Ketchikan School District Faces $5.4M Debt Driven by Health Insurance Costs

The Ketchikan school district's recent annual audit revealed a $5.4 million debt owed to the Ketchikan Gateway Borough, marking a decrease from last fiscal year's $7.5 million. This debt has accumulated over several years, primarily influenced by rising health insurance costs, as both entities share the same health insurance plan. Failures in reconciling health insurance claims and spending beyond available revenues over at least seven years contributed to the financial challenges. The audit notes a history of fluctuating debt, raising concerns about budget oversight. To address this, suggestions have been made to enhance communication between the school district and borough, with proposals for monthly budget reviews rather than limiting meetings to budget season. The school district also plans to explore switching to a fixed-cost health insurance plan to mitigate unpredictable annual insurance expenses. Additional cost-control measures are under consideration, including analyzing student enrollment data to identify potential savings on maintenance and utilities, and implementing cuts to non-essential spending until updated budgets with accurate figures are established. The borough assembly has recommended stricter financial controls, such as payment plans for interfund borrowing and requiring board approval for new hires, alongside pursuing federal funding and possibly commissioning a second independent audit. The school board is evaluating these recommendations and plans to form a health care task force to explore alternative health care options and strategies. Maintaining fiscal responsibility amid these financial challenges is a key focus, with the board considering a spending freeze on discretionary expenditures and ongoing discussions with the finance committee. These steps aim to restore financial stability and ensure more effective management of health insurance liabilities in the future.