Legislature(2013 - 2014)HOUSE FINANCE 519
03/24/2014 01:30 PM House FINANCE
| Audio | Topic |
|---|---|
| Start | |
| HB278 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 278 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| + | TELECONFERENCED |
HOUSE BILL NO. 278
"An Act increasing the base student allocation used in
the formula for state funding of public education;
repealing the secondary student competency examination
and related requirements; relating to high school
course credit earned through assessment; relating to a
college and career readiness assessment for secondary
students; relating to charter school application
appeals and program budgets; relating to residential
school applications; increasing the stipend for
boarding school students; extending unemployment
contributions for the Alaska technical and vocational
education program; relating to earning high school
credit for completion of vocational education courses
offered by institutions receiving technical and
vocational education program funding; relating to
education tax credits; making conforming amendments;
and providing for an effective date."
1:36:30 PM
DAVID TEAL, DIRECTOR, LEGISLATIVE FINANCE DIVISION,
provided a PowerPoint presentation titled "Funding Public
Education in Alaska" dated March 24, 2014 (copy on file).
He discussed that the Base Student Allocation (BSA) was an
important piece of public education funding, but it was not
the only factor. More complex issues surrounded education
funding. The BSA was not the only determinant for what the
state spent on K-12 education or for the amount of funding
a school district received. He clarified that the amount of
money that the state spent on education and the amount of
funding a school district received were "two very different
things." The difference created opposing viewpoints on
education funding. Some felt that education had been flat
funded and some legislators believed that education
received substantial increases over the years. He addressed
slide 2 titled, "Statutory Base Student Allocation (BSA)."
He stated that the BSA had been flat at $5,680 for the last
four years but that the BSA could not be regarded as a
"standalone measure for education funding." He hoped to
illustrate the point in the next several slides.
Mr. Teal turned to slide 3 titled "Converting Head Count to
Students that are Funded." He delineated that school
funding was not the BSA multiplied per pupil. The formula
for K-12 education funding was as follows: Basic Need
equaled Student Count (ADM Average Daily Membership)
multiplied by Adjustment Factors multiplied by the BSA. He
defined that adjustment factors were adjustments made for
school size, geographic location, special and intensive
needs education, vocational education and correspondence.
Funding was based on the Adjusted Average Daily Membership
(AADM). The conversion from the head count to the AADM was
a critical component of determining funding. He pointed to
the graph on slide 2 that depicted a decline in the ADM
from 131,623 students in FY 04 to 129,322 students in FY
14. The state funded education based on the AADM and that
had risen from 209,571 in FY 04 to 247,472 in FY 14. He
restated that the adjustment factors determined how the
head count was converted to the AADM and then multiplied by
the BSA.
Mr. Teal voiced that if the BSA had remained constant
during the past ten years per student funding would have
increased by 20 percent. He moved to slide 4 titled, "BSA
Adjusted for Factor Changes." The graph depicted what the
BSA would have been if the factors for converting ADM to
AADM was applied. He explained that mathematically applying
adjustment factors to the student count was the same as
applying the adjustment factors to the BSA. He exemplified
that in FY 13 the BSA adjusted for factors was $5,680 which
amounted to 130,000 multiplied by 1.9; equal to the student
count including adjustment factors. Each student was
counted as 1.9 students. The calculation was the same as
multiplying the BSA times 1.9 times 130,000. The ADM to
AADM adjustment factor was applied to the BSA. Instead of
adjusting the student count the BSA was adjusted to
illustrate that education funding was not flat over the
last ten years, it had increased by 63 percent since 2004
($3,482 in FY04 to $5,702 in FY14). He qualified that over
a ten year time period inflation had to be considered. He
pointed to slide 6 titled, "Adjusted BSA in FY 13 Dollars."
The numbers depicted on the graph were adjusted by the
Consumer Price Index (CPI). The BSA had lost ground to
inflation since FY 2011. He qualified that the BSA could be
significantly increased yet still result in a reduction in
basic need. He discussed the funding that originated
outside of formula funding in the following slides. All of
the following graphs contained inflation adjusted funding
converted to the BSA.
Mr. Teal addressed pupil transportation on slide 6 titled
"K-12 Expenditures per AADM (in FY 13 $)." In FY 07, FY 13,
and FY 14 pupil transportation funding was reflected as a
BSA of $300. He detailed that $75 million was funded as
pupil transportation but at the conversion rate of
approximately $25 million in costs for every $100 increase
in the BSA the $75 million translated into the $300 BSA.
Pupil transportation funding had declined from 2004 through
2012. The formula was increased and inflation adjusted in
2012. He examined slide 7 titled "K-12 Expenditures per
AADM (in FY 13 $)." The graph portrayed funding provided as
one-time items outside of formula funding but distributed
according to the foundation formula. A district may not
choose to count any funding distributed for use outside of
the classroom, as education spending but the legislature
considered all general fund expenditures for education as
education funding. He moved to slide 8 titled, "K-12
Expenditures per AADM (in FY13$)." He expounded that the
graph included Capital Budget grants, which were grants for
items that would normally be paid for through formula
funding.
1:47:44 PM
Mr. Teal turned to slide 9 titled, "K-12 Expenditures per
AADM (in FY13$)" that included operating expenditures of
the Department of Education and Early Development (DEED).
[The operating expenditures for K-12 included state funds
awarded as grants to school districts.] He restated that
the funds were not designated for classroom use but were
expended for education. He pointed to slide 10 titled, "K-
12 Expenditures per AADM (in FY13$)" that included
"substantial" retirement costs. The graph depicted unfunded
liability costs beginning in FY 08 amounting to currently
over $350 million for school districts. He commented that
liability converted into the BSA was "significant." He
reiterated that some may argue that the money was not
directly spent in the classroom and not considered
education funding. But some share the viewpoint that the
funding was a "cost of doing business" and therefore, an
educational expense. He turned to slide 11 titled, "K-12
Expenditures per AADM (in FY13$)." The graph depicted
capital costs which included debt service, school
construction, and major maintenance costs.
Mr. Teal observed that the shape of the graphs from
slides 7 through 11 had not changed even after adding
retirement funding. The curve rose and peaked in FY13 with
a slight decrease in FY14. He pointed to a chart on slide
12. He asserted that examining the same education
expenditures simply in terms of money, not converted into
the BSA had continually increased in inflation adjusted
dollars in the same time period. He recounted that the
student count declined steadily over the same period of
time. He noted that the chart "understated the per student
spending." He referred to slide 5 and noted that the graph
illustrated that education funding had kept pace with
inflation. The BSA alone had not kept up with inflation. He
reiterated that there was much more to education funding
than the BSA. He felt that education funding was a complex
issue.
Mr. Teal discussed other informational items had been
requested by the committee. He mentioned that information
on district by district funding comparisons for the last
three years and district costs categorized by fuel, travel,
etc., was available from DEED. He addressed the committee's
information requests about how the formula worked,
municipal versus state versus federal funding, and the
effects of education funding increases on the state's
budget. He developed an interactive Excel spreadsheet
titled, "FY 14 Projections - Converting Student Head Count
to Adjusted Average Daily Membership by District (static
copy on file). The formula converted a head count to the
AADM, which was multiplied by the BSA to determine basic
need (total funding). He explained that the math was
simple, but every factor affected school districts
differently, which made the policy choices associated with
the formula complex. School districts could distribute its
funding "in any way it saw fit," regardless of how the
funding was originally appropriated.
Mr. Teal cautioned that the adjustment factors all worked
together and any changes to the formula had to be holistic
as opposed to piecemeal. He examined the size factor for
the Aleutian Region School District that had 26.5 students
and grew to 52.7 due to the size factor which totaled 79.2
students. The size factor was adjusted for "economies or
diseconomies of scale" for each school in a school district
and changed yearly. He detailed that "the economies or
diseconomies were… massive." In small schools each student
could be counted as four students and as the school size
increased the count went down to .84 percent of one
student. The conversion table was contained in statute. He
exemplified that a school with 32 students was converted to
a base of 55 students, which would be multiplied by the
$5,680 BSA. He pointed out that a larger school with 64
students grew to 106 students when adjusting for the size
factor.
1:56:51 PM
Mr. Teal continued that a school size of 106 students
amounted to 190 students after the size factor adjustment.
As the size of the school increased the size factor
decreased. A school of 1,200 received a count of less than
1,200. He stated that "the size factor had a tremendous
impact." The conversion table was devised in 1997. He
thought that at the time the table was accurate and was
still appropriate for small schools, but was inaccurate for
large schools and should be increased. He felt that the
formula should be "dynamic." He moved on to the geographic
factor that was meant to account for differing costs across
the state. The Anchorage student population was the base
for the geographic factor and had a factor of one so the
school district did not gain an extra student count. The
geographic factor varied from one to over two. The
geographic factor took the ADM and multiplied it by the
geographic differential which was 1.94 percent for the
Aleutian Region School District. The district's 26.5
students increased to 153.6 students.
Mr. Teal demonstrated that the factors had an enormous
impact. He calculated that an increase of 25,000 to the
student count cost $145 million and an increase in the
geographic factor of 28,000 students cost $163 million. He
identified the special needs factor of 20 percent for every
school district. He felt that that was illogical because
the intent of the education funding formula was to adjust
for differences. When the intensive needs factor was
developed the special needs factor was flat funded. He
moved to the career and technical education factor which
was 1.5 percent for every school district. At this point in
the factors the Aleutian Region AADM was now 187. He
highlighted that the intensive needs factor was not a
multiplier but was an add-on. Each intensive needs student
was counted as 13 students and was also counted in the
regular BSA. He exemplified that in the Aleutian Region
School District which began at 26.5 and grew to 187 before
the intensive needs add-on, the intensive need student was
already counted as 7 students. With the intensive need add-
on of 13, an intensive needs student in the Aleutian Region
School District counted as 20. Contrasted by the Anchorage
school district that has lower multipliers for size and
geographic factors, the student count was only increased by
1.3 therefore, an intensive need student in Anchorage was
counted as 14.3 students. The impact of the intensive needs
factor amounted to approximately 28,000 students and cost
the state another $162 million. He added that the
correspondence factor was also a head count add-on of .8
per student and was added to the AADM, which completed the
list of adjustment factors. All of the factors were totaled
and counted as the AADM then multiplied by the BSA of
$5680, which totaled $1.4 billion in basic need. He
computed that the effective BSA divided the basic need by
the head count which determined the per pupil cost. He
noted a "tremendous variation" in the costs per school
district. He pointed out that the per student cost in the
Aleutian Region School District was $48,451 and $8,896 in
the Anchorage School District. The aggregate average cost
per pupil was $11,845. He proposed that in effect there
were multiple BSA's which varied tremendously by school
district.
2:05:21 PM
Mr. Teal discussed the proportion of state, local, and
federal government's education costs. He elucidated that
state, local, and federal governments cost were split. He
defined the split as: state aid equaled basic need minus
required local effort (RLE) minus federal funding. He
explained that required local effort was simply property
tax multiplied by the mil rate set at .0265 percent, which
totaled 15.8 percent of basic need. The RLE was recently
reduced from 0.04 percent. He stated that local effort was
important because every dollar of local effort was off-set
by one dollar of state aid. If the local mil rate was set
at 0.04 percent, similar to previous years the RLE would
have amounted to $334 million instead of $222 million; a
savings to the state of $113 million. When the mil rate was
reduced the state became responsible for a larger share of
the costs. He ascertained that the mil rate savings of $113
million could have been reinvested into a BSA increase of
$450 without reducing the general fund. The local
government would have contributed an additional $113
million to the school districts. He pointed out that the
above scenario was an example of how the state contributed
to education funding outside of the BSA and noted that the
impact of the $113 million was not included in the BSA
charts and understated the contribution from the state for
education funding.
Mr. Teal mentioned federal impact aid. The state received
$99,797,886 million in federal aid. The federal government
determined eligibility through a complicated formula and
paid 90 percent of the eligible amount. The school
districts retained approximately $31 million of federal aid
without reduction in state aid and approximately $67
million was deductible and reduced the state's contribution
to education funding. He directed attention to the final
piece of the formula related to voluntary local effort. He
elaborated that the local allowable contribution rate was
limited to 23 percent of basic need for most of the school
districts. Some school districts were allowed to contribute
a higher amount and Regional Education Attendance Areas
(REAA) was not allowed to contribute at all. He calculated
that when adding the required and voluntary local efforts
together the maximum effort was determined. In FY 14,
communities could have contributed an additional $66
million voluntary local effort. However, communities had
contributed $231 million or 78 percent of allowable
voluntary local effort. He restated that voluntary local
effort was limited and explained that the phrase, "funding
to the cap" meant that a school district's voluntary local
effort was at the 23 percent limit.
2:13:20 PM
Mr. Teal returned to slide 12 that displayed the formula
for education funding from FY 2000 to FY 14 on a
spreadsheet. He reminded the committee that state aid
equaled basic need minus required local effort minus 90
percent of deductible Federal Impact Aid. He examined the
components of basic need. The ADM decreased by 3.9 percent
from the FY 2000 to FY 14. Correspondence ADM increased by
30 percent during the same time period. Added together the
ADM still declined by approximately 2 percent. The AADM had
increased over 18 percent since FY 2000. The BSA increased
44 percent since FY 2000. Basic need increased by 70.9
percent since FY 2000. Required local effort increased by
53.6 percent since FY 2000. Federal Impact Aid increased
from $49 million in FY2000 to approximately $67 million in
FY 14, an increase of 35 percent. State aid increased from
approximately $655 million in FY 2000 to $1.1 billion in FY
14 which was an increase of 70 percent. The required local
effort rose 53.6 percent, even with the reduction, over the
same time period. Higher property taxes more than offset
the reduction in required local effort. He pointed out that
the voluntary local effort climbed to 87 percent from FY
2000 to FY 14. Overall, the total local contributions rose
69.1 percent. He continued that in FY 2000 the state paid
65 percent of total school district funds and paid 66
percent in FY 14 and local communities now paid 26 percent
in FY 2000 and paid 27 percent in FY 14. Federal funding
fell from 9 percent in FY 2000 to 7 percent in FY 14.
Mr. Teal referenced another fiscal projection model that
predicted when the state's reserves would be depleted. He
summarized that the base scenario demonstrated that at the
state of Alaska's budget; a flat capital budget, zero
growth in the operating budget and status quo in the
retirement plans; the reserves will be depleted in 2024.
The governor's proposed $85 increase in the BSA would
increase education funding $50 million per year and would
further diminish the reserves $500 million over a ten year
period.
Representative Gara relayed that according to Legislative
Research the six largest school districts in the state lost
over 600 full-time staff since 2011. He listed five of the
largest districts; Juneau, Anchorage, Fairbanks, Matanuska-
Susitna, and Kodiak. He asked what "attributed" to the
staff losses given the conclusions of the education funding
presentation.
Mr. Teal emphasized that the charts addressed state
spending on education and not necessarily the funding that
the school districts actually received. He acknowledged
that the districts had not received enough funding to carry
out the same level of services as they had before. He
stated that the "counter argument was that the state could
not continue to spend more and more money on education."
Representative Gara requested an analysis of inflation
adjusted per student school funding exclusively for
classroom expenses since 2011. He requested removing
PRS/TRS, school debt reimbursement, student transportation,
and DEED department operations from the equation.
2:22:14 PM
Co-Chair Stoltze interjected that if variables were removed
the information would not be accurate.
Mr. Teal replied that the information was depicted on chart
7 of the presentation. He reminded the committee that the
figures were inflation adjusted and that based on the
factors mentioned by Representative Gara education had
"outpaced" inflation from FY 2004 until FY 14 when the
funding had not kept up with inflation.
Representative Gara requested more clarification about the
chart. He wondered what capital budget grants for education
were.
Mr. Teal replied that the grants were "classroom items." He
defined that capital grants was funding included in the
Capitol Budget the legislature had given to individual
school districts for items that would normally be funded by
formula funds. When traditional funding was reduced, other
sources were sought. The capital grants had increased
substantially since 2004.
Representative Gara asked if the grants included items like
sports utility upgrades. Mr. Teal responded in the
affirmative.
Representative Wilson pointed out that capital grant funds
could be utilized for classroom materials. Mr. Teal agreed.
Representative Wilson asked whether the education formula
historically included factors like curriculum or energy.
Mr. Teal answered that did not know. He was familiar with
the formula since 1997.
Representative Wilson wondered whether federal grants for
special education was included in slide 8.
Mr. Teal answered that the grants were not included. He
explained that the chart only included impact aid, which he
described as "payments on behalf or in lieu of taxes." He
exemplified a military base with tax exempt property where
a number of base children attended the local public school.
In the described scenario, the federal government
contributed educational funding on behalf of the local
government.
Representative Wilson asked whether the formula applied
equally to charter schools.
Mr. Teal responded that charter schools were counted
against the regular formula but were not counted as
independent schools. A charter school was not always
counted as an independent school and received a reduced
count.
Representative Wilson asked for clarification about the
correspondence factor. She observed that the correspondence
factor was a headcount that was added to the number of
students multiplied by 80 percent of the BSA. Mr. Teal
answered in the affirmative.
Representative Costello addressed Mr. Teal's point that
students were not all counted equally. She wondered about
the rationale that had gone into the current funding
formula calculations.
Mr. Teal provided a hypothetical example. If the cost of a
superintendent was $200 thousand per year, in a school
district with 50 thousand students the per student cost was
$4. The cost was $2,000 per student in a school district
with 100 students. He noted the "tremendous range of fixed
costs spread over large districts and small districts." The
factors were "intended to adjust for the differences in
costs." He expounded that whether fixed costs were being
spread out over few versus many students, paying for fuel
that was $8 to $10 per gallon versus $3 to $4 per gallon,
shipping school supplies, size of a school, etc.; the
factors were developed to "equalize funding" and adjusted
for the actual costs of providing education under disparate
circumstances. He believed that it was difficult to
compensate for some of the variables between rural and
urban schools. The calculations attempted to provide
equalization.
Representative Costello asked about the measure of
flexibility districts had to spend its allocated funds.
2:32:29 PM
Mr. Teal replied that districts had total discretion about
how to spend its funding. He exemplified the intensive
needs factor which allotted 13 or 14 times the BSA. The
school district did not have to spend the entire amount on
special needs services. There was no mandate that money
generated by a certain factor had to be spent in a
definitive way.
Representative Costello pointed to the interactive Excel
spreadsheet. She wondered what effect increasing the BSA to
$200 and $400 would have on the state's reserve accounts.
She asked when the state would run out of savings.
Mr. Teal replied that a $200 BSA would cost approximately
$50 million. The scenario was currently built in to the
spreadsheet. The governor had proposed an increase of $85
which would raise the BSA to approximately $200. If the BSA
was doubled the impact was doubled.
Representative Guttenberg pointed to the various
differentials and cost factors. He wondered whether anyone
evaluated the formulas on an ongoing basis for the cost of
doing business in various communities.
Mr. Teal replied that there was no scheduled review; it was
up to the legislature to make the changes to the factors.
He informed the committee that the McDowell Group was
commissioned to perform a study in 1997. He reported that
the study concluded that the geographic factors were weak.
The legislature subsequently engaged the Institute of
Social and Economic Research (ISER) to perform another
study on the funding factors. He believed that ISER had
done a good job examining components of the geographic
factors that the McDowell Group report did not contain. The
institutes study recommended some significantly higher
geographic factors. He believed that although its
geographic factors were low, the McDowell Group study
utilized other factors that worked together well. He felt
that ISER's geographic factors did not work as well in
combination with size and other factors. The argument could
be made that ISER's geographic factor favored rural and
small districts over larger urban ones. He suggested that
the legislature should consider readjusting the geographic
factor formula when necessary. The way to determine when
readjustment was necessary was to determine which school
districts were experiencing more fiscal difficulty than
others. The size factor could be adjusted when the urban
school districts were struggling more than rural districts.
He exemplified that if the larger school districts size
factor was adjusted up the funding increase would total $13
million; the increase for Anchorage alone would be $9
million.
Mr. Teal deduced that adjusting factors was a more
efficient and less expensive way to assist financially
struggling districts. In order to increase the BSA enough
for Anchorage to receive a $9 million increase the BSA had
to be increased by approximately $40 million. He thought
that school district operations were dynamic; therefore,
the funding formula should be "as dynamic as the operating
costs." He advised that the legislature adjust the factors
on an as needed basis to "change the distribution of
funding" rather than simply increasing the BSA. He
concluded that the legislature should determine how much
money to appropriate for education and for "the most
efficient way" to spend where the funds were needed.
Representative Guttenberg noted that there were quite a few
school districts in the state. He asked Mr. Teal if he met
with DEED to determine what factors like dropout rates,
graduation rates, etc. made a significant difference.
Mr. Teal replied that he only dealt with the financial
aspect of education funding.
Co-Chair Stoltze stated that the current fiscal year budget
appropriated $25 million for safety and security which was
"used in any way possible" for classroom support and other
$25 million was appropriated for energy. He wondered what
the two appropriations equaled as a BSA increase.
Mr. Teal responded that $25 million equated to a $100
increase in the BSA and $50 million equated to a $200
increase.
Co-Chair Stoltze requested that Mr. Teal explain what the
difference was between the ways the funding was increased.
Mr. Teal answered that when money was distributed outside
of the formula the districts did not receive the same money
as they would have if it was included in the formula. He
exemplified the correspondence factor which was an add-on
and not a multiplier. Simply increasing the BSA by $100
would cost more than the $25 million appropriated outside
of the formula. In addition, an appropriation outside of
the formula was not considered basic need. When included
inside the formulas basic need was increased by $25 million
therefore, voluntary local effort was increased by 23
percent of the amount and the districts at the cap could
contribute more. He stated that the matter was not simple
and increases outside of the BSA were not equal to BSA
increases.
2:45:26 PM
Co-Chair Stoltze addressed federal funds. He discussed the
federal American Recovery and Reinvestment Act (ARRA) funds
provided to states for education in 2009. He remembered
that the funding was appropriated as "one time money" and
was not to be "integrated into school growth." Some large
school districts used the funds for reoccurring expenses.
He wondered what the ARRA funding repercussions were on the
state now that the absence of the funds was viewed as
"underfunding" in some school districts.
Mr. Teal replied that most of the ARRA funding was expended
by 2013. He thought that the situation could have
contributed to some of the school districts recent layoffs.
The layoffs should be examined against the number of staff
hired in 2009 based on the ARRA funds. He acknowledged that
the legislature clearly advised districts not to spend the
federal funds on recurring items, but some of the districts
had not followed the advice.
Co-Chair Stoltze indicated that an increased BSA to $400
translated into a $200 million budget increase for the
current year when counting the forward funding mandate. He
wondered how the expenditure would erode the state's
savings over time. He wondered how quick it would put the
state in the position of spending the permanent fund or
implementing an income tax.
Mr. Teal stated that the fiscal model depicted the BSA at
$400 which increased education funding by $100 million.
Co-Chair Stoltze asked whether his forward funding
assumption of $200 million was correct.
Mr. Teal replied in the affirmative and stated that the
doubling only applied for the first year.
Representative Edgmon appreciated the value of the
discussion. He asked whether the size factor and the
geographical differential compensated small rural districts
for the cost structure in rural Alaska versus the Anchorage
school district that benefited from its economy of scale.
He wondered if the factors adequately compensated for the
higher costs in rural Alaska.
Mr. Teal believed the ISER study was comprehensive. He
thought that the factors were adequate. He stated that the
information had to be provided by districts. He qualified
that he wasn't familiar with the financial problems in
rural parts of the state. He thought that his opinion was
biased based on the information he had access to which
suggested that urban districts were suffering but rural
districts were not. Analysis of each district's spending
information would determine whether the districts were all
struggling equally or whether a difference between rural
and urban existed. He reiterated that he examined the
funding on a large scale.
2:55:01 PM
Representative Edgmon believed the numbers shown in the
presentation were indisputable and the big picture analysis
was educational. He agreed that education funding involved
much more than the BSA including teachers' retirement,
grants, pupil transportation, maintenance funds, capital
funds and other funding sources. Rural school districts
were finding it increasingly difficult to provide required
curriculum needs. The presentation highlighted that the
state was facing an "incredible conundrum." He wondered how
the state could continue to adequately fund public schools
in light of eroding cash reserves. He observed that it was
a "tremendously complicated policy issue." He welcomed a
discussion regarding education needs and spending in rural
districts.
Representative Gara recounted that the legislature reduced
the required local contribution mil rate from 4 percent to
approximately 2.7 percent. He deduced that if the amount
that the localities contributed was reduced the amount of
state funding increased.
Mr. Teal replied in the affirmative.
Representative Gara asked if the increase was on a dollar
for dollar amount.
Mr. Teal answered in the affirmative.
Representative Gara surmised that the school districts do
not pay more; the increase shifted to the state.
Mr. Teal answered in the affirmative. He reminded the
committee that an increase in the BSA increased basic need
and allowable local contributions.
Representative Gara wondered whether increasing the funding
cap on school districts to allow a higher mil rate would
increase funding for the school districts or shift the
costs to the municipality.
Mr. Teal replied that the example would shift the costs.
He used Fairbanks as an example because they were not
currently funding to the cap. If the required contribution
was raised the school district might reduce the voluntary
contributions by the same amount in lieu of raising taxes.
A school district would gain nothing and even lose because
the state would reduce its contributions by the required
amount and the local tax payers would pay more.
Representative Munoz discussed deducting 20 percent of the
special education factor and transferring the amount into a
BSA increase. She wondered whether the increase would be
proportionately spread throughout the districts.
Mr. Teal responded that because the intensive needs and
correspondence factors were additive and not
multiplicative, the increase would not be the same for
every district. The funding would be redistributed, but not
necessarily in the most effective way. He exemplified that
the Galena school district which had 3000 correspondence
students and only approximately 300 traditional students.
Galena's correspondence factor would rise by 80 percent of
the increase which would essentially double Galena's
correspondence factor, if the 20 percent special needs
factor was reapportioned into the BSA. He expounded that
Galena's funding formula was driven by correspondence
students. The correspondence formula would double,
regardless of need, at the expense of the regular students.
Other factors in the formula might need to be adjusted if a
factor was changed. He cautioned against adjusting the
factors singularly because they all interact.
Co-Chair Stoltze recalled that the state's budget three
biggest cost drivers were Medicaid, education spending, and
retirement and would use 95 percent of general fund
revenues by 2023. He requested that Mr. Teal update the
fiscal projections by adding in higher education
expenditures. He observed that the legislature had
increased education spending above the rate of inflation.
Mr. Teal agreed but stipulated that the conclusion would be
the same and that education funding, Medicaid, and
retirement would consume all of the state's revenues if the
state continued on the same path.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB 278 LFD Budget Impact Presentation HFIN.pdf |
HFIN 3/24/2014 1:30:00 PM |
HB 278 |
| HJR 33 Opposition AK Court System Opposition Meade.pdf |
HFIN 3/24/2014 1:30:00 PM |
HJR 33 |
| Ak Jud Cncl HJR33 Info - Mar 20.pdf |
HFIN 3/24/2014 1:30:00 PM |
HJR 33 |
| HB 278 AK School District Cost Study 2005 Link.pdf |
HFIN 3/24/2014 1:30:00 PM |
HB 278 |
| HB 278 3 24 14 HFC FY14 ADM to AADM by district-4.pdf |
HFIN 3/24/2014 1:30:00 PM |
HB 278 |