Legislature(1995 - 1996)

1996-01-26 Senate Journal

Full Journal pdf

1996-01-26                     Senate Journal                      Page 2224
SB 244                                                                       
SENATE BILL NO. 244 BY THE SENATE RULES COMMITTEE                              
BY REQUEST OF THE GOVERNOR, entitled:                                          
An Act relating to state foundation aid and                                   
supplementary state aid for education; and providing                           
for an effective date.                                                         
was read the first time and referred to the Health, Education and              
Social Services and Finance Committees.                                        
Fiscal note published today from Department of Education.                      
Governor's transmittal letter dated January 26:                                
Dear President Pearce:                                                         
Under the authority of article III, sec. 18 of the Alaska Constitution,        
I am transmitting a bill relating to state aid for education.  This bill       
ensures the continued receipt of approximately $35 million in federal          
dollars for public schools and fixes the long-standing problem of              
funding for single site school districts.                                      
I promised Alaskans I would build a school funding program that is             
better than what we have today.  I envision a foundation program               
that is fair, equitable, and accountable.  At the same time it must            
have funding levels that are affordable, both now and in the future,           
and it must protect the partnership between state, federal and local           
dollars.  While we continue to make progress toward this goal, this            
bill takes a substantial first step in addressing the immediate funding        
This fiscal year, the state has allocated approximately $640 million           
through the foundation program.  Almost all of this is from the state          
general fund, with $5 million from the Public School Trust Fund,               
and $35 million from the federal impact aid program (the so-called             
P.L. 81-874 funds).                                                            
In order to consider the impact aid when calculating the states                
portion of school funding, the federal government requires the state           
to pass a disparity test which  measures the variation in revenues             
between  our  richest  and  poorest  school  districts.    The  federal        

1996-01-26                     Senate Journal                      Page 2225
SB 244                                                                       
government recently lowered the maximum allowable disparity in                 
revenues between the districts from 25 percent to 20 percent.  The             
program will also be based on two-year prior data.  Thus, in order             
to consider impact aid dollars in the states FY 1998 school funding,           
we must have no more than a 20 percent disparity in FY 1996.                   
Under our current formula, the state cannot meet this new disparity            
This bill will fix the disparity test problem beginning with fiscal year       
1997 by providing supplemental state aid of $500 per instructional             
unit value for regional educational attendance areas (REAAs),  the             
districts that receive the least revenue because of their inability to         
levy taxes for a local contribution to their schools.   This essentially       
raises the floor of our school district funding levels -- bringing it          
closer to the ceiling of the wealthier districts.                              
This supplemental funding will not mean a substantial cost to the              
state because we will also consider more of the federal funding to             
REAAs as an offset to state funding.  Currently, only 90 percent of            
federal aid to REAAs is considered in determining the amount of                
state aid.  This bill increases that to 95 percent -- for REAAs only.          
This will not affect the school districts that make larger local               
Unfortunately, this bill cannot help us achieve 20 percent disparity           
for FY 1996.  To accomplish that, I will be requesting reallocating            
$1.2 million in expected lapse money in this years foundation                  
formula program.  That will provide additional funding to the                  
REAAs, mirroring what section 2 of this bill will accomplish through           
supplemental state aid in FY 1997.   This bill, together with my               
reappropriation request, will ensure that Alaska meets the federal 20          
percent disparity test this year and in future years, protecting the           
states ability to consider federal impact aid when allocating state aid.       
This bill also provides full funding for districts that have come to be        
known as single site school districts.  These districts have lobbied           
for years for a change in the foundation formula that would                    
adequately fund their schools.  While permanent funding changes                
have not been affected in statute, the legislature has annually                
included special grants in the budget for single site districts. It is         
time to fix this problem once and for all.                                     

1996-01-26                     Senate Journal                      Page 2226
SB 244                                                                       
To that end, this bill increases the instructional units of a qualifying       
district by multiplying its units by a percentage between six and 12.          
The smaller the district, the higher the percentage multiplier.  More          
instruction units translates into more state aid.  This simple revision        
corrects a longstanding problem, and obviates the need for the annual          
battle for single site appropriations. It is time to let the single site       
districts go home and redirect their efforts to where they are needed          
most, to children in the classroom.                                            
This bill is the result of many hours of work by the public,                   
including those citizens who served on the Task Force on School                
Funding, and the State Board of Education.  As my administration               
continues to explore better ways to fund our schools, this legislation         
represents a favorable step toward addressing two immediate                    
concerns.  I urge your prompt and favorable action on this bill.               
						Tony Knowles