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Skyrocketing oil costs put squeeze on school budgets

District may have to pay $245,000 more in 2006 to heat schools

Posted: Friday, October 21, 2005

Homeowners are not the only ones feeling the pinch of increased fuel costs this year. The Juneau School District is looking at heating bills hundreds of thousands of dollars higher.

At the School Board meeting Tuesday night, Director of Administrative Services David Means presented the anticipated fuel costs the district will face to heat the schools this fiscal year. Means told the board he anticipates fuel costs could be as high as $585,000, depending on the Oil Price Information Service price and the amount of fuel consumed this coming winter.

The school district goes through the city's oil bid process, which is supplied by Petro Marine Services at the OPIS rate plus operating and transportation costs for any given day fuel is purchased.

The district spent $301,111 for heating fuel for fiscal year 2004, and $354,562 for fiscal year 2005. The school district has budgeted $340,000 for fiscal year 2006, nearly a quarter of a million dollars less than officials are now anticipating.

"It's obviously a concern and that's why we brought it to the board so the board wouldn't be taken by surprise and so that we can be proactive at both the local and state levels," said Superintendent Peggy Cowan.

She said the board is looking at solutions to deal with the increased fuel costs, and will be revising the budget after Oct. 28 following the end of the "count period," in what she called a normal budget revision cycle.

Cowan said it is too early to see if the increase in fuel costs will affect any school programs.

"The board hasn't made that decision," she said.

The staff will make recommendations, but ultimately it will the School Board's decision, Cowan said.

"We're trying to make the most accurate predictions and projections that we can and we will return to the board with what we think is the most responsible decision," she said. "We are looking at multiple ways to address it, which include energy saving measures, strategies for different revenues, and then appropriate budget allocation."

Means told the board Tuesday, that if the projection is correct, heating fuel costs have increased over 400 percent since fiscal year 1999.

Bob Cox, senior vice president of supply and distribution for Petro Marine Services, said he has done some personal analysis of heating fuel cost increases since last year and has found a significant difference.

"On average it's gone up 40 percent," he said.

Cox was unable to give the current OPIS rates because it is a subscriber database that is confidential to nonmembers. Still, customers are privy to this information to verify that they are billed accurately, said Cox.

Cox said the "ballpark" wholesale figures for heating fuel these days is over $2.50 per gallon, before transportation, profit and operating costs. He said it might be more than $3 per gallon by the time it gets to the customer.

The school district paid as little as 94 cents per gallon to as high as $2.53 during fiscal year 2005. Costs also depend on size of order and type of heating fuel, with No. 1 generally being more expensive than heating fuel No. 2.

"A fair amount of the increase this year has been due to some extraordinary one-time factors like the war in the Middle East ... hurricanes in the Gulf Coast, which has affected refinery levels, and I expect those will go away and not be as much of a factor next year," he said.

Juneau-Douglas High School was the most expensive school, and the largest, to heat for the 2005 fiscal year. Between June 11, 2004 and June 13, 2005 a total of 63,510.95 gallons of heating oil were purchased for $106,025.34.

Gastineau Elementary School was the most expensive primary school to heat for fiscal year 2005, costing the district $45,273.61 between July 28, 2004 and June 9, 2005 for 27,146.40 gallons of fuel.

Mendenhall River Elementary School has both electric and fuel boilers and used 1,796.80 gallons of fuel in two deliveries costing the district $3,554.48 last fiscal year.

Cowan said members of the School Board will be attending the Association of Alaska School Boards meeting in Anchorage Nov. 3-6 and will be discussing a resolution of fuel costs that will eventually be presented to the legislature.



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