1996-06-03                     Senate Journal                      Page 4247
SB 1011                                                                      
SENATE BILL NO. 1011 BY THE SENATE RULES COMMITTEE                             
BY REQUEST OF THE GOVERNOR, entitled:                                          
                                                                               
An Act relating to transportation of public school                            
students; relating to school construction grants;                              
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 Judiciary Committee.               
                                                                               
Fiscal note published today from Department of Education.                      
                                                                               
Governor's transmittal letter dated June 3:                                    
                                                                               
Dear President Pearce:                                                         
                                                                               
Under the authority of art.III, sec.18, of the Alaska Constitution,            
I am transmitting a bill relating to transportation of public school           
students, school construction grants, state foundation aid, and                
supplementary state aid for education.  It is identical to HCS CSSB
(FIN) am H, which passed the House but did not receive Senate               
concurrence before adjournment.                                                
                                                                               
This bill is of great financial consequence to the state.  Each year           
Alaska's school districts receive millions of dollars of  federal impact       
aid.  Because Alaska maintains a qualifying education funding                  
scheme, it is permitted to reduce state aid to a district by a portion         
of the district's federal impact aid.  For this fiscal year, consideration     
of district impact aid resulted in a savings to the state of                   
approximately $35million.                                                      

1996-06-03                     Senate Journal                      Page 4248
SB 1011                                                                      
To qualify for this substantial financial benefit in fiscal year 1998,         
the state must have no more than a 20 percent disparity between the            
revenues of our richest and poorest school districts.  The test is             
based on two-year prior data, so we must meet the 20 percent mark              
in fiscal year1996.  Without the changes made by this bill we will             
fail, and will not be permitted to reduce state aid to districts by            
considering their federal impact aid.                                          
                                                                               
The bill decreases disparity by providing supplemental state aid of            
$500 per instructional unit to regional educational attendance areas           
(REAAs), who are unable to levy taxes to increase revenue for their            
schools.  The supplemental funding will not result in a substantial            
cost to the state because we will increase the state's deduction of            
federal impact aid from 90 to 96 percent for REAAs.  This change               
will not affect city and borough school districts.                             
                                                                               
The amendments to the foundation formula program are retroactive               
to July1, 1995, to ensure that we achieve the required 20percent               
disparity for the current fiscal year.  It also contains a hold harmless       
measure so that no district will receive less foundation aid under this        
bill than it would have received under existing law.  The bill also            
addresses two other education issues -- one related to pupil                   
transportation and one to school construction grants.                          
                                                                               
This bill represents an important step toward my goal of achieving             
a foundation formula program that is fair, equitable, and accountable          
and that protects the partnership between state, federal, and local            
dollars.  I urge your prompt and favorable action on this bill.                
                                                                               
						Sincerely,                                                               
						/s/                                                                      
						Tony Knowles                                                             
						Governor