Legislature(2019 - 2020)CAPITOL 106

02/27/2019 08:00 AM EDUCATION

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Audio Topic
08:02:11 AM Start
08:03:56 AM Overview: How Are K-12 Schools Funded in Ak?
09:41:19 AM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ Overview: How are K-12 Schools Funded in AK? TELECONFERENCED
A. Foundation Formula
B. History, Funding Outside Formula
C. Disparity Test
-- Testimony <Invitation Only> --
**Streamed live on AKL.tv**
                    ALASKA STATE LEGISLATURE                                                                                  
               HOUSE EDUCATION STANDING COMMITTEE                                                                             
                       February 27, 2019                                                                                        
                           8:02 a.m.                                                                                            
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Harriet Drummond, Co-Chair                                                                                       
Representative Andi Story, Co-Chair                                                                                             
Representative Grier Hopkins                                                                                                    
Representative Chris Tuck                                                                                                       
Representative Tiffany Zulkosky                                                                                                 
Representative Josh Revak                                                                                                       
Representative DeLena Johnson                                                                                                   
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
All members present                                                                                                             
                                                                                                                                
OTHER LEGISLATORS PRESENT                                                                                                     
                                                                                                                              
Representative Dan Ortiz                                                                                                      
Representative Ben Carpenter                                                                                                    
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
OVERVIEW: HOW ARE K-12 SCHOOLS FUNDED IN AK?                                                                                    
                                                                                                                                
     - HEARD                                                                                                                    
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                              
No previous action to record                                                                                                    
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
HEIDI TESHNER, Director                                                                                                         
Administrative Services                                                                                                         
Department of Education and Early Development (EED)                                                                             
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Provided information and answered questions                                                              
during the EED overview entitled, the Alaska Public School                                                                      
Funding Formula.                                                                                                                
                                                                                                                                
ELWIN BLACKWELL, School Finance Manager                                                                                         
School Finance and Facilities Section                                                                                           
Department of Education and Early Development (EED)                                                                             
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:   Presented  an EED  overview of,  the Alaska                                                             
Public  School Funding  Formula,  with the  use  of a  PowerPoint                                                               
presentation.                                                                                                                   
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
8:02:11 AM                                                                                                                    
                                                                                                                                
CO-CHAIR  HARRIET DRUMMOND  called the  House Education  Standing                                                             
Committee meeting  to order at 8:02  a.m. Representative Johnson,                                                               
Revak, Zulkosky, Tuck, Hopkins,  Story, and Drummond were present                                                               
at the call to order.                                                                                                           
                                                                                                                                
^OVERVIEW: How are K-12 Schools Funded in AK?                                                                                   
          OVERVIEW: How are K-12 Schools Funded in AK?                                                                      
                                                                                                                                
8:03:56 AM                                                                                                                    
                                                                                                                                
CO-CHAIR  DRUMMOND  announced that  the  only  order of  business                                                               
would be  a Department of  Education and Early  Development (EED)                                                               
overview of  the Alaska  Public School  Funding Formula  by Elwin                                                               
Blackwell and Heidi Teshner.                                                                                                    
                                                                                                                                
8:04:51 AM                                                                                                                    
                                                                                                                                
HEIDI TESHNER,  Director, Administrative Services,  Department of                                                               
Education  and Early  Development (DEED),  directed attention  to                                                               
slide 39  of a  PowerPoint presentation [that  would be  given by                                                               
Elwin  Blackwell],   titled  "AS  14.17.410   Foundation  Funding                                                               
Formula FY2020  Projection,and    noted that  this slide  shows a                                                               
"snapshot" view of the overall formula.                                                                                         
                                                                                                                                
8:05:42 AM                                                                                                                    
                                                                                                                                
ELWIN  BLACKWELL,  School  Finance Manager,  School  Finance  and                                                               
Facilities   Section,   Department   of   Education   and   Early                                                               
Development  (DEED),  presented  a  department  overview,  titled                                                               
"Alaska Public School Funding Formula  Overview," with the use of                                                               
a PowerPoint  presentation.   As shown on  slide 2,  he explained                                                               
that the current funding formula  was developed in Senate Bill 36                                                               
in  1998 and  fully implemented  in 1999.   All  of the  statutes                                                               
regarding the Alaska  Foundation Formula are found  in AS. 14.17.                                                               
Mr. Blackwell  continued to slide  3, "Providing an  Overview" of                                                               
what  the state  pays, which  includes:   an  October count  that                                                               
provides  the average  daily  membership  (ADM); calculations  of                                                               
adjusted average  daily membership (AADM); calculations  of basic                                                               
need;  funding  components   of  basic  need  -   who  pays;  and                                                               
additional  funds  above  basic  need.   As  shown  on  slide  4,                                                               
"Average  Daily Membership,"  he said  the ADM  is the  number of                                                               
enrolled  students  during  the twenty  school-day  count  period                                                               
ending on the fourth Friday of October.                                                                                         
                                                                                                                                
8:08:11 AM                                                                                                                    
                                                                                                                                
CO-CHAIR STORY asked why the period in October was chosen.                                                                      
                                                                                                                                
MR. BLACKWELL replied  he wasn't sure why October  was chosen but                                                               
the calculation is based on enrollment, not attendance.                                                                         
                                                                                                                                
8:09:41 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  REVAK  questioned  whether students'  names  were                                                               
cross checked to avoid double counting.                                                                                         
                                                                                                                                
MR.  BLACKWELL answered  yes, then  explained how  districts work                                                               
together to ensure students are not counted twice.                                                                              
                                                                                                                                
MR. BLACKWELL  continued his presentation by  directing attention                                                               
to slide  5, titled "Who Qualifies  as a Student?"   He said that                                                               
per  statute  a child  who  is  six years  of  age  on or  before                                                               
September first, under  the age of twenty, and  has not completed                                                               
the twelfth grade  is considered a student  for funding purposes.                                                               
A child  who is under  five years of  age on or  before September                                                               
first may enter  kindergarten and would be  considered a student.                                                               
Finally, a  child with disabilities and  an active Individualized                                                               
Education Program  (IEP) may attend  school if  at the age  of at                                                               
least three or if under the  age of twenty-two by July first, and                                                               
he/she would be considered a student.                                                                                           
                                                                                                                                
8:11:37 AM                                                                                                                    
                                                                                                                                
CO-CHAIR STORY asked  if a child who turns three  after the count                                                               
date  would  be considered  a  student  for  the purpose  of  the                                                               
formula.                                                                                                                        
                                                                                                                                
MR. BLACKWELL replied yes.                                                                                                      
                                                                                                                                
8:12:41 AM                                                                                                                    
                                                                                                                                
MR. BLACKWELL  started his  explanation of  the slide,  titled "6                                                               
Steps  to District  Adjusted  ADM," by  explaining  that the  ADM                                                               
formula is  adjusted based on school  size.  He said  a community                                                               
with under  10 ADM  would be  added to  the nearest  small school                                                               
with greater  than 10 ADM.  Schools with  between 10 and  100 ADM                                                               
would be  adjusted as one  school.  Communities with  between 101                                                               
and 425  ADM would be adjusted  as two schools.   For communities                                                               
with over  425 ADM, each  facility is administered as  a separate                                                               
school unless  it is a  single facility;  then it is  adjusted as                                                               
two schools.                                                                                                                    
                                                                                                                                
8:15:19 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE ZULKOSKY  inquired how many schools  fell into the                                                               
under 10 ADM category.                                                                                                          
                                                                                                                                
MR. BLACKWELL  answered that he did  not have an exact  number of                                                               
schools  that  were  close  to  being  under  10  students.    He                                                               
explained  that in  the past  most towns  have chosen  to shut  a                                                               
school  down,  however a  few  districts  elected to  keep  those                                                               
schools  open  based  on the  belief  student  populations  would                                                               
rebound.                                                                                                                        
                                                                                                                                
REPRESENTATIVE  ZULKOSKY asked  for  clarification about  whether                                                               
schools with  less than  10 ADM  would be  added to  the smallest                                                               
school with over 10 ADM.                                                                                                        
                                                                                                                                
MR. BLACKWELL  answered yes, the ADM  would be added to  the next                                                               
smallest school with over 10 ADM.                                                                                               
                                                                                                                                
8:19:54 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  JOHNSON inquired  about  rounding  errors in  the                                                               
foundation formula.                                                                                                             
                                                                                                                                
MR. BLACKWELL explained that the  formula's assumption is that as                                                               
a school  gets bigger it  becomes more efficient, so  the formula                                                               
builds  on  previous  adjustments   as  the  number  of  students                                                               
increase.                                                                                                                       
                                                                                                                                
MR. BLACKWELL  continued his presentation  on slide 8  by sharing                                                               
information on  how the formula  is adjusted for  alternative and                                                               
charter schools.   He  said there  are different  adjustments and                                                               
rules associated with those type of  schools.  He related that an                                                               
alternative  school with  an  ADM of  175 or  greater  has to  be                                                               
administered  as  a  separate  facility,  and  the  ADM  will  be                                                               
adjusted  separately.     The  exception  to  this   is  that  an                                                               
alternative  school in  its first  year of  service, with  an ADM                                                               
between 120  and 175, will receive  an adjustment of 1.33;  if it                                                               
has an ADM  of 175 or greater  in the prior year  but drops below                                                               
the 175  in the current  year, then  it will continue  to receive                                                               
the 1.33 adjustment; if  it has an ADM of less  than 175, then it                                                               
will be counted as a part of  the school in the district with the                                                               
highest ADM.                                                                                                                    
                                                                                                                                
MR.  BLACKWELL  advised  that   charter  schools  have  different                                                               
adjustments.   A charter  school with  an ADM  of 150  or greater                                                               
will  be adjusted  as a  separate facility  unless it  is in  the                                                               
first  year of  service and  the ADM  is between  75 and  150, in                                                               
which case  it will receive an  adjustment of 1.45; if  it has an                                                               
ADM of 75  or greater in the  prior year but drops  below this in                                                               
the current  year, then it  will receive the 1.45  adjustment; if                                                               
it  continues to  stay  below 75  ADM, then  it  will receive  an                                                               
adjustment of 1.18.                                                                                                             
                                                                                                                                
8:23:29 AM                                                                                                                    
                                                                                                                                
CO-CHAIR   STORY  explained   through   this  mechanism,   school                                                               
districts can offer more options for families and students.                                                                     
                                                                                                                                
MR.  BLACKWELL offered  that so  far in  his presentation  he had                                                               
gone  through  the  school  funding  process.    He  said  as  he                                                               
continued through  the presentation, he  would be using  the Nome                                                               
Public Schools as an example  to work through the funding formula                                                               
with the  committee.   He directed attention  to slide  9, titled                                                               
 Step 1.  Example:  Nome  Public Schools Projected FY2019  ADM by                                                               
School."   Mr. Blackwell  referenced the part  of the  slide that                                                               
showed Nome  Elementary School  had 380 ADM.   He  then explained                                                               
each school's ADM was referenced on  the slide, and the total ADM                                                               
for the Nome Public School District was 689.00.                                                                                 
                                                                                                                                
8:25:10 AM                                                                                                                    
                                                                                                                                
MR.  BLACKWELL shared  slide  10, which  shows  how schools  "run                                                               
through the  school size adjustment."   Using Nome  Public School                                                               
District as an example, he  related that the kindergarten through                                                               
sixth grade ("K-6") is at 380.00  ADM.  Using the reference table                                                               
on slide  10, he pointed out  that this K-6 ranked  number six in                                                               
schools  ranging  in  size  from 250-399.99.    He  continued  as                                                               
follows:                                                                                                                        
                                                                                                                                
     And in  this case what we  do is we take  380, subtract                                                                    
     out  250,  and  take   ...  the  difference  there  and                                                                    
     multiply  it  by the  .97  and  then add  the  previous                                                                    
     maximum calculation  of 326.10 to  it and come  up with                                                                    
     our school size adjustment of 452.20.                                                                                      
                                                                                                                                
MR.  BLACKWELL said  this calculation  is  done for  each of  the                                                               
schools and demonstrated the full calculation on slide 10.                                                                      
                                                                                                                                
8:26:58 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE HOPKINS  asked what was being  referenced on slide                                                               
10 by the number 326.10.                                                                                                        
                                                                                                                                
MR.  BLACKWELL  explained  that  326.10  represents  the  maximum                                                               
number of school  size adjustments that could  have been achieved                                                               
on slide 10, reference 5.                                                                                                       
                                                                                                                                
REPRESENTATIVE HOPKINS asked for clarification.                                                                                 
                                                                                                                                
MR. BLACKWELL stated  that taking a look at reference  1 and 2 on                                                               
slide 10 might facilitate understanding  how the table works.  He                                                               
continued as follows:                                                                                                           
                                                                                                                                
     Because we have a flat...factor  of 39.60 for step one,                                                                    
     we carry  that over  into step  two, and  then anything                                                                    
     that is between 20 and  29.99 gets adjusted at 1.62 and                                                                    
     added to the 39.6, which  was the maximum adjustment in                                                                    
     number 1...So, if  I run through that, and  I had 29.99                                                                    
     for  step  2,  I  would  come up  with  a  school  size                                                                    
     adjustment of 55.80.  And  so, when I start my...number                                                                    
     3, that   my basis for  starting, and so those students                                                                    
     that  are from  30 to  74.55 then  will be  adjusted at                                                                    
     1.49  and added  to the  55.80, which  was the  maximum                                                                    
     adjustment from the previous reference.                                                                                    
                                                                                                                                
8:29:30 AM                                                                                                                    
                                                                                                                                
MR.  BLACKWELL  turned  to  slide   11,  titled,  "Hold  Harmless                                                               
Provision,and    explained  there  is potential  for school  size                                                               
adjustments  to   decrease  for  reasons  ranging   from  natural                                                               
fluctuation to  school closures.   If that decrease is  5 percent                                                               
or greater from  one year to the next, that  would trigger a hold                                                               
harmless provision.  He used a  formula on page 11 to explain how                                                               
the hold harmless provision would  be allocated over a three-year                                                               
period.  Mr. Blackwell continued  his explanation and on slide 12                                                               
he  demonstrated  how  the  hold   harmless  provision  would  be                                                               
calculated for the Nome Public  School District.  In his example,                                                               
Nome  Public School  District did  not decrease  by 5  percent or                                                               
greater, so he  explained that the hold  harmless provision would                                                               
not be triggered.                                                                                                               
                                                                                                                                
8:31:51 AM                                                                                                                    
                                                                                                                                
MR. BLACKWELL  demonstrated  District Cost Factors   on slide 13.                                                               
He explained that  district cost factors are laid  out in statute                                                               
and range from a  factor of 1 to 2.116.  He  shared that the Nome                                                               
Public School District  cost factor is 1.450, and  he showed that                                                               
the Nome  ADM of 856.30,  multiplied by the District  Cost Factor                                                               
for Nome of 1.450, would be 1,241.64.                                                                                           
                                                                                                                                
8:32:58 AM                                                                                                                    
                                                                                                                                
MR. BLACKWELL  shared slide 14,   Special Needs  Funding Factor.                                                                
Mr. Blackwell explained  this factor is to  cover some vocational                                                               
education and some  gifted/talented, as well bilingual/bicultural                                                               
needs.   He said this  factor was "block  funded" at a  factor of                                                               
1.20.                                                                                                                           
                                                                                                                                
8:33:21 AM                                                                                                                    
                                                                                                                                
MR.  BLACKWELL, on  slide 15.  continued his  use of  Nome Public                                                               
School District for  his examples and demonstrated  how to adjust                                                               
for the  special needs  factor.  His  analysis used  the district                                                               
cost factor  of 1,241.64 and  multiplied it by the  special needs                                                               
factor of 1.20, which equated to 1,489.97.                                                                                      
                                                                                                                                
8:33:38 AM                                                                                                                    
                                                                                                                                
MR. BLACKWELL  explained that  several years  ago a  vocational &                                                               
technical  funding  factor added  to  the  funding formula.    He                                                               
shared  slide  16,  which  showed that  the  career  &  technical                                                               
education  (CTE) funding  was set  at a  factor of  1.015 and  is                                                               
intended  to assist  districts in  providing technical  education                                                               
services in grades  7 through 12.  The formula  took 1,489.97 and                                                               
multiplied that factor by 1.015 for a new factor of 1,512.32.                                                                   
                                                                                                                                
8:34:40 AM                                                                                                                    
                                                                                                                                
MR.  BLACKWELL  explained  that  at this  stage  of  the  formula                                                               
districts  would consider  [slide 18  titled] Intensive  Services                                                               
Funding.    Mr.  Blackwell   said  students  receiving  intensive                                                               
service, who  are enrolled on  the last  day of the  count period                                                               
and meet  intensive qualification for each  intensive service are                                                               
identified  and  multiplied by  a  factor  of  13.   He  said  an                                                               
intensive needs student, "at 13," generates just over $77,000.                                                                  
                                                                                                                                
8:35:28 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  TUCK asked  what would  qualify a  student to  be                                                               
considered for the funding.                                                                                                     
                                                                                                                                
MR.  BLACKWELL answered  there are  multiple criteria  that would                                                               
have  to  be  met  in  order  for a  student  to  qualify  as  an                                                               
intensive-needs student.   He stated that these  are students who                                                               
need a lot of special help and aid throughout the day.                                                                          
                                                                                                                                
8:36:33 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE REVAK asked whether  some students fell under both                                                               
special and intensive needs.                                                                                                    
                                                                                                                                
MR. BLACKWELL  replied that intensive needs  students are special                                                               
needs  students  with additional  factors.    He added  that  the                                                               
formula   provides  additional   funding   for  intensive   needs                                                               
students.                                                                                                                       
                                                                                                                                
8:37:14 AM                                                                                                                    
                                                                                                                                
CO-CHAIR STORY asked  Mr. Blackwell to provide  a definition that                                                               
explains  the  difference  between special  and  intensive  needs                                                               
students to the committee.                                                                                                      
                                                                                                                                
8:37:57 AM                                                                                                                    
                                                                                                                                
MR. BLACKWELL  proceeded to  slide 19,  titled "Step  5. Example:                                                               
Nome Public Schools."   He explained that the  Nome Public School                                                               
District has  12 students who  qualify for the  Intensive Student                                                               
adjustment.   He showed  a calculation  of 12  Intensive Students                                                               
multiplied  by the  Intensive  Needs Student  factor  of 13  then                                                               
added  to the  school factor  of 1,512.32  would become  the Nome                                                               
Public School District new factor of 1,668.32.                                                                                  
                                                                                                                                
8:38:33 AM                                                                                                                    
                                                                                                                                
MR.  BLACKWELL explained  that the  Nome  Public School  District                                                               
adjusted ADM  needed to include an  adjustment for correspondence                                                               
programs.    As  he  presented  slide 20,  he  said  the  formula                                                               
provides a  factor of 0.9  for each correspondence student.   Mr.                                                               
Blackwell  shared  his example  on  slide  21 which  showed  Nome                                                               
Public  School  District  had 15  correspondence  students.    He                                                               
worked through  the formula of 15  correspondence ADM, multiplied                                                               
by a factor  of 0.9, then added to the  previous ADM of 1,668.32,                                                               
and said  that would give the  Nome Public School District  a new                                                               
ADM of 1,681.82.                                                                                                                
                                                                                                                                
8:39:50 AM                                                                                                                    
                                                                                                                                
MR. BLACKWELL directed attention to  slide 22, titled "Basic Need                                                               
Entitlement."    He  said  at  this point  the  adjusted  ADM  is                                                               
multiplied by  the base student allocation  (BSA); therefore, the                                                               
1,681.82  adjusted ADM  is multiplied  times $5,930,  which shows                                                               
that  basic  need   for  the  Nome  Public   School  District  is                                                               
$9,973,193 per the formula.   He said this represents "the number                                                               
that the  formula expects  the school district  would need  to be                                                               
able to operate their schools for that particular fiscal year."                                                                 
                                                                                                                                
8:40:27 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  TUCK  referred  back  to Step  4,  on  slide  16,                                                               
regarding technical  funding, and asked how  the costs associated                                                               
with   "administrative  expenses   and  instruction   in  general                                                               
literacy,  mathematics, and  job readiness  skills" are  excluded                                                               
from the funding factor of 1.015.                                                                                               
                                                                                                                                
8:41:16 AM                                                                                                                    
                                                                                                                                
MS. TESHNER  explained that the intent  is for the funding  to go                                                               
toward the provision  of career and technical  services to grades                                                               
7 through 12; it is not meant to cover those excluded costs.                                                                    
                                                                                                                                
8:41:40 AM                                                                                                                    
                                                                                                                                
CO-CHAIR STORY  noted that  part or all  of the  legislative body                                                               
had requested a 2015 study  by Augenblick, Palish, and Associates                                                               
(APA)  to compare  Alaska's formula  to that  of other  states to                                                               
determine  whether  Alaska  is  "providing  for  adjustments  and                                                               
increased expenses  to districts  based on these  certain needs."                                                               
She said  she found  it interesting that  the study  found Alaska                                                               
did  not provide  "a factor  for ...  low-income students."   She                                                               
said, for  example, one school  in Juneau  has 11 percent  of its                                                               
students  living in  poverty; another  serves 66  percent of  its                                                               
students  in poverty.   She  said some  states give  more to  the                                                               
schools  with higher  numbers of  students who  live in  poverty.                                                               
Another factor, she  said, was limited English  proficiency.  She                                                               
said she knows  there are some schools in Alaska  with 80 percent                                                               
of students  with limited  English proficiency;  therefore, "they                                                               
need to  provide ... extra  service, which costs money,  but it's                                                               
not in our factor."  Other  districts, she said, have very little                                                               
limited English  proficiency.   She indicated  that that  was one                                                               
area that [APA suggested] could be made more equitable.                                                                         
                                                                                                                                
CO-CHAIR DRUMMOND  said she  could provide a  copy of  the report                                                               
based on the APA study to committee.                                                                                            
                                                                                                                                
8:43:32 AM                                                                                                                    
                                                                                                                                
MR.  BLACKWELL continued  with  his  PowerPoint presentation,  to                                                               
slide  23, titled  "Nome:   Summarized  District  Adjusted ADM  &                                                               
Basic Need."  He indicated that  this slide is a summarization of                                                               
all  the other  slides  and an  illustration  of "how  everything                                                               
builds on itself to get to basic need."  He continued:                                                                          
                                                                                                                                
     We started off with ... 856.30  ADM; we ended up with a                                                                    
     school size ... adjusted ADM  of 1,681.82 ....  So, ...                                                                    
     the formula  does inflate  those numbers  throughout to                                                                    
     help provide for those additional services.                                                                                
                                                                                                                                
MR. BLACKWELL,  referring to  slide 24, said  "basic need  is our                                                               
magic number"  and the next step  is to figure out  "who is going                                                               
to  pay  what  portion  of  that   ...  basic  need."    A  city,                                                               
municipality,  or  local  borough  will  have  a  required  local                                                               
contribution.  He said regional  attendance contribution areas do                                                               
not  have a  local  contribution,  but a  lot  of those  district                                                               
receive  federal impact  aid; some  cities  and boroughs  receive                                                               
federal impact  aid, as well.   The  final source that  will help                                                               
pay for basic need is state aid, he said.                                                                                       
                                                                                                                                
MR.  BLACKWELL turned  next  to  slide 25,  titled  "Full &  True                                                               
Value/Local Effort Calculation."  He continued:                                                                                 
                                                                                                                                
     We'll take the  full and true value,  which is provided                                                                    
     by the  State Assessor's Office, and  we'll multiply it                                                                    
     for  the  required  local  effort  at  2.65  mils,  ...                                                                    
     [which] is established in statute.                                                                                         
                                                                                                                                
MR. BLACKWELL referred to slide  26, titled "Calculating Required                                                               
Local Contribution."  He said,  "There's really a test that we're                                                               
looking at to see which calculation  is the lesser.  He indicated                                                               
that the calculation  would show the lesser of  the equivalent of                                                               
2.65 mils of the full value  for the 2018 calendar year but would                                                               
not exceed 45  percent of the school district's  prior year basic                                                               
need.  He continued:                                                                                                            
                                                                                                                                
     So, what  we'll do is we'll  run both the 2.65  mils on                                                                    
     the assessed value,  and we'll also run  the 45 percent                                                                    
     of the district's prior year  basic need, and we'll see                                                                    
     which one of  those is the less -  the smallest number.                                                                    
     That, then, becomes the required local effort.                                                                             
                                                                                                                                
MR.  BLACKWELL  reported that  almost  all  the municipal  school                                                               
districts fall in  the category of the 2.65, while  three or four                                                               
of them  fall under  the 45  percent.   The latter  include North                                                               
Slope, Valdez, Skagway, and Bristol Bay.                                                                                        
                                                                                                                                
8:46:51 AM                                                                                                                    
                                                                                                                                
CO-CHAIR DRUMMOND  asked if the  2.65 mils of [those  four listed                                                               
districts] is  above 45 percent  of [the prior year]  basic need;                                                               
therefore, "the lower number is the one to go with."                                                                            
                                                                                                                                
MR. BLACKWELL answered that is correct.                                                                                         
                                                                                                                                
8:47:59 AM                                                                                                                    
                                                                                                                                
MR. BLACKWELL presented  slide 27,  Title VII  Federal Impact Aid                                                               
Payments.    He told the  committee, federal impact  aid payments                                                               
received between  March first  and the last  day of  February are                                                               
used as  payment for basic needs.   He shared there  are elements                                                               
of impact aid  that the state cannot use for  funding basic need,                                                               
those  are  special  education  funding,  one-fifth  Native  land                                                               
funding,  and any  construction funds.   Mr.  Blackwell continued                                                               
onto slide  28, an example  of the Nome Public  School Districts                                                                
impact aid funding.  He explained to the committee:                                                                             
                                                                                                                                
     After all of  the removal of these items  we can't look                                                                    
     at,  we  come   up  with  a  number   $133,113.    That                                                                    
     represents the  impact aid we  can look at  for funding                                                                    
     basic need.                                                                                                                
                                                                                                                                
                                                                                                                                
8:50:23 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE TUCK asked whether  the formula deducts 20 percent                                                               
of the  native lands  funding a district  would receive  from the                                                               
state.                                                                                                                          
                                                                                                                                
MR. BLACKWELL answered  no, the deduction for  native lands would                                                               
be from federal impact aid programs.                                                                                            
                                                                                                                                
REPRESENTATIVE  TUCK  commented  that  there  are  three  federal                                                               
impact aid categories.                                                                                                          
                                                                                                                                
CO-CHAIR  DRUMMOND  asked  if the  federal  funding  for  special                                                               
education was the total amount  for special education required by                                                               
the [Disability Education Act] (DEA) of 1975.                                                                                   
                                                                                                                                
MR. BLACKWELL replied it was  part of the special education money                                                               
received as part of impact aid payments.                                                                                        
                                                                                                                                
8:53:34 AM                                                                                                                    
                                                                                                                                
MR.   BLACKWELL   presented   slide  29,   titled   "Impact   Aid                                                               
Percentage."     He  explained   that  at   this  point   in  the                                                               
presentation the calculation for  the Nome Public School District                                                               
showed  what  was eligible  for  deduction,  not necessarily  the                                                               
amount that will  be deducted.  He continued and  said since Nome                                                               
is a first-class  city and has a required  local contribution, he                                                               
would take the committee through  how much of the eligible impact                                                               
aid would actually be deducted.   He explained that for Nome, the                                                               
calculation would  be the required local  contribution divided by                                                               
the  budgeted local  contribution.   Cities contributing  more at                                                               
the  local  level for  their  schools  benefit because  they  are                                                               
paying  a little  more  towards education.    He explained:   The                                                               
budgeted local, for the purposes  of calculating this percentage,                                                               
would  comprise  of  any   city  appropriations,  investments  on                                                               
earnings, any in-kind services or  ... any other local money that                                                               
shows up in that budget.                                                                                                        
                                                                                                                                
REPRESENTATIVE  HOPKINS  questioned  whether that  would  include                                                               
assistance with  maintenance, risk management, or  legal services                                                               
for the district.                                                                                                               
                                                                                                                                
MR.  BLACKWELL explained  that  if the  city  is providing  those                                                               
services for the  school district and the district  is not paying                                                               
for them then it could be considered an in-kind service.                                                                        
                                                                                                                                
REPRESENTATIVE  HOPKINS   asked  if  the  in-kind   services  are                                                               
included in the cap that  local municipalities can give to school                                                               
districts.                                                                                                                      
                                                                                                                                
MR. BLACKWELL replied that it  would be within the required local                                                               
contribution, so  in that  case would be  considered part  of the                                                               
cap.                                                                                                                            
                                                                                                                                
8:56:51 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE JOHNSON asked what was "other" local.                                                                            
                                                                                                                                
MR. BLACKWELL  explained "other"  local as  items such  as monies                                                               
received  for   rental  facilities,  prior  recovery   of  funds,                                                               
donations, sales  of supplies/equipment,  or a variety  of things                                                               
that may  not fit into certain  categories but show up  as income                                                               
to the community.                                                                                                               
                                                                                                                                
8:57:51 AM                                                                                                                    
                                                                                                                                
MR. BLACKWELL resumed  his explanation of slide  30 by explaining                                                               
the  Nome  Public School  District  Title  VII Percentage.    The                                                               
formula for  Nome is  required local  effort divided  by budgeted                                                               
local  effort, which  was $1,114,206  divided  by $3,408,762,  or                                                               
32.69 percent.   The calculated  percentage is what will  be used                                                               
to apply to the eligible impact aid.                                                                                            
                                                                                                                                
CO-CHAIR DRUMMOND referenced slide 30  and asked Mr. Blackwell to                                                               
explain the difference between  required local [contribution] and                                                               
budgeted local [contribution].                                                                                                  
                                                                                                                                
MR. BLACKWELL explained that the  required local contribution was                                                               
what is statutorily  required to be provided  for education while                                                               
the budgeted  local contribution  represented the  required local                                                               
contribution plus any additional funding provided.                                                                              
                                                                                                                                
CO-CHAIR DRUMMOND  asked if the  budgeted local  contribution was                                                               
also a formula.                                                                                                                 
                                                                                                                                
MR.  BLACKWELL  answered  that the  budgeted  local  contribution                                                               
would be addressed later in the presentation.                                                                                   
                                                                                                                                
REPRESENTATIVE TUCK asked if the  budgeted local contribution was                                                               
that for which the district had budgeted for.                                                                                   
                                                                                                                                
MR. BLACKWELL replied it would  be what the district had budgeted                                                               
for local  contributions plus the  additional amount  provided by                                                               
the City of Nome.                                                                                                               
                                                                                                                                
9:02:22 AM                                                                                                                    
                                                                                                                                
MR. BLACKWELL  said he was going  to use slide 32  titled, "State                                                               
Aid."  His  explanation referenced basic need  of $9,973,193 less                                                               
the required local contribution and  impact aid which would leave                                                               
state aid of  $8,819,824.  The state aid is  the amount the State                                                               
of Alaska  would pay the Nome  Public School District to  run its                                                               
schools for that school year.                                                                                                   
                                                                                                                                
CO-CHAIR STORY  asked if the  [Nome] municipality could  give "up                                                               
to the $3.4 Million".                                                                                                           
                                                                                                                                
MR.  BLACKWELL  replied that  the  municipality  could give  even                                                               
more, but  that was  the amount  that was  given.   Mr. Blackwell                                                               
continued  onto slide  34, titled  "Additional Funds  Above Basic                                                               
Need."    The  slide  showed  that  two  additional  funds  were,                                                               
additional local  contributions and  quality schools grants.   As                                                               
shown on slide  34, Mr. Blackwell explained  the additional local                                                               
contribution by saying:                                                                                                         
                                                                                                                                
     Before,  we  were  talking  about  the  lesser  of  two                                                                    
     numbers  for  the  required local.    In  this  example                                                                    
     [slide 34]  or in this  case wre   going to  be talking                                                                    
     [about] the  greater of two  numbers.  And so,  in this                                                                    
     case...we're going  to...run a calculation on  two mils                                                                    
     of  the true  value,  assessed value,  of property  and                                                                    
     we're going  to take a look  at what 23 percent  of the                                                                    
     current year basic need is  going to be.  And whichever                                                                    
     one of  those two  is greater  will then  be considered                                                                    
     their  additional local  contribution.   So, in  Nome's                                                                    
     case, if we  take a look at...two  mils of their...full                                                                    
     and true  value, that  comes up  at $840,910.   Twenty-                                                                    
     three   percent  of   the  current   year  basic   need                                                                    
     calculates out at  $2,300,023.  And what we  do when we                                                                    
     take a look at that,  ... we have the $9,973,193, which                                                                    
     was the  Basic Need, and  then there is a  $26,909 that                                                                    
     is quality  schools.  That... uses  the formula numbers                                                                    
     but its not  part of the formula,  its...in addition to                                                                    
     it,  and  we'll   cover  how  that's  calculated...That                                                                    
     $26,000 is added to their  basic need and then we apply                                                                    
     the 23 percent  to  that number...with what, to come up                                                                    
     with that  product. And  at this  point we'll  see that                                                                    
     the $2,300,000  is the greater  of the two  numbers so,                                                                    
     we're going to  utilize 23 percent of  the current year                                                                    
     basic need as representing  what their additional local                                                                    
     funding would be.                                                                                                          
                                                                                                                                
MR. BLACKWELL shared  slide 35 with the committee.   He explained                                                               
that  at  this  point  in  the  calculation  the  required  local                                                               
contribution  and   additional  local  contribution   were  added                                                               
together  for a  maximum local  contribution of  $3,414,229.   He                                                               
said  that  number  falls  below  what  was  budgeted  for  local                                                               
contribution to  the school  and  that   why they've  stayed just                                                               
below the cap, in this case."                                                                                                   
                                                                                                                                
9:06:37 AM                                                                                                                    
                                                                                                                                
MR. BLACKWELL  shared slide 36,  titled  Quality  Schools Grant,                                                                
and explained how  the adjusted ADM is multiplied by  a factor of                                                               
$16 to  come up with the  quality schools grant amount.   For the                                                               
Nome  Public School  District, the  quality schools  grant amount                                                               
was $26,909.                                                                                                                    
                                                                                                                                
REPRESENTATIVE TUCK asked  if there were criteria  to qualify for                                                               
the grant.                                                                                                                      
                                                                                                                                
9:07:54 AM                                                                                                                    
                                                                                                                                
MS.  TESHNER  answered  that  there   is  a  report  that  school                                                               
districts are required to provide to receive the funding.                                                                       
                                                                                                                                
9:08:25 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  REVAK   asked  that  information   regarding  the                                                               
Quality School  Grant funding requirements be  distributed to the                                                               
committee.                                                                                                                      
                                                                                                                                
9:08:41 AM                                                                                                                    
                                                                                                                                
MR.  BLACKWELL presented  slide 37,  titled "A  permanent Funding                                                               
Component  of State  Aid."   He  started his  explanation of  the                                                               
slide by  saying we now  have the components  of state aid.   The                                                               
calculated  state aid  for the  Nome Public  School District  was                                                               
$8,819,824,  and by  adding  the $26,909  amount  of the  Quality                                                               
Schools  Grant,   the  district  would  receive   a  total  state                                                               
entitlement  of  $8,846,733.   He  explained  that would  be  the                                                               
amount that  would be  requested to fund  Nome Public  Schools in                                                               
the upcoming fiscal year.                                                                                                       
                                                                                                                                
9:09:36 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  HOPKINS asked  whether  that  included the  local                                                               
contribution.                                                                                                                   
                                                                                                                                
MR. BLACKWELL replied  that it was just what the  state would pay                                                               
and did not include the local contribution.                                                                                     
                                                                                                                                
9:09:57 AM                                                                                                                    
                                                                                                                                
MR.  BLACKWELL  shared  slide 38,  "Prorating  the  Public-School                                                               
Funding Formula."   The slide  read, "If the  amount appropriated                                                               
by  the legislature  is  insufficient to  meet  the total  amount                                                               
authorized, then  all districts' Basic  Need will be  reduced pro                                                               
rata."    Mr.  Blackwell  explained that  if  state  funding  was                                                               
insufficient, the  state would do  its best to fund  schools with                                                               
as much money as available.                                                                                                     
                                                                                                                                
9:10:38 AM                                                                                                                    
                                                                                                                                
CO-CHAIR DRUMMOND asked  if the local contribution  would also be                                                               
affected by  lowering of  state aid  because of  the way  the cap                                                               
worked.                                                                                                                         
                                                                                                                                
9:10:54 AM                                                                                                                    
                                                                                                                                
MR.  BLACKWELL  agreed  with  Co-Chair  Drummond  and  added  the                                                               
contribution would be affected because  the 23 percent basic need                                                               
factor would be calculated on a smaller number.                                                                                 
                                                                                                                                
CO-CHAIR DRUMMOND  asked if a  city or borough wanted  to provide                                                               
additional funding above the cap would be allowed to do so.                                                                     
                                                                                                                                
MR. BLACKWELL explained that if  a city or borough funded schools                                                               
above the  cap, the school  district would be notified  and would                                                               
have  to return  the money  above the  cap amount.   He  said the                                                               
cap's  purpose  is  to  ensure all  school  district  funding  is                                                               
equalized.                                                                                                                      
                                                                                                                                
9:12:57 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  HOPKINS   asked  for   an  explanation   of  what                                                               
equalized was in the described situation.                                                                                       
                                                                                                                                
MR.  BLACKWELL said  equalized means  that school  districts fall                                                               
within  a range  to  help ensure  there  isn't disparity  between                                                               
affluent and non-affluent districts.                                                                                            
                                                                                                                                
9:14:08 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  JOHNSON   commented  that  the   various  funding                                                               
formulas  have constants  that are  used within  the formula  for                                                               
part  of the  calculation.   She then  asked whether  they change                                                               
annually or how often those constants get adjusted.                                                                             
                                                                                                                                
9:15:32 AM                                                                                                                    
                                                                                                                                
MS.  TESHNER answered  that  each  of the  constants  are set  in                                                               
statute; the formula was established  in 1999 and has had changes                                                               
to it since its inception.                                                                                                      
                                                                                                                                
REPRESENTATIVE  JOHNSON   asked  if  once  the   basic  need  was                                                               
calculated there  were other numbers from  the federal government                                                               
that were part of the calculation for the total disbursement.                                                                   
                                                                                                                                
MS. TESHNER replied that the impact  aid number was the only part                                                               
of the calculation from the federal government.                                                                                 
                                                                                                                                
9:16:49 AM                                                                                                                    
                                                                                                                                
CO-CHAIR STORY  asked how many  municipalities are funded  at the                                                               
cap.                                                                                                                            
                                                                                                                                
MS. TESHNER  replied she  could provide  that information  to the                                                               
committee at a later time.                                                                                                      
                                                                                                                                
9:17:24 AM                                                                                                                    
                                                                                                                                
MS.  TESHNER   presented,  "Department   of  Education   &  Early                                                               
Development History  of One-Time  funding outside  the Foundation                                                               
Formula."    She explained  it  showed  the history  of  one-time                                                               
funding from  2002 to  2020 which  is additional  funding outside                                                               
the formula provided to school districts based on adjusted ADM.                                                                 
                                                                                                                                
9:18:09 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE   HOPKINS   said   there  had   been   discussions                                                               
concerning when the one-time monies  have been given out. He then                                                               
asked for the calendar dates of disbursement.                                                                                   
                                                                                                                                
MS. TESHNER  explained that once  the foundation formula  for all                                                               
districts had  been calculated, then  the one-time  payment would                                                               
be provided,  which typically occurred  in late January  or early                                                               
February.                                                                                                                       
                                                                                                                                
9:19:49 AM                                                                                                                    
                                                                                                                                
CO-CHAIR STORY  asked Ms. Teschner  to confirm that  the one-time                                                               
money [2019] was already with the department.                                                                                   
                                                                                                                                
MS. TESHNER  replied that  the department had  the money  and was                                                               
holding onto it  until the legislature acted  on the supplemental                                                               
budget.                                                                                                                         
                                                                                                                                
9:20:21 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE TUCK  asked what  would happen if  the legislature                                                               
did not act on the supplemental budget.                                                                                         
                                                                                                                                
MS.  TESHNER   explained  that  the   funds  would  have   to  be                                                               
distributed by  June 30; otherwise  they would lapse back  to the                                                               
general fund.                                                                                                                   
                                                                                                                                
9:21:08 AM                                                                                                                    
                                                                                                                                
MR. BLACKWELL Presented "Federal Impact  Aid Disparity Test."  He                                                               
said the presentation was a  brief overview of what the disparity                                                               
test  is.    Mr.  Blackwell  summed  up  the  disparity  test  by                                                               
explaining it was  a way of ensuring school  districts within the                                                               
state  have equalized  funding.   The  slide  explained that  the                                                               
highest revenue  districts in  the state  and the  lowest revenue                                                               
districts  in  the state  cannot  have  more  than a  25  percent                                                               
disparity in funding based on the adjusted ADM.                                                                                 
                                                                                                                                
9:23:41 AM                                                                                                                    
                                                                                                                                
CO-CHAIR  STORY asked  if the  department had  determined whether                                                               
the governor's proposed  budget would pass or  fail the disparity                                                               
test.                                                                                                                           
                                                                                                                                
MS.  TESHNER  answered  that  the department  had  not  done  the                                                               
calculation yet but would follow-up with the committee.                                                                         
                                                                                                                                
9:24:15 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  HOPKINS  asked  how   the  district  cost  factor                                                               
"played into the disparity test.                                                                                                
                                                                                                                                
MR.  BLACKWELL  explained he  hadn't  considered  how the  factor                                                               
would affect the test but said  that the district cost factor was                                                               
a small component of the total.                                                                                                 
                                                                                                                                
REPRESENTATIVE  HOPKINS asked  for clarification  on what  the 25                                                               
percent represented.                                                                                                            
                                                                                                                                
MR. BLACKWELL  explained that all  the factors and  formulas from                                                               
the  earlier  presentation  go  into  the  calculation  for  each                                                               
district, and by  looking at the district cost factor  and how it                                                               
plays into the disparity test,  the district cost factor was just                                                               
one  small  factor in  a  large  calculation.   He  continued  by                                                               
sharing  the  disparity test  information  is  on the  department                                                               
website and  all districts disparity  test results  are available                                                               
to the public.                                                                                                                  
                                                                                                                                
9:29:15 AM                                                                                                                    
                                                                                                                                
CO-CHAIR DRUMMOND  offered the House Education  Committee members                                                               
an  opportunity to  speak  about why  they wanted  to  be on  the                                                               
committee.                                                                                                                      
                                                                                                                                
9:29:47 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  REVAK explained  he has  two daughters  in public                                                               
school and wants  to make a positive impact on  school systems in                                                               
Alaska.                                                                                                                         
                                                                                                                                
9:30:18 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  TUCK  talked  about  his children  who  had  gone                                                               
through  public  schools  and  how  he wants  the  best  for  all                                                               
children  so [Alaska]  can be  the  example for  other states  to                                                               
follow.                                                                                                                         
                                                                                                                                
9:32:04 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE ZULKOSKY  shared she comes  from a region  that is                                                               
spread out  and rural.   She said she believes  the relationships                                                               
young people  have with their  teachers can inspire  young people                                                               
toward  greatness.   She commented  she is  interested in  making                                                               
sure the  resources are available  to ensure that  young Alaskans                                                               
are stepping into the workforce  or continuing their education to                                                               
advance their communities.                                                                                                      
                                                                                                                                
9:33:17 AM                                                                                                                    
                                                                                                                                
CO-CHAIR  STORY  agreed  that  children   are  one  of  the  best                                                               
resources Alaska  has.   She explained  that the  House Education                                                               
Committee should have a good  relationship with the entities that                                                               
effect  students   lives  and  make   sure  they're  all  working                                                               
together  for  the sake  of  children.    She also  said  funding                                                               
education at a level that resources the mission is important.                                                                   
                                                                                                                                
9:36:04 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  JOHNSON offered  that she  was interested  in the                                                               
committee because  the Matanuska Susitna Borough  School District                                                               
has the second largest attendance and is continuing to expand.                                                                  
                                                                                                                                
9:37:00 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE HOPKINS said he wanted  students in school to have                                                               
the  same  opportunities   he  did  growing  up   in  the  Alaska                                                               
educational system.                                                                                                             
                                                                                                                                
9:38:17 AM                                                                                                                    
                                                                                                                                
CO-CHAIR  DRUMMOND said  when she  started out,  her interest  in                                                               
education stemmed from  a situation with her son's  school in the                                                               
early  90s.  Through her initial  interest she got elected to the                                                               
Anchorage  School Board.   She  said she  was concerned  that the                                                               
governor wants to step away  from the responsibility of the state                                                               
in funding school construction.                                                                                                 
                                                                                                                                
9:41:19 AM                                                                                                                    
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
There being no further business before the committee, the House                                                                 
Education Standing Committee meeting was adjourned at 9:41 a.m.                                                                 

Document Name Date/Time Subjects
FY2020 Projected Formula Programs_as of 12-20-18.pdf HEDC 2/27/2019 8:00:00 AM
1page slide Federal Disparity Test2-25-19.pdf HEDC 2/27/2019 8:00:00 AM
FY2020GovAmdK-12FundingReductions_2-15-2019 (002).pdf HEDC 2/27/2019 8:00:00 AM
HEDC Committee Packet 2.2719.pdf HEDC 2/27/2019 8:00:00 AM
History of One-Time Funding.pdf HEDC 2/27/2019 8:00:00 AM
DEED_PresentationFY2020_FoundationFeb2018.pdf HEDC 2/27/2019 8:00:00 AM