Two Fairbanks ordinances would loosen the cap on school district reserves

Two ordinances before the Fairbanks North Star Borough Assembly would change how much money the school district is allowed to keep in reserve, and one of them would dissolve the borough fund that collects the excess.

Borough code now bars the district from holding unrestricted balances above 40 percent of the borough's July 1 appropriation to education, with anything over that going into a maintenance reserve. The threshold used to be 28.5 percent capped at $800,000, then 25 percent capped at $1 million by fiscal 2017.

Ordinance 2026-39, from Assembly members Garrett Armstrong and Nick LaJiness, keeps the 40 percent ceiling but stops counting four funds toward it, including transportation and food service, saying the current rule "has created burdens on the School District's budgeting process."

Ordinance 2026-40, from Presiding Officer Scott Crass, repeals the ceiling. Anything above 40 percent would instead have to be spent before the district asks the borough for local support, and the maintenance reserve would dissolve on June 30, 2027, its balance going into the district's operating fund.

The district's 2024 annual financial report listed a general fund balance of $32.87 million, $13.47 million of it unassigned. The Assembly moved $5.25 million out of the maintenance reserve and into the general fund for education effective July 1. Officials had reconsidered the caps earlier after an audit clawed back $11.4 million.

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

Both ordinances are on Thursday's consent agenda, which takes two assembly members to pull an item for separate consideration. Both go to the Finance Committee Oct. 1 and to public hearing Oct. 8.