Legislature(2021 - 2022)ADAMS 519
03/04/2021 01:30 PM House FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| HB69 || HB71 | |
| Presentation: Fy 21 Student Enrollment Counts and Covid-19 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 69 | TELECONFERENCED | |
| += | HB 71 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| + | TELECONFERENCED |
HOUSE FINANCE COMMITTEE March 4, 2021
1:33 p.m.
1:33:45 PM
CALL TO ORDER
Co-Chair Foster called the House Finance Committee meeting
to order at 1:33 p.m.
MEMBERS PRESENT
Representative Neal Foster, Co-Chair
Representative Kelly Merrick, Co-Chair
Representative Dan Ortiz, Vice-Chair
Representative Ben Carpenter
Representative Bryce Edgmon
Representative Andy Josephson
Representative Bart LeBon
Representative Sara Rasmussen
Representative Adam Wool
MEMBERS ABSENT
Representative DeLena Johnson
Representative Steve Thompson
ALSO PRESENT
None
PRESENT VIA TELECONFERENCE
Heidi Teshner, Director, Finance and Support Services,
Department of Education and Early Development; Lacey
Sanders, Administrative Services Director, Department of
Education and Early Development, Office of Management and
Budget, Office of the Governor.
SUMMARY
HB 69 APPROP: OPERATING BUDGET/LOANS/FUNDS
HB 69 was HEARD and HELD in committee for further
consideration.
HB 71 APPROP: MENTAL HEALTH BUDGET
HB 71 was HEARD and HELD in committee for further
consideration.
PRESENTATION: K-12 FY 22 OPERATING AND FORMULA WALK-THROUGH
BY DEED
PRESENTATION: FY 21 STUDENT ENROLLMENT COUNTS AND COVID-19
FEDERAL RELIEF FUNDING BY DEED
Co-Chair Foster reviewed the agenda for the day.
HOUSE BILL NO. 69
"An Act making appropriations for the operating and
loan program expenses of state government and for
certain programs; capitalizing funds; amending
appropriations; making reappropriations; making
supplemental appropriations; making appropriations
under art. IX, sec. 17(c), Constitution of the State
of Alaska, from the constitutional budget reserve
fund; and providing for an effective date."
HOUSE BILL NO. 71
"An Act making appropriations for the operating and
capital expenses of the state's integrated
comprehensive mental health program; making
supplemental appropriations; and providing for an
effective date."
1:34:47 PM
^PRESENTATION: K-12 FY 22 OPERATING AND FORMULA WALK-
THROUGH BY DEED
^PRESENTATION: FY 21 STUDENT ENROLLMENT COUNTS AND COVID-19
FEDERAL RELIEF FUNDING BY DEED
1:35:05 PM
HEIDI TESHNER, DIRECTOR, FINANCE AND SUPPORT SERVICES,
DEPARTMENT OF EDUCATION AND EARLY DEVELOPMENT (via
teleconference), Introduced the PowerPoint Presentation:
"FY2021 Student Enrollment Counts and COVID-19 K-12 Federal
Relief Funding." She reviewed the presentation agenda on
slide 2. She would cover a review of the FY 21 statewide
enrollment counts, explain the foundation payment process
and the advanced process, briefly address the federal
impact aid disparity tests, and address a few additional
state-funded programs that were affected by the changes in
enrollment counts. Lacy Sanders, the department's
administrative services director, would provide a COVID-19
federal relief funding overview. She would conclude the
presentation with a high-level overview of seven school
district snapshots.
Ms. Teshner discussed the public school funding formula on
slide 3 and slide 4. She reported that the legislature
provided a formula in statute for funding school
operational costs. It was referred to as the public school
funding formula, more commonly known as the foundation
formula. The formula was adopted under Senate Bill 36 in
1998, implemented in 1999, and defined in Alaska Statute,
Title 14, Chapter 17. The funding for each school district
was a combination of their state aid, required local
contribution, and federal impact aid. She noted that the
Regional Educational Attendance Areas (REAAs) did not have
a required local contribution, and there were 19 REAA
school districts in Alaska. She indicated a school district
was only eligible for foundation funding as calculated
under the formula and set out in AS 14.17.410.
Ms. Teshner continued that the first step in determining
state aid for a district to determine the average daily
membership (ADM) for each school. She provided a couple of
links on the slide. The first link was the school finance
website which included the foundation funding formula and
various publications providing historical ADM data, base
student allocation (BSA) histories, and annual foundation
reports. In addition, the committee had been provided with
two supplemental handouts. Handout One, an 8-page document
titled, "The Public School Funding Program Overview,"
walked through each step of the formula and could be found
at the second link on the slide. Handout Two was a 1-page
document outlining changes made to the formula over time
titled, "Alaska Public School Funding Foundation Formula
History."
Ms. Teshner talked about the importance of the annual count
period on slide 5. The average daily membership was the
defined term for student count data and was the number of
enrolled students during the 20 school-day count period
which ended on the fourth Friday of October. For school
year 2020-2021 the 20 school-day count period began on
September 28th and ended on October 23rd. In order to
determine state aid, districts were required to submit
their ADM to the department within two weeks after the
count period ended in accordance with statute. For the
2020-2021 school year count period, numbers were due to the
department November 6th. Based on statute, the student data
from the count period was the starting point for all
calculations that lead to the determination of state aid to
school districts.
1:39:40 PM
Ms. Teshner moved to slide 6 to look at the FY 21 statewide
school enrollment counts. She pointed to the top of the
slide which showed the statewide FY 21 Oasis update student
count data compared to the FY 21 projected student count
data and the FY 20 actual student count data. Also, she
provided the FY 22 projected data comparing it to the FY 21
Oasis number. For reference, the FY 21 projected data was
provided to the department in November 2019 in accordance
with statute. The counts were used to determine and prepare
the FY 21 governor's budget. Projected data was used for
budgetary purposes only at the statewide level, and there
was no provision in statute to pay state aid based on
projected student counts. She continued that the FY 21
Oasis data was a result of the department's reconciliation
and review of the count data provided by districts during
the 20-day count period in October.
Ms. Teshner continued that annually the department reviewed
the data submitted initially to remove all duplicates
ensuring no student received more than one ADM count and
special education intensive student reviews. She noted that
the department was wrapping up the special education
intensive counts presently. Any resulting changes were not
reflected in the numbers being presented in the current
meeting. She indicated that in the FY 22 projected data,
the projections provided by districts in November 2020 were
used in order to prepare the FY 22 governor's budget.
Ms. Teshner drew attention to the table at the top of
slide 6. The FY 21 Oasis regular ADM brick and mortar
student number decreased 15,352.91, a decrease of
13.4 percent compared to the projected data for FY 21. In
addition, the FY 21 Oasis correspondence daily membership
increased 13,445.8, an increase of 94.9 percent over the
projected data. The overall ADM decreased 1,907.11, a
decrease of 1.5 percent. Finally, the ADM increased
5,698.09, an increase of 2.2 percent compared to the FY 21
projected count. She indicated slide 8 of the presentation
provided a glance at the factors used to determine the ADM.
She would address them in a couple of slides.
Representative Carpenter asked if Ms. Teshner could provide
a historical look at the ADM over the previous 10 years.
Ms. Teshner responded that she could provide the
information to the committee. She indicated that the
information could also be found on the department's website
and extended further back than 10 years.
Ms. Teshner commented that the main factors contributing to
the increase in the ADM was the adjusted-for-school-size
ADM, the hold harmless provision, and a shift in
correspondence.
Representative Wool referenced the 1,907.11 decrease in the
ADM. He wondered if any research had been done on the
decrease in pupil counts. Ms. Teshner replied that the
department received a request to specifically reach out to
the districts to find out where students had gone. The
trend was that students had either left the state or moved
to a private education program or facility. She could
provide the data once the department received it.
1:44:58 PM
Ms. Teshner continued to slide 7 regarding the hold
harmless provision available to school districts. The
provision was enacted in 2008 under HB 273 [Legislation
passed in 2008 regarding education funding] for school
districts who had experienced a reduction in their
brick-and-mortar schools' ADM after they had been adjusted
for the school size in the foundation formula.
Ms. Teshner reported that eligibility was determined after
the districts' adjusted-for-school-size ADMs were
calculated and totaled for all schools resulting in a
statewide district total. The sum total of a district's
adjusted-for-school-size ADM was compared to the prior
fiscal year's total to determine if there was a decrease of
5 percent or more. If the answer was yes, the prior year
was locked in as the base year for the following 3 years,
and the new school size adjustment with the hold harmless
provision continued through the formula adjustments, which
she would address briefly on the following slide. It
resulted in approximately 75 percent of the base need being
restored in the first year. The hold harmless provision was
available to districts over a 3-year step-down: 75 percent
the first year; 50 percent the second year; and 25 percent
the third and final year, as long as the adjusted-for-
school-size ADM stayed below the established base year. The
3-year step-down allowed time for districts' budgets to
adjust to the decreased funding that came with the
reduction of their brick-and-mortar schools' ADM.
Representative Josephson suggested that if there was a
5.1 percent drop in enrollment, the step-down should be
94.9 percent. He wondered why a drop in enrollment resulted
in a greater reduction than the calculation for the ADM.
Ms. Teshner responded that the statute indicated a
5 percent trigger with a 3-year step-down of 75/50/25
percent. She did not have the history as to why the
specific trigger and step-downs were chosen.
Representative Carpenter had a question about the 5 percent
total loss in enrollment. He asked if the percentage was
factored on total or regular ADM. He asked for
clarification. Ms. Teshner replied that the department used
the school size ADM. Once the ADM was determined, the
department ran it through the school size factor table. The
resulting number was compared to the number in the prior
year to see if there was a reduction in enrollment of 5
percent or more.
Representative Carpenter wanted to see the relationship
between a school size determination that triggered the hold
harmless provision with an increase in correspondence not
factored into the provision. Ms. Teshner replied that
because correspondence students were not run through the
school size factor table, a reduction of brick-and-mortar
moved them out of the calculation which then triggered the
hold harmless provision. She could provide detail by
district that showed the school size change.
1:49:39 PM
Representative Wool understood the 5 percent enrollment
loss. He asked for further clarification regarding
75 percent. Ms. Teshner indicated it was 75 percent of the
basic need. She elaborated that the formula was applied to
all of the factors and multiplied by the base student
allocation (BSA) to reach the basic need amount. The basic
need amount equaled the cost to run a school district based
on the formula. She continued to explain that school
districts with a 5 percent or more reduction in their
school size ADM would receive 75 percent of the amount in
the first year. A reduction of 5 percent pertained to the
school size ADM rather than enrollment. A school district's
basic need was determined after enrollment counts were
submitted and ran through the school size factor table. The
number was then compared to the prior year. It was 75
percent of the amount of basic need.
Representative Wool clarified that it was not 75 percent of
funding. He also remarked that the 5 percent was not based
on total enrollment. A table was applied. The calculation
was multi-fold. Ms. Teshner referred to Handout One which
walked through the formula. It provided greater detail
about the numbers.
Vice-Chair Ortiz returned to the hold harmless provision.
He suggested the impact would be significantly different
depending on the school and district. For instance, some
school districts participated in revenue-generating
correspondence programs while others did not. School
districts received 90 percent of the ADM for students
participating in a district-sponsored correspondence
program. Districts without a correspondence program lost
out. He asked if he was correct.
Ms. Teshner responded in the affirmative. For example, the
Mat-Su School District had a correspondence program.
Although the district lost students in the brick-and-mortar
school format, most went to the in-district correspondence
program. The Mat-Su School District triggered the hold
harmless provision but gained the students in
correspondence and would see an increase in their
foundation funding for FY 21. Other districts who did not
have a correspondence program lost students in their
brick-and-mortar schools to another statewide
correspondence program triggering the hold harmless
provision. The districts were losing out because of not
having an in-district correspondence program to attract
students.
1:54:51 PM
Vice-Chair Ortiz suggested that a district who was hurt
financially because of a large drop in enrollment in their
brick-and-mortar schools would be forced to make
significant adjustments only being funded at 75 percent. He
thought the circumstance would be a Catch-22 because once
COVID-19 was over students would return to brick-and-mortar
education. However, the programs would not be available
because of school districts having to make reductions. He
asked if he was accurate about the potential outcomes for
some districts.
Ms. Teshner responded, "Yes." She reported there were
multiple factors at play. A district losing funding, such
as the Wrangell School District who lost several students,
triggered the hold harmless provision. They did not have a
correspondence program and would have to make adjustments
based on what they thought would happen in the current and
following years. Between the availability of carrying over
an additional fund balance at the end of FY 20 to help
offset things, the Covid relief funding would be available.
Lacey Sanders would be addressing the Covid relief funding
later in the presentation. If the majority of students
returned to the brick-and-mortar setting, the districts
would see an increase in the FY 22 foundation formula
amounts.
Representative Rasmussen asked how many districts did not
have a correspondence option. Ms. Teshner thought about 23
districts had correspondence programs, whether they were
state-wide or district-wide programs. Some districts had
multiple programs. She offered to provide a list to the
committee. Representative Rasmussen responded, "That'd be
great. Thank you."
Representative Edgmon thought the issue of enrollment could
be a key focus in the current legislative session. He
believed when the related statute was implemented, the hold
harmless provision was directed more towards schools that
had a student population on a downward trajectory. He
thought it might apply to a coastal fisheries community
where the fisheries were declining or to a community
gradually losing population. In the current situation with
the impacts of Covid-19, Alaska enrollment went from
114,000 students state-wide to 108,000 students or a
2.2 percent drop. Some of the school districts would
recapture their students once Covid became less of an issue
and things returned to normal. He did not have the full
picture he needed for context. He also brought up federal
dollars and hoped further presentations would be scheduled
to better understand the whole picture.
Co-Chair Foster remarked that he would be requesting
additional presentations.
2:00:28 PM
Representative Wool talked about students from the district
in Fairbanks that were leaving to attend correspondence
schools in other places. He asked about increased
enrollment in other correspondence districts.
Ms. Teshner referred to Handout 4 which showed various
funding levels. She pointed to the Galena School District
and the Yukon Koyukuk School District who saw large
influxes in their correspondence programs and would see a
large increase in their FY 21 changes. She highlighted the
first column. Galena would see an increase of $23 million,
and the Yukon-Koyukuk School District would see an increase
of $12.8 million. The handout showed the increases and
decreases by district and the overall funding. There were
decreases to the pupil transportation programs and the
residential schools for districts who had them. The handout
also showed the Covid relief funding and the districts'
unreserved fund balances. The net total could be seen in
the last column including districts who still might be in
the red. The department was committed to working with the
districts who were projected to be in the red to ensure
they were meeting their funding needs. She also clarified
that there were actually 35 correspondence schools within
the state. She reiterated she would provide the list to the
committee.
Representative Rasmussen asked what the Yukon-Koyukuk and
Galena School Districts were doing differently that were
bringing other students to their correspondence programs.
She suggested that the goal for legislators should be that
the state provided the best level of education possible.
She wondered if the statutes should be looked at in terms
of educational offerings.
Ms. Teshner did not know specifically what the two school
districts were doing differently. She could get back to the
committee. It was the choice of the parents where to enroll
their children. As for what they were providing, they both
had a state-wide program that was well established.
Representative Rasmussen asked if Ms. Teshner was aware of
the level of broadband service needed for those districts
with correspondence programs. Ms. Teshner thought her
question would be better directed to the school districts.
She could try to follow up with additional information.
2:05:07 PM
Representative Josephson suggested that if the numbers were
based on the prior year's actual numbers, could the Galena
School District and the Yukon Koyukuk School District
programs end up with resources that surged back the
following fall after Covid to brick-and-mortar facilities.
Ms. Teshner replied that the department had to follow
statute. The department would pay on the fiscal year. If
everyone were to return to the brick-and-mortar schools in
their districts, then Galena and Yukon Koyukuk would see a
potential large decrease just as they were currently seeing
a large increase in FY 22.
Representative Josephson asked whether there was an
adjustment that could be made mid-year. Ms. Teshner
responded that the department only had one count period per
year and would not make any adjustments to the count. She
elaborated that for the first 9 months of the school year
the department paid on the prior fiscal year foundation
numbers. In the last 3 months of the fiscal year the
department trued up the amount and paid it on the current
year. The districts ended up receiving what they should
have received all year long. She indicated that because
students were enrolled in their district, they were due the
funds based on the formula.
Representative Carpenter suggested that two school
districts were being discussed that experienced a negative
impact from not having a correspondence program. He assumed
the figures included Covid federal relief funding. He saw
two schools that were in the red.
Ms. Teshner concurred there were two school districts in
the red. She highlighted that the Kuspuk School District
was blank in the column for the unreserved fund balance
because she had not received their final FY 20 audit yet.
They could potentially be in the black once the department
received all of the necessary information.
Ms. Teshner detailed the public school funding formula
relating to the district ADN (Average Daily Number) on
slide 8. She would be providing a high-level overview of
the formula steps. After the count period was reported, the
ADM for each school was then calculated by applying the
school size factor to the count according to the table in
AS 14.17.410. The product of that calculation was then used
as a factor in the next step of the formula. Ms. Teshner
walked through the steps of the formula for the district
adjusted ADM. All of the steps shown on the slide were in
statute. She indicated the slide reflected the first part
of the formula.
2:09:50 PM
Ms. Teshner advanced to slide 9: "Public School Funding
Formula: State Aid." The department multiplied the District
ADM by the BSA of $5930 totaling the basic need. The number
reflected what it would cost to run a particular district
based on student enrollment. Then she would remove the
required local contribution amounts for any of the city
borough school districts. Next, she would remove any
deductible impact aid leaving the state aid amount. The
department would then add in the quality schools' grant.
The final number reflected the total state aid the
department provided to districts otherwise referred to as
the total state entitlement.
Representative LeBon noted there was a range to the local
required contribution. School districts could be near the
bottom of the range or the top. He asked if there was an
impact to state support if a community decided to
contribute near the bottom of the range.
Ms. Teshner replied that if a municipality was at the lower
end of the required local contribution, it would affect the
bottom line in state aid. The department would remove
anything excess up to the maximum local contribution. If a
community paid the maximum local contribution, it would
reduce how much was paid in state aid.
Representative LeBon asked if there was incentive for a
community to pay the minimum level of local contribution
rather than the maximum. Ms. Teshner replied that based on
the end total, they would potentially see more state aid if
they paid at the minimum required contribution level versus
the maximum.
Representative Carpenter asked if the required local
contribution was impacted because of the Covid crisis
causing a fluctuation in student count. Ms. Teshner
referred to page 6 of Handout One. She indicated that the
handout showed the required local contribution and how it
was determined in addition to the calculation for the
maximum local contribution. The actual required local
contribution was not affected by enrollment. Rather, it was
based on the full and true value of the table property. The
amount was not to exceed 45 percent of the prior year's
basic need. It was not affected by the current year
enrollment changes.
Ms. Teshner continued to the bar graph on slide 10: "Base
Student Allocation (BSA) Funding." The pencil chart showed
changes in the BSA from FY 99 through FY 21. It also
indicated when there were appropriations of one-time
funding outside of the foundation formula. She reported
that the BSA for FY 22 would remain at the $5930 level but
was not reflected on the slide.
Ms. Teshner reviewed the FY 21 statewide enrollment
comparison on slide 11. She had covered the top portion of
the slide when she addressed slide 6. Therefore, she would
not go through the information again. She pointed to the
FY 21 Oasis update compared to the FY 21 projected which
showed a net increase of approximately $25 million or an
increase of 2 percent. She noted that it was a $25 million
increase in the current fiscal year's budget. In addition,
the FY 21 Oasis update versus the FY 21 actual showed a net
increase of $38.1 million or an increase of 3.1 percent.
Looking at the FY 22 projected versus the FY 21 Oasis,
there was a decrease of $45 million or a decrease of 6.1
percent. In the Oasis numbers for FY 21 there were 32
districts who had triggered the hold harmless provision
compared to the base in FY 20.
2:15:41 PM
Ms. Teshner scrolled to slide 12: "Foundations Payments
Process." She explained that outlined in AS 14.17.610(a)
payments were processed on a monthly basis in time to
arrive in districts' bank accounts by the fifteenth of each
month. Payments for the first 9 months of the year were
calculated based on the prior final fiscal year's
foundation. For FY 21, the first 9 months (July-March) were
paid on the final FY 20 foundation numbers. The remaining
3 months (April, May, and June) were recalculated and trued
up based on the finalized current year foundation counts.
For FY 21, the 3 previous months would be based on the
finalized FY 21 foundation counts. It ensured that by the
end of the year districts would be paid what was due based
on their current year reconciled final ADM counts.
Representative Wool clarified that the payments for the
last 3 months of the current school year would be based on
enrollment in September. He thought the last 3 months would
show a decrease in funding to most of the school districts
assuming most of them fell into the hold harmless category.
Ms. Teshner could not say for certain that there would be a
decrease to most school districts. However, she confirmed
that anyone in the hold harmless category who was not going
to see an increase would see less funding coming in for the
last 3 months. She thought one district would be in the red
and their March payment would need to be adjusted in order
to ensure they had some kind of payment in April, May, and
June. The department would not cut the districts off
because of their changes in enrollment.
Representative Wool asked if 32 of 35 school districts fell
into the hold harmless category. Ms. Teshner replied that
there were 54 school districts.
Representative Wool thought Ms. Teshner had stated that if
a school district was in the hold harmless category, they
would see a reduction unless they received an increase. He
asked if the increase would be in the form of federal Covid
money. Ms. Teshner referred to Handout Four. An increase
would be the result of a combination of reductions in state
aid for foundation funding or any kind of state funded
programs, and additional monies including Covid relief
funding and any unreserved fund balances.
Representative Wool suggested that although school
districts in the hold harmless category had less money
coming in, they would be able to pay their bills because of
federal Covid funding and reserves. However, they would
still see a reduction, as the reserves were monies they
already had. He asked if he was accurate. Ms. Teshner
responded that he was correct. She added that assuming the
unreserved fund balances were not already committed by the
school districts, some of it would be used to offset the
reduction. The department would work with school districts
to ensure that they remained even.
2:19:48 PM
Representative Carpenter asked if only 2 school districts
who would not have adequate funding. Ms. Teshner indicated
that on Handout Four there were 2 school districts noted in
the red. The Kuspuk School District had uncertainty. Just
looking at the change in foundation numbers compared to the
Covid relief funding numbers, there were 7 school districts
the department identified that were seeing negative
numbers. In other words, if the unreserved fund balances
were not included, there would be 7 school districts in the
red.
Representative Carpenter wanted to know which school
districts would have a financial problem in the current
year. He referenced Handout Four which showed only 2 school
districts who would have a difficult time financially
through the pandemic period. He was focused on foundation
payments for April, May, and June. He relayed that there
were other amounts of money coming into the state that
should impact legislators' decisions about what they did
with foundation payments. He was trying to get a full
picture. He reiterated that in Handout Four, all but 2
school districts would be in the black in the current year.
Ms. Teshner responded, "That is accurate." There was also
the potential for Alaska to receive another federal relief
package projected to be a significantly large dollar
amount. She hoped the additional funding would help the
2 school districts in the red denoted in Handout Four.
Representative Wool had heard from school districts in the
Fairbanks area that the deficit they had, based on
enrollment, was not -$9.9 million, it was closer to
-$27 million. The school districts were considering
approximately 240 layoffs. In the net total column in
Handout Four, the Fairbanks School District was in the
black. However, the school district indicated they were not
in the black and were considering having to make some dire
decisions. He wanted to look at the numbers more closely.
Ms. Teshner discussed advances related to foundation
payments on slide 13. The department also had an advance
provision that would allow districts, if they experienced a
large increase in student enrollment and were concerned
about falling short of funds. The provision would allow
school districts to request an advance on their anticipated
finalized state aid funding. Slide 13 showed the process
districts had to follow in order to request an advance and
the minimum amount of information required by the
department.
2:24:34 PM
Ms. Teshner reviewed the federal impact aid disparity test
on slide 14. The federal government allowed the State of
Alaska to deduct 90 percent of its allowable impact aid
from the amount the foundation formula allocated to school
districts. Per AS 14.17.410, the basic need minus the
required local contribution, minus the 90 percent of
eligible impact aid equaled Alaska's state aid. It reduced
the state's cost by an average of about $85 million per
year. However, the state was only allowed to deduct the
federal impact aid if there was an equalized formula in
accordance with federal law. Every year the State of Alaska
had to ask permission from the federal government in order
to take impact aid payments into account in determining
state aid to districts. It was an annual certification
which had to happen no later than 120 days after the end of
the fiscal year. Each year the department performed the
disparity test which compared the state's high-per-revenue
to low-per-revenue districts to each other. If the funding
differential was not more than a 25 percent disparity
between districts' revenue per adjusted ADM, the funding
formula would be considered equal and the state was allowed
to deduct the approximate $85 million. It was also the
reason for the 23 percent cap on the maximum local
contribution. It was intended to ensure that disparity did
not exceed 25 percent.
Representative LeBon clarified that local contributions
were caped because of the disparity test. Ms. Teshner
responded in the affirmative.
Vice-Chair Ortiz asked if the state had ever failed the
disparity test and whether it would pass the test in FY 22.
Ms. Teshner indicated there was one year in the 80s in
which the state failed the test. Otherwise, the state had
passed. The department just submitted the FY 19 disparity
test, as the state always submitted it a year behind. The
state passed the test with a disparity of 24.3 percent.
Ms. Teshner added that if the state failed the disparity
test, the formula would not be considered equalized, and
the state would owe school districts approximately $85
million. Alaska could not deduct the federal impact aid
until the state's education funding system was recertified
by the federal government. The department performed the
disparity test after the fiscal year was over. It meant
that the state would owe $85 million over multiple years.
If the state were to fail for FY 21, the results would be
determined in FY 22, and the state could not recertify
again until at least FY 24. In that case, failing the
disparity test could cost the state a minimum of
$255 million.
Representative LeBon returned to the topic of local
contributions. He asked if his school district in Fairbanks
was at the bottom portion of the range, it would be helping
to meet the disparity test. He wondered if he was accurate.
Ms. Teshner replied positively. She indicated it was
preferred that the large districts fell at the middle of
the disparity test to help with not exceeding the 25
percent. Representative LeBon knew that. Ms. Teshner noted
that the department had copies of all of the disparity
tests dating back to FY 09 on its foundation formula
website.
2:29:20 PM
Ms. Teshner advanced to slide 15 which highlighted the
other state-funded programs that used the 2020-2021 school
year enrollment counts in determining their FY 21 final
grant amounts. It included the Pupil Transportation Program
and the residential schools. She indicated that the Pupil
Transportation Program was determined based on a statutory
formula in AS 14.09.010. The calculation involved taking a
district's ADM less their correspondence ADM multiplied by
a per student amount set in statute. The FY 21
appropriation was approximately $77 million, and the
estimated FY 21 actual grants totaled approximately $65
million a decrease of almost $12 million or a decrease of
15 percent. The state also had the residential schools
program. The funding was also determined based on a
statutory formula in AS 14.16.200. The funding outlined on
slide 15, had two parts. There was a residential stipend, a
per-pupil monthly stipend rate multiplied by the 9 months
multiplied by the actual student count. Residential schools
also received a one round trip transportation reimbursement
per student which had to be at the least expensive means
between the student's community of residence and the
school. The FY 21 appropriation was $8.3 million for the
residential schools. The estimated FY 21 actual grants
totaled $2.4 million. There was a $5.9 million decrease or
a decrease of 71 percent in grants to residential schools.
In a normal year, the state had 9 school districts
operating and 10 approved programs across the state. For FY
21 only 4 residential schools (Galena, Lower Yukon, Nenana,
and Northwest Arctic) were operating but at reduced
capacity.
Representative Carpenter asked if the decrease was due to
Covid-19. Ms. Teshner responded that all was related to
Covid-19, whether they were open or operating at reduced
capacity. She commented that starting on slide 24 she would
provide 7 district snapshots reflecting enrollment changes,
Covid relief funding, and fund balance information. She
passed the presentation over to Lacy Sanders.
2:32:36 PM
LACEY SANDERS, ADMINISTRATIVE SERVICES DIRECTOR, DEPARTMENT
OF EDUCATION AND EARLY DEVELOPMENT, OFFICE OF MANAGEMENT
AND BUDGET, OFFICE OF THE GOVERNOR (via teleconference),
would provide the committee with an update on the Covid-19
K-12 federal relief packages that had been allocated to the
state Department of Education and Early Development (DEED).
She would be sure to pause at the end of each slide to
address any questions or comments. Towards the end of the
presentation, she would walk through several handouts that
were in members' packets.
Ms. Sanders began her presentation on slide 17. She
explained that the Coronavirus Aid, Relief and Economic
Security (CARES) Act was signed into law on March 27, 2020,
and appropriated $30.75 billion into the Education
Stabilization Fund. At a national level, funding was
allocated in the following manner. Approximately $3 billion
was appropriated into the Governor's Emergency Education
Relief Fund (GEER I Fund). Approximately $13.5 billion was
appropriated into the Elementary and Secondary School
Emergency Relief Fund (ESSER I Fund). Approximately $14.25
billion was appropriated for the Higher Education Emergency
Relief Fund. In her presentation for the day, she would be
speaking about ESSER and GEER Funds. The University of
Alaska was the appropriate agency to speak to the Higher
Education Emergency Relief Funds.
Vice-Chair Ortiz asked about the Higher Education
Investment Fund. He assumed it did not relate to what was
currently being discussed. Ms. Sanders responded that if
Representative Ortiz was referring to the Alaska Higher
Education Investment Fund, it was a fund that the state
used as an endowment to support the Alaska Performance
Scholarship Fund. She wondered if that was what he was
referring to. Representative Ortiz responded in the
affirmative.
2:35:06 PM
Ms. Sanders continued with the CARES Act update on
slide 18. The slide represented the State of Alaska's
allocation of CARES Act ESSER I and GEER 1 funds. First,
the total allocation of ESSER I funds was $38.4 million.
Local education agencies (school districts) were awarded
$34.6 million or 90 percent of the funds. The funds were
allocated to school districts based on federal guidance
which required 90 percent of the state's allocation be
distributed to those school districts based on the
proportion of Title 1, Part A funds that they received in
the most recent fiscal year. Funding was available to the
school districts to obligate until September 30, 2022. As
of January 29, 2021, school districts had requested
reimbursements totaling $11.3 million.
Ms. Sanders continued that school districts provided an
application and a budget each fiscal year for the funding
available to them. She reported that FY 20 was the first
year that funding was available for expenditure. The
department was currently working through the FY 21
applications and requests had been submitted by school
districts. The process would continue into FY 22 and FY 23.
She reported that the State Education Agency, DEED,
received $3.8 million to award grants or contracts to
address emergency needs resulting from the Covid-19
pandemic. A small portion could be used for administrative
costs and the funding was also available until
September 20, 2022.
Ms. Sanders reported that the total allocation of
GEER I Funds was $6.5 million. The purpose of the funding
was to provide emergency assistance as a result of the
Covid-19 pandemic in support of education and
education-related entities. The funding was available for
the governor to allocate at his discretion, and funding was
allocated in the following manner. She conveyed that $3.7
million was given to school districts, $1.7 million was
given to institutes of higher education, and $1 million was
distributed as a competitive grant award to various
education and education-related entities. One of the
handouts which she would walk through later, DEED
Handout 8, identified the education-related entities that
received the funding and the amount of the awards.
Representative LeBon asked if she could provide information
on the formula for disbursement and why some school
districts received funding while others did not. Ms.
Sanders explained that when allocating the original ESSER 1
funding it was determined that there would be school
districts who would not receive funding because it was
based on a Title 1(a) allocation. A comparison was done
that allocated funding to the 35 school districts to bring
them to an amount that was equal to or more than what they
would have received under a $30 million award based on the
foundation formula allocation.
Representative Carpenter asked about DEED's allotment of
$3.8 million. He wondered if she could provide a list of
how the funding was used. Ms. Sanders could provide a list
to the committee. She indicated that approximately $2.8
million had been allocated or awarded which left a balance
of just over $800,000.
2:40:01 PM
Representative Josephson referenced the GEER I Fund. Ms.
Sanders had mentioned applying it against a $30 million
factor. He asked her to repeat the information. Ms. Sanders
clarified that previously there was an appropriation for
$30 million that would have been allocated to school
districts. The department compared what school districts
would have received at the time to ensure that what they
received through ESSER and GEER funding was equal to or
greater than that amount.
Representative Josephson asked, relative to the veto of the
$30 million on April 7th, if there was a way to know
whether ESSER I and GEER I funds were a response to normal
needs or supplemental needs relating to the pandemic. Ms.
Sanders replied that the CARES Act funding was provided
with federal guidance to address the impact of the Covid-19
pandemic. The school districts were asked to provide a
budget and a narrative outlining how they intended to use
that money. The school district would have 3 years to spend
the money. Some had already spent it to address their needs
and some had not. She wondered if she had answered the
representative's question.
Representative Josephson responded, "Sort of." He used the
Gateway School District and the Kuspuk School District as
examples. He suggested that if they spent money on masks
and plexiglass, it would not be the normal need that was
vetoed. However, it would be important to know whether they
spent the money on things that would have otherwise been
funded except for the veto. He felt it was fundamental to
have the answer to his question as an appropriator. He
invited Ms. Sanders to comment.
Ms. Sanders thought each school district would be unique in
their needs. She suggested inquiring with the school
districts directly.
Ms. Sanders additionally commented on slide 18. She noted
that authority for ESSR I and GEER I was approved through a
revised program legislative (RPL)that was presented to the
Legislative Budget and Audit Committee on May 1, 2020.
2:45:13 PM
Ms. Sanders moved to slide 19 to discuss the second relief
package from the federal government the Coronavirus
Response and Relief Supplemental Appropriations (CRRSA)
Act. The act was signed into law on December 27, 2020, and
appropriated approximately $82 billion into the Education
Stabilization Fund. Approximately $4.1 billion went into
the Governor's Emergency Education Relief Fund (GEER II
Fund). Approximately $54.3 billion went into the Elementary
and Secondary School Emergency Relief Fund (ESSER II Fund).
Lastly, approximately $21.7 billion went into the Higher
Education Emergency Relief Fund. She noted that the funding
in the second round was referred to as ESSER II and GEER II
because the funds were accounted for separately from CARES
Act funds. They second round of funds had slightly expanded
allowable uses and a different period of availability. She
indicated the slide reflected the funding at a national
level.
Ms. Sanders turned to slide 20 to walk through the State of
Alaska's allocation. She began with the state's ESSER II
funds. The total allocation was $159.7 million. The local
education agencies, the school districts, were awarded
$143.7 million. The funds were allocated the same as the
CARES Act funding based on federal guidance requiring 90
percent of the state's allocation to be distributed to
school districts based on the proportion of Title 1, Part A
funds they received in the most recent fiscal year. Funding
was available for school districts to obligate until
September 30, 2023, and could be used for expenditures
dating back to March 2020. She reported that the
application for this funding was available on DEED's
website presently, and school districts had begun
submitting applications recently.
Ms. Sanders continued that the State Education Agency,
DEED, received $15.2 million to award grants or contracts
to address emergency needs resulting from the Covid-19
pandemic. A small portion of the funding could be used for
administrative costs and was also available until
September 30, 2023. Nothing had been allocated or awarded
to-date. She noted that ESSER II funds had an expanded
allowability of activities compared to CARES Act funds. It
included allowing the funds to be used to address learning
loss, summer programming, and for school facility repairs
that reduced the risk of virus transmission and improved
air quality. The Department of Education and Early learning
had received questions in the past about water system
upgrades and investments in internet and broadband
infrastructure. Federal guidance provided allowances for
those uses. She noted that school districts determined how
their funding would be used. The department reviewed the
school districts' proposed plans and requests for
reimbursements to ensure that the spending followed federal
guidance. Ultimately, school districts were responsible for
demonstrating that their plans for expenditures net the
federal allowable rules. The department assisted in
determining if a use was allowable and frequently addressed
questions from school districts on whether certain
purchases could and should be made.
2:49:46 PM
Representative Josephson thought the funds might be a
source for districts to supplement their budgets. He
referred to one of the parameters, addressing learning
loss, was fairly broad.
Ms. Sanders confirmed that school districts had the ability
to determine how they would utilize the funding. Each
school district would use it differently. For example, a
district might have seen savings in some areas of their
normal budgets, and other areas might have seen increases
due to the pandemic.
Representative Carpenter noted Ms. Sanders had mentioned
that no money had been allocated or awarded. He wondered if
her statement was in reference to the state education
agency dollar figures. Ms. Sanders replied that her comment
at the time was specific to the $15 million for the state
education agency, Although the last time she checked, no
funding of the $143 million had been awarded because the
application process for school districts just recently
opened around February 15th.
Ms. Sanders continued to provide a detailed update on
slide 21. She reported that the State of Alaska's
allocation of GEER II funds was approximately $8.2 million
and was broken into two parts. The first part was the
governor's supplemental allocation and totaled about $2.8
million similar to the funding that was received under the
CARES Act appropriation. The governor could determine and
allocate the funding. The uses were similar and included
preventing, preparing for, and responding to the Covid-19
pandemic. Presently, the governor had not determined how
the funding would be allocated and had until January 2022
to award the funds.
Ms. Sanders continued that there was a new provision in the
CRRSA Act titled, Emergency Assistance for Non-Public
Schools (EANS). The total allocation for the State of
Alaska was $5.4 million The funding would be awarded to
non-public schools in partnership with DEED. The
application for the funding was made available on
February 12, 2021, and non-public schools had a 30-day
period to submit their application for the funding. She
elaborated that because non-public schools were not
required to register with DEED, it made it difficult to
provide a comprehensive list of eligible schools. The
Department of Education and Early Childhood Development
conducted an extensive search including contacting local
school districts, searching websites, and through state
databases. Included in members' packets was a list of
schools that had been identified as non-public schools in
Alaska. However, once the application period was completed,
the department might identify additional eligible schools.
She noted that both ESSR II and GEER II funding were
approved again through the RPL process. The department
resented an RPL to the Legislative Budget and Audit
Committee on January 18, 2021.
2:54:50 PM
Vice-Chair Ortiz asked what document Ms. Sanders referred
to that indicated how many non-public schools were in the
state. Ms. Sanders replied that the information could be
found in Handout 9. Vice-Chair Ortiz asked how many of the
schools had applied so far. Ms. Sanders believed 2 schools
had submitted applications. Her staff was working closely
with the non-public schools to complete the application
process. She thought many of the applications would be
submitted towards the end of the period.
Representative Rasmussen asked for the date of the end of
the period. Ms. Sanders thought the date was
March 12, 2021. It was a 30-day period that opened on
February 12, 2021.
Representative Rasmussen asked Ms. Sanders to explain the
criteria or how the department planned to award the
funding, given that the department did not know how many
schools might apply. Ms. Sanders reported that no
determination had been made to-date on how to allocate the
funding. The department was waiting to receive the
applications to see what types of requests were being made
and at what levels. She noted that it was similar to school
districts in that it was a reimbursement process.
Representative Rasmussen asked if there was a maximum
amount of money school districts could receive. Ms. Sanders
clarified that Representative Rasmussen was asking if there
was a limit. Representative Rasmussen responded in the
affirmative. Ms. Sanders replied that there was not a
limit. It was up to DEED working with the governor's office
to determine how and at what level the funding would be
allocated.
Representative LeBon assumed the department was reaching
out to the non-public schools to inform them of the
available funding. Ms. Sanders responded affirmatively that
the department had contacted each one of the schools. In
addition, the department held an online seminar to address
questions and walk through the application period shortly
following the time the application was made available. She
reiterated that her staff had reached out to the no-public
schools to ensure they had the information they needed to
complete an application.
Representative Edgmon asked if a determination had been
made by the administration that there was no reason to
freeze the 2020 enrollment numbers for school districts
since there had been three disbursements of funding from
the federal government. Ms. Sanders deferred to the
commissioner.
Representative Rasmussen asked if Pre-K was included in the
non-public schools. Ms. Sanders replied that it was only K-
12 as outlined in federal guidance.
Representative Rasmussen asked Ms. Sanders if she knew
whether there were programs available for the pre-K
providers to offset costs related to the pandemic. Ms.
Sanders answered that the Department of Health and Social
Services (DHSS) had the daycare assistance programs and
would be able to provide her with a summary they had
provided through grants to them.
3:00:26 PM
Representative Rasmussen asked if the day-care assistance
program was different from funding for pre-K. He family did
not qualify for assistance, but she had her son in a
private preschool program. She was thinking of private
preschools that had been impacted. She thought they would
fall under early learning and development. Ms. Sanders
relayed that it was beyond the scope of the programs being
discussed in the current meeting. The representative was
correct that there were pre-K grant programs within the
department. However, the daycare assistance programs fell
under DHSS.
Representative Carpenter referred to the emergency
assistance for non-public schools. He wondered if there
were federal requirements that the non-public schools would
have to meet to be eligible for funding. He wondered if
there were any exclusion for religious schools. He
recognized some religious schools on the list of non-public
schools. He assumed there were no exclusions on the list.
Ms. Sanders responded that there was no limit. Non-public
schools might include a religious entity. However, there
were rules on how the funding could be spent. The
department would not be providing the non-public schools a
check for spending. Rather, the non-public schools were
submitting applications with a plan on how the funding
would reduce the impacts of the pandemic. Items such as air
purifiers, HVAC modifications, tablets for distance
learning were examples of where the funding could be spent.
3:03:11 PM
Ms. Sanders advanced to the pie charts on slide 22 showing
the total education stabilization funds. The slide was a
visual representation of the ESSER and GEER funding
allocated to the State of Alaska.
Ms. Sanders wanted to walk through the eight handouts that
were in members' packets, as they contained a significant
amount of information. The information might be helpful in
looking at specific school districts. She began with
Handout 3 which was a summary of the education
stabilization funds that had been allocated to each of the
school districts. It showed what each district received
whether from the CARES Act or the CRRSA Act and whether
from ESSER or GEER funds.
Ms. Sanders moved to Handout 4 showed the state funded
programs. It was the item that Ms. Teshner spoke to
earlier. It provided a summary of the formula changes based
on the enrollment changes districts were seeing. It also
showed allocations of the CARES Act and the CRRSA Act as
well as their FY 20 end reserve balances.
Ms. Sanders continued to Handout 5 which provided the
distribution of CARES Act monies to school districts. The
funding had been awarded and expended reimbursed to
school districts as of January 28, 2021. It broke down the
ESSER I Funds and the GEER I Funds that school districts
received, what they spent, and their remaining balances.
Ms. Sanders explained that Handout 6 and Handout 7 showed
further details of how school districts were spending their
money. It provided a summary of expenditures by chart of
accounts. Handout 6 was specific to FY 20, and Handout 7
was specific to FY 21. She continued that Handout 8 was the
grant award list for the $1 million awarded in GEER I
funding. Handout 9 was the list of non-public schools she
mentioned earlier. Handout 10 was a summary of terminology
and definitions for Covid-19 relief funding. The department
had received several questions about the definition of
supplement, not supplant, as well as the maintenance of
effort requirements under the CARES Act and the CRRSA Act.
The document outlined the federal guidance along with the
impact for DEED.
Ms. Sanders reviewed additional CARES Act allocations on
slide 23. She wanted to note other allocations of funding
the department received. The Child Nutrition Program was
awarded $42.2 million for several food service programs. A
total of $28.3 million had been expended. The funding had a
limited period of availability. It was only able to address
expenses from March 202 through September 2020. The
Libraries, Archives, and Museums received $66,100 award
from the Institute of Museum and Library Services to award
grants to museums and libraries in Alaska. She reported
that $63,300 had already been awarded. Lastly, the Alaska
State Council on the Arts was awarded $421,500 for grants
to Alaskan artists of which $385,500 had already been
awarded. She concluded her prepared remarks and was
available for questions.
3:08:07 PM
Representative Carpenter referred to Handout 5. He asked
why funds had not already been spent. Ms. Sanders indicated
there could be variety of reasons the monies had not be
spent. For example, some monies would be used for summer
school programs. It was different for each recipient. She
noted that the period of availability on the specific
funding was over several years.
Representative Josephson relayed that the Fairbanks Daily
News Minor was reporting that the Fairbanks School District
was projected to lose 243 jobs with a shortfall of $27
million. The district was looking at the demise of music
and outdoor recess for elementary schools. Layoff notices
would go out in May unless the legislature intervened. He
referred to slide 27. He asked how the Fairbanks Daily News
Miner could report such a dire circumstance when
significant relief was available. Ms. Sanders commented
that it was the first time she had heard the number
mentioned. She would need to review the article. Currently
she did not have any insightful comments on the topic.
Representative Josephson if there was anything she could
report to the committee that was going on behind the
scenes. He thought that in the absence of COVID dollars,
what were the districts experiencing. Ms. Sanders suggested
that it would be helpful to speak with the districts. She
could provide the numbers and what DEED was providing.
However, she could not speak on behalf of the school
districts.
3:11:30 PM
Ms. Teshner would be providing seven district snapshots
that included the foundation funding totals, Covid relief
funding, and the FY 20 unreserved fund balance data for
Anchorage, Dillingham, Fairbanks, Kenai Peninsula,
Ketchikan, Mat-Su, and the Nome school districts. She began
with the Anchorage School District on slide 25. She
reported that the top of the slide was the same layout as
she shared on slide 11. There were two tables at the bottom
of the slide. The left-hand portion of the slide showed the
CARES Act allocations, expenditures, and percentage spent.
It also showed the district's CRRSA allocations,
expenditures, and percentage spent. The department was just
receiving the CRRSA Act budgets from districts. In the
seven districts she mentioned, there were no CRRSA
expenditures to-date.
Ms. Teshner continued that on the lower right-hand side was
the FY 20 operating fund balance breakout between the
reserved and unreserved portions and the percentage of
unreserved balance. Per AS 14.17.505 and related to the
fund balance in a school district's operating budget, a
district was not allowed to accumulate in a fiscal year an
unreserved portion of its year-end fund balance in its
operating fund (as defined in the department's regulations)
that was greater than 10 percent of its expenditures for
that fiscal year. All money in a year-end fund balance of a
district's school operating fund was subject to the 10
percent limit except if it was in one of six categories:
encumbrances, inventory, prepaid expenditures (including
fuel), self-insurance, any federal impact aid received, and
any unexpended annual student allotment money for
correspondence programs.
Ms. Teshner reported that Governor Dunleavy issued the
order of suspension number 3 which suspended the statute in
regulation and allowed school districts to retain more than
10 percent of their unreserved fund balance from FY 20 into
FY 21 in response to Covid. At a quick glance, of the 52
audits the department had received to-date, 43 school
districts reported they were carrying over more unreserved
fund balance at the end of FY 20 versus what they carried
at the end of FY 19. In addition, 26 of the districts were
reporting an unreserved fund balance greater than 10
percent. The additional carryover was available to help
districts address funding fluctuations due to enrollment
and Covid response.
Ms. Teshner highlighted that the Anchorage School District
was showing an increase of almost 150 percent in their
correspondence ADM from the FY 21 projected to the FY 21
Oasis update. They saw movement of approximately 170
students from their brick-and-mortar programs to their
district correspondence programs. Anchorage triggered the
Hold Harmless provision in FY 21 and had a decrease of
11.19 percent in their school size ADM compared to FY 20.
They were estimated to receive approximately $5.8 million
less than their FY 21 projected foundation amount and $8.1
million less than their actual foundation amount. Anchorage
had spent approximately 59 percent of their ESSER I
allocation and they did not receive an allocation under
GEER I. Anchorage School District anticipated receiving
about $50 million in ESSER II funds. At the end of FY 20
Anchorage reported a 10.34 percent unreserved fund balance
in their operating fund.
3:17:08 PM
Ms. Teshner provided a snapshot of the Dillingham School
District on slide 26. The district was seeing a decrease of
9.4 percent in their regular brick-and-mortar ADM and a
decrease of 100 percent in their correspondence ADM. The
district triggered the hold harmless provision, as they
experienced a 5.21 percent decrease in their school size
ADM. They were expected to get about $194,000 less than
their FY projected foundation amount. The school district
reported spending 100 percent of their ESSER I and GEER I
allocations. They expected to receive $430,000 in ESSER II
Funds. At the end of FY 20 they reported a 10.79 percent
unreserved fund balance in their district operating fund.
Ms. Teshner continued to slide 27: "District Snapshot:
Fairbanks North Star School District. The district was
showing a 20.6 percent in their regular brick-and-mortar
ADM and a 248 percent increase in their correspondence ADM.
They had a statewide correspondence program. The district
triggered the hold harmless provision with a 16.59 percent
decrease in their school size ADM. Based on the district's
counts, they were estimated to receive about $7.5 million
less in their FY 21 projected foundation amount. Fairbanks
School District had spent about 65 percent of their ESSER I
allocation and about 41 percent of their GEER I allocation.
The district was expected to receive about $9.7 million in
ESSER II funds. Fairbanks had a 4.71 percent unreserved
fund balance at the end of FY 20.
Ms. Teshner reviewed the Kenai Peninsula School District on
slide 28. The district reported a 22.6 percent decrease in
their regular brick-and-mortar ADM and 115 percent increase
in their correspondence ADM. Comparative to FY 21
projected, the school district triggered the hold harmless
provision in FY 21 with an 18 percent decrease in their
school size ADM. They were estimated to receive $1.6
million less than their FY 21 projected foundation amount
and $2.6 million less than their FY 20 actual foundation
amount. The Kenai Peninsula School District had spent
approximately 30 percent of their ESSER I allocation and
they did not receive a GEER I allocation. The district
expected to receive approximately $9 million in ESSER II
funding. They had a 9.63 percent unreserved fund balance at
the end of FY 20.
Ms. Teshner discussed a snapshot view of the Ketchikan
Gateway Borough School District on slide 29. They showed a
$12.6 percent decrease in their brick-and-mortar ADM and a
237 percent increase in their correspondence ADM. The
district triggered the hold harmless provision with a 10.04
decrease in their school size ADM. They were estimated to
receive approximately $1.2 million more that their FY 21
projected foundation amount. They had spent about 56
percent of their ESSER I allocation and approximately 75
percent of their GEER I allocation. They expected to
receive nearly $2 million in ESSER II funding. At the end
of FY 20 the Ketchikan Gateway School District had a 3.91
percent unreserved fund balance.
3:21:19 PM
Ms. Teshner advanced to slide 30: "District Snapshot: Mat-
Su Borough School District." The school district was
showing a 14.5 percent decrease in their brick-and-mortar
ADM and a 45 percent increase in their correspondence ADM.
The district triggered the hold harmless provision with an
11.56 percent decrease in their school size ADM. They
expected to receive about $3.1 million more than their
FY 21 projected foundation amount. The district had only
spent about 4.9 percent of their ESSR I allocation and did
not receive a GEER I allocation. They expect to receive
about $15.9 million in ESSR II funding.
Ms. Teshner reviewed the public school enrollment and the
funding formula for Nome Public Schools on slide 31. They
showed a 9.5 decrease in their brick-and-mortar ADM and
about a 318 percent increase in their correspondence ADM.
The district triggered the hold harmless provision with an
8.39 percent decrease in their school size ADM. They
expected to receive about $323,000 more than their FY 21
projected foundation amount. The district had spent about
13 percent of their ESSER I allocation and about 45 percent
of their GEER I allocation. The district expected to
receive about $810,000 in ESSER II funding. At the end of
FY 20 they reported a 13.29 percent unreserved fund balance
in their operating fund. She concluded the presentation.
3:23:19 PM
Representative Josephson asked about additional funding
from the federal government. He wondered if Ms. Teshner had
any recommendations as to how to appropriate those dollars.
He supposed Alaska's potion would be less than $1 billion.
He thought consideration of the timing of the release of
those funds relative to the completion of the budget was in
order. He asked Ms. Teshner to comment.
Ms. Teshner responded that if the State of Alaska were to
receive the allocation before the end of the regular
session, the administration would go through the regular
process to request additional federal authority. If the
legislature was not in regular session, the administration
would go through the Legislative Budget and Audit Committee
and request the additional federal receipt authority
through the Revised Programs Legislative (RPL) Review
Process.
Representative Josephson asked if the administration would
make a recommendation to the legislature. Ms. Teshner
deferred to Ms. Sanders. Ms. Sanders responded that if the
federal government passed an additional bill, DEED would
allocate the funding in accordance with federal law.
Similar to what the department did with the CARES Act
funding and the CRRSA Act, it allocated the funding to the
school districts based on what the federal guidance
provided. Ms. Teshner was correct that the department would
appear before the Legislative Budget and Audit Committee to
request the additional federal receipt authority if a bill
was passed and the legislature was not in session.
3:27:14 PM
Representative LeBon referred to slide 27 which showed the
Fairbanks School District. He pointed to the required local
effort in the middle of the slide. He clarified that it
showed the baseline for the Fairbanks North Star Borough
was required to provide in education funding. They might
contribute more than the amount, but the amount was the
minimum required contribution. He asked if he was accurate.
Ms. Sanders confirmed that it was their required minimum
local contribution.
Representative LeBon thought the amount was smaller than
what was actually provided. The Fairbanks North Star
Borough actually contributed about $50 million. He
suggested that if the minimum was 4 mils, the maximum must
be about 8 mils. He asked if he was correct. Ms. Teshner
replied that the maximum local contribution was calculated
using their required local contribution plus 25 percent of
the basic need. In other words, it was the greater of 25
percent of prior year basic need or the 2 mils equivalent
of the full and true value of taxable property.
Representative LeBon noted that the disparity feature of
school funding. he suggested that even if the Fairbanks
community wanted to contribute the maximum amount, the
disparity formula might push down the local contribution to
avoid jeopardizing any federal funding. He thought the
disparity formula acted as a ceiling for local
contributions. He asked if his statement was accurate. Ms.
Teshner responded in the affirmative.
Representative Edgmon appreciated the presentation. He
referred to Handout 10. It stated that given that there was
no single supplement or supplant provision in both CARES
Act and CRRSA Act funding, the state had to fund education
at FY 17, FY 18, or FY 19 levels in order to meet the
maintenance of effort requirements for the ESSER I, GEER I,
ESSER II, and GEER II pots of money. The state would have
to get a waiver from DEED or risk paying the money back. He
asked if that was Ms. Teshner's interpretation.
Ms. Teshner explained that for the CARES Act funding, in FY
20 and FY 21 the state had to meet the average of what it
spent in FY 17, FY 18, and FY 19. She reported that the
department had already submitted its FY 20 maintenance of
effort calculation to the U.S. Department of Education, and
the State of Alaska had met the maintenance of effort for
elementary, secondary, and higher education. The department
was also projecting it would meet the maintenance of effort
under the CARES Act for FY 21.
Ms. Teshner continued that under the CRRSA Act, the
maintenance of effort was the proportional amount the state
had spent on average from FY 17, FY 18, and FY 19. The
amount that had been spent overall across the entire
state's budget was what the state had to meet for the
maintenance of effort calculation for FY 22.
3:32:55 PM
Representative Edgmon was still trying to get to the
question of enrollment. It appeared there was a decrease in
the governor's proposal for education funding of about
$24 million in FY 22 due to a lower enrollment number. He
wondered how to know the amount the legislature should
appropriate with all of the current factors at play. He
wanted to see that the funding levels for schools remained
healthy. He noted the state's current fiscal restraints. He
indicated there were several handouts in members packets
containing pertinent information. He asked if there was a
way for the department to condense the information so that
it was easier for people to understand, he would appreciate
it.
Representative Edgmon continued that he thought there was
significant funding already going to school districts with
additional distributions anticipated in the near future. He
returned to the supplement versus supplant provisions and
potential unmet needs because the executive branch would be
allocating much of the funding without the legislature
being involved in the process. The legislature was being
asked to appropriate its normal education funding,
approximately 25 percent of the UGF amount appropriated
every year. He hoped any future presentations would create
more of a concrete picture.
Ms. Teshner commented that maintenance of effort was a very
complicated issue. The administration was looking at the
requirements of what it knew so far for FY 22 maintenance
of effort under the CRRSA Act. The state was in compliance
with the CARES Act. The state had not received any specific
guidance from the federal government on the maintenance of
effort for FY 22. She was aware that it would be based on
what the state actually spent rather than what was in the
budget. Therefore, if FY 22 actual numbers came in higher,
it would be a different number. She was happy to keep the
committee informed as the department received additional
information.
Co-Chair Foster reviewed the agenda for the following
meeting. The subcommittee for the University of Alaska
would be meeting as a committee of the whole.
HB 69 was HEARD and HELD in committee for further
consideration.
HB 71 was HEARD and HELD in committee for further
consideration.
ADJOURNMENT
3:37:53 PM
The meeting was adjourned at 3:37 p.m.