30, 2027, its balance going to the district's operating fund.

Borough code now bars unrestricted balances, which it counts as committed, assigned and unassigned money together, above 40 percent of the borough's July 1 appropriation to education, with the excess going to the maintenance reserve. The threshold stood at 28.5 percent with an $800,000 cap, then dropped to 25 percent capped at $1 million by fiscal year 2017. Borough policy says the reserve covers cash flow, revenue variance, state revenue uncertainty, litigation risk and emergencies.

The district's 2024 Popular Annual Financial Report cites three requirements: Alaska Statute 14.17.505, Borough Code 7.04.125 and Board Policy 412, and listed a General Fund balance of $32.87 million, with $13.47 million unassigned.

The Assembly moved $5.25 million from that reserve into the General Fund for education under Ordinance 2026-20, effective July 1. The Committee of the Whole and the School Board held a joint work session on accumulation rules July 16. Officials had reconsidered reserve caps earlier after an audit clawed back $11.4 million.

District finance chief Andy DeGraw told the Alaska State House Finance Committee on April 27 that in Fairbanks, "over the last 8 years, we've cut $30 to $40 million that I've personally overseen."