00 SPONSOR SUBSTITUTE FOR SENATE BILL NO. 46 01 "An Act relating to education funding; relating to the public education fund; relating to 02 the base student allocation; and providing for an effective date." 03 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 04  * Section 1. AS 14.03.150(c) is amended to read: 05 (c) The department may not award a school construction or major 06 maintenance grant under AS 14.11 to a municipality that is a school district or a 07 regional educational attendance area that is not in compliance with (a) of this section. 08 The department shall reduce the amount of state aid under AS 14.17.410 09 [AS 14.17.400] for which a school district may qualify by the amount, if any, paid by 10 the department under (b) of this section. 11  * Sec. 2. AS 14.17.410(b) is amended to read: 12 (b) Public school funding consists of state aid, a required local contribution, 13 and eligible federal impact aid determined as follows: 14 (1) state aid equals the amount appropriated by the legislature for  01 public school funding; except as otherwise provided in this section, a district's 02 basic need equals the amount of the district's state aid calculated under (g) of this  03 section plus the district's [MINUS A] required local contribution and 90 percent of 04 the district's eligible federal impact aid for that fiscal year; [BASIC NEED EQUALS 05 THE SUM OBTAINED UNDER (D) OF THIS PARAGRAPH, MULTIPLIED BY 06 THE BASE STUDENT ALLOCATION SET OUT IN AS 14.17.470;] district 07 adjusted ADM is calculated as follows: 08 (A) the ADM of each school in the district is calculated by 09 applying the school size factor to the student count as set out in AS 14.17.450; 10 (B) the number obtained under (A) of this paragraph is 11 multiplied by the district cost factor described in AS 14.17.460; 12 (C) the ADMs of each school in a district, as adjusted 13 according to (A) and (B) of this paragraph, are added; the sum is then 14 multiplied by the special needs factor set out in AS 14.17.420(a)(1) and the 15 secondary school vocational and technical instruction funding factor set out in 16 AS 14.17.420(a)(3); 17 (D) the number obtained for intensive services under 18 AS 14.17.420(a)(2) and the number obtained for correspondence study under 19 AS 14.17.430 are added to the number obtained under (C) of this paragraph or 20 under (H) and (I) of this paragraph; 21 (E) notwithstanding (A) - (C) of this paragraph, if a school 22 district's ADM adjusted for school size under (A) of this paragraph decreases 23 by five percent or more from one fiscal year to the next fiscal year, the school 24 district may use the last fiscal year before the decrease as a base fiscal year to 25 offset the decrease, according to the following method: 26 (i) for the first fiscal year after the base fiscal year 27 determined under this subparagraph, the school district's ADM adjusted 28 for school size determined under (A) of this paragraph is calculated as 29 the district's ADM adjusted for school size, plus 75 percent of the 30 difference in the district's ADM adjusted for school size between the 31 base fiscal year and the first fiscal year after the base fiscal year; 01 (ii) for the second fiscal year after the base fiscal year 02 determined under this subparagraph, the school district's ADM adjusted 03 for school size determined under (A) of this paragraph is calculated as 04 the district's ADM adjusted for school size, plus 50 percent of the 05 difference in the district's ADM adjusted for school size between the 06 base fiscal year and the second fiscal year after the base fiscal year; 07 (iii) for the third fiscal year after the base fiscal year 08 determined under this subparagraph, the school district's ADM adjusted 09 for school size determined under (A) of this paragraph is calculated as 10 the district's ADM adjusted for school size, plus 25 percent of the 11 difference in the district's ADM adjusted for school size between the 12 base fiscal year and the third fiscal year after the base fiscal year; 13 (F) the method established in (E) of this paragraph is available 14 to a school district for the three fiscal years following the base fiscal year 15 determined under (E) of this paragraph only if the district's ADM adjusted for 16 school size determined under (A) of this paragraph for each fiscal year is less 17 than the district's ADM adjusted for school size in the base fiscal year; 18 (G) the method established in (E) of this paragraph does not 19 apply to a decrease in the district's ADM adjusted for school size resulting 20 from a loss of enrollment that occurs as a result of a boundary change under 21 AS 29; 22 (H) notwithstanding (A) - (C) of this paragraph, if one or more 23 schools close and consolidate with one or more other schools in the same 24 community and district and, as a result of the consolidation, basic need 25 generated by the district's ADM of the consolidated schools as adjusted under 26 (A) - (C) of this paragraph decreases, the district may use the last fiscal year 27 before the consolidation as the base fiscal year to offset that decrease for the 28 first four fiscal years following consolidation according to the following 29 method: 30 (i) for the first two fiscal years after the base fiscal year, 31 the district's ADM of the consolidated schools as adjusted under (A) - 01 (C) of this paragraph is calculated by dividing the sum of the district's 02 ADM of the consolidated schools as adjusted under (A) - (C) of this 03 paragraph for the base fiscal year by the sum of the district's ADM of 04 the consolidated schools for the base fiscal year without adjustment, 05 and subtracting the quotient obtained by dividing the district's ADM of 06 the consolidated schools for the current fiscal year as adjusted under 07 (A) - (C) of this paragraph by the sum of the district's ADM of the 08 consolidated schools for the current fiscal year without adjustment, 09 multiplying that number by the sum of the district's ADM of the 10 consolidated schools for the current fiscal year without adjustment, and 11 adding that number to the sum of the district's ADM of the consolidated 12 schools for the current fiscal year as adjusted under (A) - (C) of this 13 paragraph; 14 (ii) for the third fiscal year after the base fiscal year, the 15 district's ADM of the consolidated schools as adjusted under (A) - (C) 16 of this paragraph is calculated by dividing the sum of the district's 17 ADM of the consolidated schools as adjusted under (A) - (C) of this 18 paragraph for the base fiscal year by the sum of the district's ADM of 19 the consolidated schools for the base fiscal year without adjustment, 20 and subtracting the quotient obtained by dividing the sum of the 21 district's ADM of the consolidated schools for the current fiscal year as 22 adjusted under (A) - (C) of this paragraph by the sum of the district's 23 ADM of the consolidated schools for the current fiscal year, 24 multiplying that number by the sum of the district's ADM of the 25 consolidated schools for the current fiscal year without adjustment, 26 multiplying that number by 66 percent, and adding that number to the 27 sum of the district's ADM of the consolidated schools for the current 28 fiscal year as adjusted under (A) - (C) of this paragraph; 29 (iii) for the fourth fiscal year after the base fiscal year, 30 the district's ADM of the consolidated schools as adjusted under (A) - 31 (C) of this paragraph is calculated by dividing the sum of the district's 01 ADM of the consolidated schools as adjusted under (A) - (C) of this 02 paragraph for the base fiscal year by the sum of the district's ADM of 03 the consolidated schools for the base fiscal year without adjustment, 04 and subtracting the quotient obtained by dividing the sum of the 05 district's ADM of the consolidated schools for the current fiscal year as 06 adjusted under (A) - (C) of this paragraph by the sum of the district's 07 ADM of the consolidated schools for the current fiscal year, 08 multiplying that number by the sum of the district's ADM of the 09 consolidated schools for the current fiscal year without adjustment, 10 multiplying that number by 33 percent, and adding that number to the 11 sum of the district's ADM of the consolidated schools for the current 12 fiscal year as adjusted under (A) - (C) of this paragraph; 13 (iv) to calculate the district's basic need for each fiscal 14 year, the number obtained through the calculation in (i), (ii), or (iii) of 15 this subparagraph is added to the number obtained under (C) of this 16 paragraph for the remainder of the district; 17 (I) if the basic need calculated under (H)(i) - (iii) of this 18 paragraph for one of the first four fiscal years after consolidation is less than 19 the basic need calculated under (A) - (C) of this paragraph for that fiscal year, 20 the basic need may not be adjusted under (H) of this paragraph for that fiscal 21 year; 22 (J) a district may not offset a decrease under (H) of this 23 paragraph if 24 (i) a new facility is constructed in the district for the 25 consolidation; or 26 (ii) the district offset a decrease under (E) of this 27 paragraph in the same fiscal year; 28 (K) a district that offsets a decrease under (H) of this paragraph 29 may not reopen a school that was closed for consolidation in the district until 30 (i) seven or more years have passed since the school 31 closure; and 01 (ii) the district provides evidence satisfactory to the 02 department that the schools affected by the consolidation are over 03 capacity; 04 (L) a district may not reopen and reconsolidate a school that 05 was consolidated in the district more than once every seven years for purposes 06 of the calculations made under (H) of this paragraph; 07 (M) a district offsetting a decrease under (H) of this paragraph 08 shall provide the department with the list of schools participating in the 09 consolidation and the corresponding ADM; 10 (2) the required local contribution of a city or borough school district is 11 the equivalent of a 2.65 mill tax levy on the full and true value of the taxable real and 12 personal property in the district as of January 1 of the second preceding fiscal year, as 13 determined by the Department of Commerce, Community, and Economic 14 Development under AS 14.17.510 and AS 29.45.110, not to exceed 45 percent of a 15 district's basic need for the preceding fiscal year as determined under (1) of this 16 subsection. 17  * Sec. 3. AS 14.17.410 is amended by adding a new subsection to read:  18 (g) The department shall distribute state aid to each district. The department 19 shall determine the amount of a district's state aid by 20 (1) dividing the district adjusted ADM of the district by the combined 21 total of the district adjusted ADMs of all districts in the state; 22 (2) multiplying the number obtained under (1) of this subsection by the 23 combined total of 24 (A) state aid appropriated by the legislature; 25 (B) the total required local contributions for all districts in the 26 state; and 27 (C) 90 percent of eligible federal impact aid received by all 28 districts in the state for that fiscal year; and 29 (3) subtracting the district's required local contribution and 90 percent 30 of the district's eligible federal impact aid for that fiscal year from the number 31 obtained under (2) of this subsection. 01  * Sec. 4. AS 14.17.430 is amended to read: 02 Sec. 14.17.430. State funding for correspondence study. Funding [EXCEPT 03 AS PROVIDED IN AS 14.17.400(b), FUNDING] for the state centralized 04 correspondence study program or a district correspondence program, including a 05 district that offers a statewide correspondence study program, includes [AN 06 ALLOCATION FROM THE PUBLIC EDUCATION FUND IN] an amount 07 calculated by multiplying the ADM of the correspondence program by 90 percent.  08  * Sec. 5. AS 14.17.440(a) is amended to read: 09 (a) Funding [EXCEPT AS PROVIDED IN AS 14.17.400(b), FUNDING] for 10 state boarding schools established under AS 14.16.010 includes [AN ALLOCATION 11 FROM THE PUBLIC EDUCATION FUND IN] an amount appropriated by the  12 legislature [CALCULATED BY 13 (1) DETERMINING THE ADM OF STATE BOARDING SCHOOLS 14 BY APPLYING THE SCHOOL SIZE FACTOR TO THE STUDENT COUNT AS 15 DESCRIBED IN AS 14.17.450; 16 (2) MULTIPLYING THE NUMBER OBTAINED UNDER (1) OF 17 THIS SUBSECTION BY THE SPECIAL NEEDS FACTOR IN AS 14.17.420(a)(1) 18 AND THE SECONDARY SCHOOL VOCATIONAL AND TECHNICAL 19 INSTRUCTION FUNDING FACTOR SET OUT IN AS 14.17.420(a)(3) AND 20 MULTIPLYING THAT PRODUCT BY THE BASE STUDENT ALLOCATION; 21 AND 22 (3) MULTIPLYING THE PRODUCT DETERMINED UNDER (2) 23 OF THIS SUBSECTION BY THE DISTRICT COST FACTOR THAT IS 24 APPLICABLE TO CALCULATION OF THE STATE AID FOR THE ADJACENT 25 SCHOOL DISTRICT UNDER AS 14.17.460]. 26  * Sec. 6. AS 14.17.500(a) is amended to read: 27 (a) A district shall prepare and submit to the department by November 5 of 28 each fiscal year, in the manner and on forms prescribed by the department, an estimate 29 of its ADM and other student count data, including per school student count data, for 30 the succeeding fiscal year upon which computations can be made to estimate the 31 amount of state aid for which the district may be eligible under AS 14.17.410 01 [AS 14.17.400] in the succeeding fiscal year. In making its report, the district shall 02 consider its ADM, other student count data, the pattern of growth or decline of the 03 student population in preceding years, and other pertinent information available to the 04 district. 05  * Sec. 7. AS 14.17.610(b) is amended to read: 06 (b) Distribution of state aid under (a) of this section shall be made as required 07 under AS 14.17.410(g) [AS 14.17.410]. If a district receives more state aid than it is 08 entitled to receive under this chapter, the district shall immediately remit the amount 09 of overpayment to the commissioner, to be returned to the general [PUBLIC 10 EDUCATION] fund. The department may make adjustments to a district's state aid to 11 correct underpayments made in previous fiscal years. 12  * Sec. 8. AS 14.17.900(b) is amended to read: 13 (b) Money to carry out the provisions of this chapter may be appropriated 14 annually by the legislature [INTO THE PUBLIC EDUCATION FUND. IF THE 15 AMOUNT APPROPRIATED TO THE FUND FOR THE PURPOSES OF THIS 16 CHAPTER IS INSUFFICIENT TO MEET THE ALLOCATIONS AUTHORIZED 17 UNDER AS 14.17.400 - 14.17.470 FOR A FISCAL YEAR, STATE AID SHALL BE 18 REDUCED ACCORDING TO AS 14.17.400(b)]. 19  * Sec. 9. AS 37.07.020(b) is amended to read: 20 (b) In addition to the budget and bills submitted under (a) of this section, the 21 governor shall submit a capital improvements program covering the succeeding six 22 fiscal years. The governor shall also submit a fiscal plan with estimates of significant 23 sources and uses of funds for the succeeding 10 fiscal years. The fiscal plan 24 (1) must include sufficient details to identify 25 (A) significant sources of funds; 26 (B) significant uses of funds, including lump sum projections 27 of 28 (i) operating expenditures; 29 (ii) capital expenditures; 30 (iii) debt service expenditures; 31 (iv) fund capitalizations; 01 (v) appropriations of income of the Alaska permanent 02 fund (art. IX, sec. 15, Constitution of the State of Alaska), if any; 03 (2) must balance sources and uses of funds held while providing for 04 essential state services and protecting the economic stability of the state; 05 (3) must include projected balances of significant funds held in 06 separate accounts, including the budget reserve fund (art. IX, sec. 17, Constitution of 07 the State of Alaska) [, THE PUBLIC EDUCATION FUND (AS 14.17.300),] and the 08 Alaska capital income fund (AS 37.05.565); 09 (4) must set out significant assumptions used in the projections with 10 sufficient detail to enable the legislature to rely on the fiscal plan in understanding, 11 evaluating, and resolving issues of state budgeting, including information that supports 12 major areas of operating increases, such as population demographics that affect the 13 need for particular government services. 14  * Sec. 10. AS 37.07.020 is amended by adding a new subsection to read: 15 (h) On December 15 and March 15 of each year, the governor shall 16 (1) for information purposes only, adjust the total amount of 17 appropriations enacted for public school education in the state for the current fiscal 18 year in proportion to changes in the Consumer Price Index for all urban consumers for 19 urban Alaska during the previous calendar year, as determined by the United States 20 Department of Labor, Bureau of Labor Statistics; the March 15 calculation must 21 include supplemental appropriations enacted for the current fiscal year on or before 22 February 28; in this paragraph, "public school" does not include the University of 23 Alaska or another postsecondary institution; 24 (2) publish the amount adjusted for inflation in (1) of this subsection 25 on the Internet website of the Office of the Governor; and 26 (3) report the amount adjusted for inflation in (1) of this subsection to 27 the senate secretary and the chief clerk of the house of representatives and notify the 28 legislature that the amount is available. 29  * Sec. 11. AS 14.17.300, 14.17.400, 14.17.410(a), 14.17.470, 14.17.480(b), and 30 14.17.490(c) are repealed. 31  * Sec. 12. The uncodified law of the State of Alaska is amended by adding a new section to 01 read: 02 APPLICABILITY. This Act applies to a contract that becomes legally binding on or 03 after the effective date of this Act. 04  * Sec. 13. This Act takes effect July 1, 2025.