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SSHB 148: "An Act relating to the public school funding program; relating to the definition of a school district, to the transportation of students, to school district layoff plans, to the special education service agency, to the child care grant program, and to compulsory attendance in public schools; and providing for an effective date."

00SPONSOR SUBSTITUTE FOR HOUSE BILL NO. 148 01 "An Act relating to the public school funding program; relating to the definition 02 of a school district, to the transportation of students, to school district layoff 03 plans, to the special education service agency, to the child care grant program, 04 and to compulsory attendance in public schools; and providing for an effective 05 date." 06 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 07 * Section 1. PURPOSE OF SECTION 2. The purpose of sec. 2 of this Act is to provide 08 a level of funding through the public school funding program that allows for an equitable level 09 of educational opportunities and outcomes for those students attending the public schools of 10 the state, to promote local decision-making, and, through increased control of funding, to 11 provide more local responsibility and accountability for decisions affecting public schools. 12 * Sec. 2. AS 14.17 is amended by adding new sections to read: 13 Article 1. State Funding to Public Schools. 14  Sec. 14.17.300. Public school account. (a) The public school account is

01 established. The account consists of appropriations for distribution to school districts, 02 the state boarding school, and for the centralized correspondence study program under 03 this chapter. 04  (b) The money in the account may be used only in aid of public schools, 05 including community school programs, and for centralized correspondence study 06 programs under this chapter. 07  Sec. 14.17.400. State funding for districts. (a) The state funding for which 08 a school district is eligible in a fiscal year is equal to the amount for which a district 09 qualifies under AS 14.17.410 (equalization funding). 10  (b) If the amount in the public school account (AS 14.17.300) is insufficient 11 to meet the amounts authorized under (a) of this section for a fiscal year, the 12 department shall reduce pro rata the state share of equalization funding for which 13 districts are eligible by the necessary percentage as determined by the department. If 14 the state share of equalization funding is reduced under this subsection, the department 15 shall also reduce state funding for centralized correspondence study and the state 16 boarding school by the same percentage. 17  Sec. 14.17.410. Equalization funding. (a) A district is eligible for 18 equalization funding in an amount equal to the sum calculated under this section. 19  (b) Except as provided in (d) of this section, equalization funding consists of 20 a state share and a local contribution, determined as follows: 21  (1) the state share equals need minus local contribution; need equals 22 the district adjusted ADM, multiplied by the base student allocation set out at 23 AS 14.17.475, plus any intensive services funding for which the district qualifies under 24 AS 14.17.420(a)(2); district adjusted ADM is calculated as follows: 25  (A) the ADM of a funding community is multiplied by the 26 funding community size factor set out in AS 14.17.460; 27  (B) the product obtained under (A) of this paragraph is 28 multiplied by the funding community area cost factor described in 29 AS 14.17.470(a) and set out in regulations adopted by the department; 30  (C) if a funding community is the only funding community in 31 a district with an ADM of 900 or less, the product obtained under (B) of this

01 paragraph is multiplied by the appropriate factor set out in AS 14.17.460(b); 02  (D) the ADMs of each funding community in a district, as 03 adjusted according to (A) - (C) of this paragraph, are added; the sum is then 04 multiplied by the special needs factor set out in AS 14.17.420(a)(1); 05  (E) the product obtained under (D) of this paragraph is 06 multiplied by a district's student transportation factor described in 07 AS 14.17.470(b) and set out in regulations by the department; the resulting 08 product is the district's adjusted ADM; 09  (2) for the fiscal year beginning July 1, 1997, the local contribution is 10 the equivalent of a three mill tax levy on the full and true value of the taxable real and 11 personal property in the district as of January 1 of the second preceding fiscal year, 12 as determined by the Department of Community and Regional Affairs under 13 AS 14.17.510 and AS 29.45.110, not to exceed 35 percent of a district's need as 14 determined under (1) of this subsection for the preceding fiscal year; for the fiscal year 15 beginning July 1, 1998, and subsequent fiscal years, the required mill equivalent shall 16 be increased by one-fourth of a mill each year until the local contribution is the 17 equivalent of a four mill tax levy, but, in each year, a district's local contribution may 18 not exceed 35 percent of the district's need for the preceding fiscal year, as determined 19 under (1) of this subsection. 20  (c) Equalization funding may not be provided to a city or borough school 21 district if the local contributions required under (b) of this section have not been made. 22  (d) In a regional educational attendance area, funding consists of need, 23 calculated under (b)(1) of this section for that regional educational attendance area. 24  Sec. 14.17.420. Special needs and intensive services funding. (a) As a 25 component of equalization funding, a district is eligible for special needs funding and 26 may be eligible for intensive services funding as follows: 27  (1) special needs funding is available to a district to assist the district 28 in providing special education, gifted and talented education, vocational education, and 29 bilingual education to its students; a special needs funding factor of 1.20 shall be 30 applied as set out in AS 14.17.410(b)(1); 31  (2) in addition to the special needs funding for which a district is

01 eligible under (1) of this subsection, a district is eligible for intensive services funding 02 for each special education student who needs and receives intensive services and is 03 enrolled on the last day of the count period; for each such student, intensive services 04 funding is equal to $22,500 multiplied by the area cost factor of the funding 05 community in which the student is enrolled. 06  (b) In this section, "intensive services" has the meaning given by the 07 department by regulation adopted under AS 14.30.180 - 14.30.350. 08  Sec. 14.17.430. State funding for centralized correspondence study. Except 09 as provided in AS 14.17.400(b), funding for the state centralized correspondence study 10 program includes an allocation from the public school account (AS 14.17.300) in an 11 amount calculated by multiplying the ADM of the correspondence program by the base 12 student allocation and multiplying that product by 65 percent. 13  Sec. 14.17.435. State funding for state boarding school. Except as provided 14 in AS 14.17.400(b), funding for the state boarding school established under 15 AS 14.16.010 includes an allocation from the public school account (AS 14.17.300) 16 in an amount calculated by multiplying the ADM of the state boarding school by the 17 special needs factor in AS 14.17.420(a)(1) and multiplying that product by the base 18 student allocation. The state boarding school is also eligible for intensive services 19 funding under AS 14.17.420(a)(2). 20  Sec. 14.17.440. Local contribution. (a) The required local contribution to 21 a city or borough school district is a district's local contribution as calculated 22 according to AS 14.17.410(b)(2). 23  (b) Nothing in this section prohibits a city or borough from contributing to its 24 district amounts in excess of the local contribution required under this section if the 25 local contribution is also in compliance with federal law. 26  Sec. 14.17.450. Funding communities. The department shall adopt 27 regulations defining funding communities within each district that reflect geographic 28 and attendance area factors. The regulations may not allow for funding communities 29 smaller than 10 ADM. 30  Sec. 14.17.460. Funding community size factor. (a) For purposes of 31 calculating a district's adjusted ADM to determine equalization funding, the ADM of

01 each funding community in a district shall be multiplied by a funding community size 02 factor as set out in the following table: 03 ADM Funding Community Size Factor 04 10 - 20 2.75 05 21 - 40 2.20 06 41 - 80 1.90 07 81 - 160 1.55 08 161 - 400 1.40 09 401 - 1,000 1.10 10 over 1,000 1.00. 11  (b) For a district that consists of one funding community with an ADM of 900 12 or less, the district ADM shall be multiplied according to AS 14.17.410(b)(1) by the 13 appropriate factor as set out in the following table: 14 ADM Factor 15 1 - 250 1.12 16 251 - 525 1.08 17 526 - 900 1.06 18  Sec. 14.17.470. Area cost and transportation factors. (a) For purposes of 19 calculating a district's adjusted ADM under AS 14.17.410(b)(1), the department shall 20 adopt in regulation an area cost factor for each funding community. In adopting the 21 regulations, the department shall consider factors that affect the cost of providing 22 public educational services in a funding community, including student transportation. 23  (b) For purposes of calculating a district's adjusted ADM under 24 AS 14.17.410(b)(1), the department shall adopt by regulation a transportation factor 25 for each district. 26  Sec. 14.17.475. Base student allocation. The base student allocation is 27 $3,890. 28 Article 2. Preparation of Public School Funding Budget. 29  Sec. 14.17.500. Student count estimate. (a) A district shall prepare and 30 submit to the department by October 15 of each fiscal year, in the manner and on 31 forms prescribed by the department, an estimate of its ADM and other student count

01 data for the succeeding fiscal year upon which computations can be made to estimate 02 the amount of public school funding for which the district may be eligible under 03 AS 14.17.400 in the succeeding fiscal year. In making its report, the district shall 04 consider its ADM, other student count data, the pattern of growth or decline of the 05 student population in preceding years, and other pertinent information available to the 06 district. 07  (b) Part-time students and district correspondence students shall be included 08 in the student count data in accordance with regulations adopted by the department. 09  Sec. 14.17.505. Fund balance in school operating fund. (a) A district may 10 not accumulate in a fiscal year an unreserved portion of its year-end fund balance in 11 its school operating fund, as defined by department regulations, that is greater than 10 12 percent of its expenditures for that fiscal year. 13  (b) The department shall review each district's annual audit under AS 14.14.050 14 for the preceding fiscal year to ascertain its year-end operating fund balance. The 15 amount by which the unreserved portion of that balance exceeds the amount permitted 16 in (a) of this section shall be deducted from the public school funding that would 17 otherwise be paid to the district in the current fiscal year. 18  Sec. 14.17.510. Determination of full and true value by Department of 19 Community and Regional Affairs. (a) To determine the amount of required local 20 contribution under AS 14.17.440 and to aid the department and the legislature in 21 planning, the Department of Community and Regional Affairs, in consultation with the 22 assessor for each district in a city or borough, shall determine the full and true value 23 of the taxable real and personal property in each district in a city or borough. If there 24 is no local assessor or current local assessment for a city or borough school district, 25 then the Department of Community and Regional Affairs shall make the determination 26 of full and true value from information available. In making the determination, the 27 Department of Community and Regional Affairs shall be guided by AS 29.45.110. 28 The determination of full and true value shall be made by October 1 and sent by 29 certified mail, return receipt requested, on or before that date to the president of the 30 school board in each city or borough school district. Duplicate copies shall be sent to 31 the commissioner. The governing body of a city or borough that is a school district

01 may obtain judicial review of the determination. The superior court may modify the 02 determination of the Department of Community and Regional Affairs only upon a 03 finding of abuse of discretion or upon a finding that there is no substantial evidence 04 to support the determination. 05  (b) Motor vehicles subject to the motor vehicle registration tax under 06 AS 28.10.431 shall be treated as taxable property under this section. 07  Sec. 14.17.520. Minimum expenditure for instruction. (a) A district shall 08 budget for and spend a minimum of 60 percent of its school operating expenditures in 09 each fiscal year on the instructional component of the district budget. 10  (b) The commissioner shall reject a district budget that does not comply with 11 (a) of this section and, unless a waiver has been granted by the board under (d) of this 12 section, shall withhold payments of state aid from that district, beginning with the 13 payment for the second full month after rejection and continuing until the school board 14 of the district revises the district budget to comply with (a) of this section. 15  (c) The commissioner shall review the annual audit of each district for 16 compliance with the expenditure requirements of (a) of this section. If the 17 commissioner determines that a district does not meet those requirements, the 18 commissioner shall advise the district of the determination and calculate the percentage 19 of deficiency in required expenditure and deduct that percentage from state aid paid 20 to the district for the current fiscal year, beginning with the payment for the second 21 full month after the determination, unless a waiver has been granted by the board 22 under (d) of this section. 23  (d) A district that has been determined by the commissioner to be out of 24 compliance with the requirements of this section may, within 20 days of the 25 commissioner's determination, request a waiver by the board of the imposition by the 26 commissioner of any reduction in state aid payments under (b) or (c) of this section. 27 The request must be submitted to the Legislative Budget and Audit Committee and 28 must be in writing and include an analysis of the reasons and causes for the district's 29 inability to comply with the requirements of this section. The Legislative Budget and 30 Audit Committee shall review the district's request and forward it, along with the 31 committee's recommendations on it, to the board, which shall either grant or deny the

01 waiver. 02  (e) The commissioner shall submit an annual report on actions taken by the 03 commissioner or the board under this section to the Legislative Budget and Audit 04 Committee by April 15 of each year. 05 Article 3. Procedure for Payments of Public School Funding. 06  Sec. 14.17.600. Student counting periods. (a) Within two weeks after the 07 end of the 20-school-day period ending the fourth Friday in October, each district shall 08 transmit a report to the department that, under regulations adopted by the department, 09 reports its ADM for that counting period and other student count information that will 10 aid the department in making a determination of its state aid under the public school 11 funding program. If it makes the district eligible for more state aid under the program, 12 a district may transmit, within two weeks after the 20-school-day period ending the 13 second Friday in February, a similar report for that counting period. For centralized 14 correspondence study, the October report shall be based on the period from July 1 15 through the fourth Friday in October, except that summer school students shall be 16 counted as a proportionate fraction as determined by the department. The department 17 may make necessary corrections in the report submitted and shall notify the district of 18 changes made. The commissioner shall notify the governor of additional 19 appropriations the commissioner estimates to be necessary to fully finance the public 20 school funding program for the current fiscal year. 21  (b) Upon written request and for good cause shown, the commissioner may 22 permit a district to use a 20-school-day counting period other than the periods set out 23 in (a) of this section. However, a counting period approved under this subsection must 24 be 20 consecutive school days unless one or more alternate counting periods are 25 necessary to permit a district to implement flexible scheduling that meets the district's 26 needs and goals without jeopardizing the public school funding for which the district 27 would be ordinarily be eligible under this chapter. 28  Sec. 14.17.610. Distribution of public school funding. (a) The department 29 shall determine the public school funding for each school district in a fiscal year on 30 the basis of the district's student count data reported under AS 14.17.600. On or 31 before the 15th day of each of the first nine months of each fiscal year, one-twelfth

01 of each district's public school funding shall be distributed on the basis of the data 02 reported for the preceding fiscal year. On or before the 15th day of each of the last 03 three months of each fiscal year, one-third of the balance of each district's public 04 school funding shall be distributed, after the balance has been recomputed on the basis 05 of student count and other data reported for the current fiscal year. 06  (b) If a district receives more public school funding than it is entitled to 07 receive under this chapter, the district shall immediately remit the amount of 08 overpayment to the commissioner, to be returned to the public school account 09 (AS 14.17.300). 10  (c) Upon an adequate showing of a cash flow shortfall of a district, and in the 11 discretion of the commissioner, the department may make advance payments to a 12 district. The total of advance payments may not exceed the amount of public school 13 funding for which the district is eligible for the fiscal year. 14 Article 4. General Provisions. 15  Sec. 14.17.900. Construction and implementation of chapter. (a) This 16 chapter does not create a debt of the state. Each district shall establish, maintain, and 17 operate under a balanced budget. The state is not responsible for the debts of a school 18 district. 19  (b) Money to carry out the provisions of this chapter may be appropriated 20 annually by the legislature into the public school account (AS 14.17.300). If the 21 amount in the account is insufficient to meet the allocations authorized under 22 AS 14.17.400 - 14.17.475 for a fiscal year, public school funding shall be reduced 23 according to AS 14.17.400(b). 24  Sec. 14.17.910. Restrictions governing receipt and expenditure of district 25 money. (a) Each district shall maintain complete financial records of the receipt and 26 disbursement of public school funding, money acquired from local effort, and other 27 money received or held by the district. The records must be in the form required by 28 the department and are subject to audit by the department at a time and place 29 designated by the department. 30  (b) Public school funding provided under this chapter is for general operational 31 purposes of the district. All district money, including public school funding, shall be

01 received, held, allocated, and expended by the district under applicable local law and 02 state and federal constitutional provisions, statutes, and regulations, including those 03 related to ethical standards and accounting principles. 04  Sec. 14.17.920. Regulations. The department shall adopt regulations to 05 interpret and implement this chapter. 06  Sec. 14.17.990. Definitions. In this chapter, unless the context requires 07 otherwise, 08  (1) "ADM or average daily membership" means the aggregate number 09 of full-time equivalent students enrolled in a funding community during the student 10 count period for which a determination is being made, divided by the actual number 11 of days that school is in session for the student count period for which the 12 determination is being made; 13  (2) "district" means a city or borough school district or a regional 14 educational attendance area; 15  (3) "district adjusted ADM" means the number resulting from the 16 calculations under AS 14.17.410(b)(1); 17  (4) "district ADM" means the sum of the ADMs in a district; 18  (5) "local contribution" means appropriations and the value of in-kind 19 services made by a city or borough to its district; 20  (6) "public school funding" means money provided under the public 21 school funding program established in this chapter; 22  (7) "taxable real and personal property" means all real and personal 23 property taxable under the laws of the state. 24 * Sec. 3. AS 14.03.120(g) is amended to read: 25  (g) In this section, "district" has the meaning given in AS 14.17.990 26 [AS 14.17.250]. 27 * Sec. 4. AS 14.03.125(e) is amended to read: 28  (e) In this section, "district" has the meaning given in AS 14.17.990 29 [AS 14.17.250]. 30 * Sec. 5. AS 14.03.150(c) is amended to read: 31  (c) The department may not award a school construction or major maintenance

01 grant under AS 14.11 to a municipality that is a school district or a regional 02 educational attendance area that is not in compliance with (a) of this section. The 03 department shall reduce the amount of public school funding [STATE FOUNDATION 04 AID] under AS 14.17.400 [AS 14.17.021] for which a school district may qualify [,] 05 by the amount, if any, paid by the department under (b) of this section. 06 * Sec. 6. AS 14.03.160(f)(2) is amended to read: 07  (2) "district" has the meaning given in AS 14.17.990 [AS 14.17.250]. 08 * Sec. 7. AS 14.03.260(c) is amended to read: 09  (c) The charter school shall provide the financial and accounting information 10 requested by the local school board or the Department of Education [,] and shall 11 cooperate with the local school district or the department in complying with the 12 requirements of AS 14.17.910 [AS 14.17.190]. 13 * Sec. 8. AS 14.09.010 is repealed and reenacted to read: 14  Sec. 14.09.010. Transportation of students. (a) A district may provide for 15 the transportation of students. 16  (b) A district that provides for the transportation of students is eligible for 17 adjustments in public school funding as set out in AS 14.17.470(b). 18  (c) A district that provides for the transportation of students may determine 19 and establish a system for the transportation of students to address needs and priorities 20 of the district. However, the district shall comply with applicable statutes, regulations, 21 and local laws related to minimum standards for school buses, school bus driver 22 training courses, certification of course instructors, certification of bus drivers, and 23 other safety concerns related to the transportation of students. 24 * Sec. 9. AS 14.11.008(b) is amended to read: 25  (b) The required participating share for a municipal school district is based on 26 the district's full value per average daily membership (ADM), which is calculated 27 by dividing the full and true value of the taxable real and personal property in the 28 district, calculated as described in AS 14.17.510 [AS 14.17.025(a)(1),] by the district 29 ADM [AVERAGE DAILY MEMBERSHIP (ADM)] as defined in AS 14.17.990 30 [AS 14.17.250], for the same fiscal year for which the valuation was made. The 31 municipal district's full value per ADM determines the district's required participating

01 share, as follows: 02 Full Value Per ADM District Participating Share 03 $1 - $100,000 5 percent 04 100,001 - 200,000 10 percent 05 200,001 - 600,000 30 percent 06 over 600,000 35 percent. 07 * Sec. 10. AS 14.14.115(c)(2) is amended to read: 08  (2) "district" has the meaning given in AS 14.17.990 [AS 14.17.250]. 09 * Sec. 11. AS 14.16.050(a)(2) is amended to read: 10  (2) requirements relating to the public school funding program 11 [STATE FINANCIAL ASSISTANCE FOR EDUCATION] and the receipt and 12 expenditure of that funding [ASSISTANCE]: 13  (A) AS 14.17.500 [AS 14.17.080] (relating to student count 14 estimates); 15  (B) AS 14.17.505 [AS 14.17.082] (relating to school operating 16 fund balances); 17  (C) AS 14.17.500 - 14.17.910 [AS 14.17.160 - 14.17.220] 18 (setting out the procedure for payment of public school funding [FINANCIAL 19 ASSISTANCE,] and imposing general requirements and limits on money paid); 20 * Sec. 12. AS 14.16.080(a) is amended to read: 21  (a) AS 14.17.435 [AS 14.17.024] applies to the calculation of public school 22 funding [STATE AID] payable for operation of the state boarding school. 23 * Sec. 13. AS 14.20.177(a) is amended to read: 24  (a) A school district may implement a layoff plan under this section if it is 25 necessary for the district to reduce the number of tenured teachers because 26  (1) school attendance in the district has decreased; [OR] 27  (2) the [BASIC] need of the school district determined under 28 AS 14.17.410(b)(1) [AS 14.17.021(b) AND ADJUSTED UNDER AS 14.17.225(b)] 29 decreases by three percent or more from the previous year; or 30  (3) the state share of equalization funding is reduced under 31 AS 14.17.400(b) by three percent or more in a fiscal year.

01 * Sec. 14. AS 14.30.305 is amended to read: 02  Sec. 14.30.305. State support of programs for children hospitalized or 03 confined to their homes. A child who is hospitalized or confined to home and who 04 receives at least 10 hours of special education and related services per week may be 05 counted as a pupil in average daily membership when computing state support under 06 the public school funding [FOUNDATION] program. 07 * Sec. 15. AS 14.30.315(a) is amended to read: 08  (a) To be eligible for state support under the public school funding 09 [FOUNDATION] program, special education and related services for gifted children 10 must be provided in a program that has been approved in advance by the department. 11 * Sec. 16. AS 14.30.347 is amended to read: 12  Sec. 14.30.347. Transportation of exceptional children. When transportation 13 is required to be provided as related services, an exceptional child [CHILDREN] shall 14 be carried with other children if the district provides transportation to other 15 children in the district [,] except when the nature of the [THEIR] physical or mental 16 disability [DISABILITIES] is such that it is in the best interest of the exceptional 17 child [CHILDREN], as determined by the school district, that the child [THEY] be 18 transported separately. A district is responsible for the costs associated with 19 providing transportation as a related service to an exceptional child [STATE 20 REIMBURSEMENT FOR TRANSPORTATION OF EXCEPTIONAL CHILDREN 21 SHALL BE AS PROVIDED FOR TRANSPORTATION OF ALL OTHER PUPILS 22 EXCEPT THAT ELIGIBILITY FOR REIMBURSEMENT IS NOT SUBJECT TO 23 RESTRICTION BASED ON THE MINIMUM DISTANCE BETWEEN THE 24 SCHOOL AND THE RESIDENCE OF THE EXCEPTIONAL CHILD]. 25 * Sec. 17. AS 14.30.650 is repealed and reenacted to read: 26  Sec. 14.30.650. Funding. (a) Subject to legislative appropriation, each fiscal 27 year the department may allocate to the agency an amount equal to 18 percent of the 28 unadjusted statewide ADM multiplied by $85. 29  (b) In this section, "statewide ADM" means the sum of all district ADMs in 30 the state as calculated under AS 14.17. 31 * Sec. 18. AS 14.36.030(a) is amended to read:

01  (a) A district operating a community school program under an approved plan 02 of operation may receive an annual grant from the state of one-half of one percent of 03 its public school funding [FOUNDATION SUPPORT] or $10,000, whichever is 04 greater. 05 * Sec. 19. AS 29.45.020(a) is amended to read: 06  (a) If a municipality levies and collects property taxes, the governing body 07 shall provide the following notice: 08 "NOTICE TO TAXPAYER 09 For the current fiscal year the (city)(borough) has been allocated the 10 following amount of state aid for school and municipal purposes under 11 the applicable financial assistance Acts: 12 PUBLIC SCHOOL FUNDING PROGRAM 13 [PUBLIC SCHOOL FOUNDATION 14 PROGRAM ASSISTANCE] (AS 14.17) $ 15 STATE AID FOR RETIREMENT OF 16 SCHOOL CONSTRUCTION DEBT 17 (AS 14.11.100) $ 18 MUNICIPAL TAX RESOURCE 19 EQUALIZATION ASSISTANCE 20 (AS 29.60.010 - 29.60.080) $ 21 STATE AID FOR MISCELLANEOUS 22 MUNICIPAL SERVICES 23 (AS 29.60.010 - 29.60.180) $ 24  TOTAL AID $ 25 The millage equivalent of this state aid, based on the dollar 26 value of a mill in the municipality during the current assessment 27 year and for the preceding assessment year, is: 28 MILLAGE EQUIVALENT 29 PREVIOUS YEAR THIS YEAR 30 PUBLIC SCHOOL FUNDING 31 PROGRAM [PUBLIC SCHOOL

01 FOUNDATION PROGRAM 02 ASSISTANCE] ....MILLS ....MILLS 03 STATE AID FOR RETIREMENT 04 OF SCHOOL CONSTRUCTION DEBT ....MILLS ....MILLS 05 MUNICIPAL TAX RESOURCE 06 EQUALIZATION ASSISTANCE ....MILLS ....MILLS 07 STATE AID FOR MISCELLANEOUS 08 MUNICIPAL SERVICES ....MILLS ....MILLS 09 TOTAL MILLAGE EQUIVALENT ....MILLS ....MILLS" 10 Notice shall be provided by 11  (1) [BY] furnishing a copy of the notice with tax statements mailed for 12 the fiscal year for which aid is received; or 13  (2) [BY] publishing in a newspaper of general circulation in the 14 municipality a copy of the notice once each week for a period of three successive 15 weeks, with publication to occur not later than 45 days after the final adoption of the 16 municipality's budget. 17 * Sec. 20. AS 29.60.030(d) is amended to read: 18  (d) The full and true assessed property value shall be determined by the 19 department in the manner provided for the computation of state aid to education under 20 AS 14.17.510 [AS 14.17.140]. When the determination of locally generated revenue 21 includes revenue of a utility received under AS 29.60.010(c)(1)(E), the full and true 22 assessed property value must include the computed assessed value of the utility, 23 determined by dividing the amount of the payment in place of taxes made by the 24 utility by the millage rate that would apply to the utility if the utility were subject to 25 levy and collection of taxes under AS 29.45. 26 * Sec. 21. AS 36.10.090(b) is amended to read: 27  (b) A local government or school district covered by the provisions of this 28 chapter that is found to be in violation of these provisions may be required to forfeit 29 all or part of the state aid made available for the project in which the violation occurs 30 and in addition may be denied up to 12 months of state revenue sharing or public 31 school funding [FOUNDATION MONEY]. A state department or agency head found

01 to be in violation of this chapter may be required to forfeit the position of department 02 or agency head. 03 * Sec. 22. AS 36.10.125(c) is amended to read: 04  (c) In an action brought under (b) of this section, the court may, in its 05 discretion, order denial of state revenue sharing or public school funding 06 [FOUNDATION MONEY], forfeiture of office or position, or injunctive or other 07 relief. If the court finds for the plaintiff in an action brought under (b) of this section, 08 it may award the plaintiff an amount equal to the actual costs and attorney fees 09 incurred by the plaintiff. 10 * Sec. 23. AS 44.47.305(c) is amended to read: 11  (c) A grant under (a) of this section may not exceed $50 per month for each 12 child the child care facility cares for, or for each full-time equivalent, as determined 13 by the department. The grant shall be adjusted on a geographic basis by the same 14 percentages as funding communities [INSTRUCTIONAL UNIT ALLOTMENTS] are 15 adjusted under AS 14.17.470 [AS 14.17.051]. 16 * Sec. 24. AS 14.09.020; AS 14.17.010, 14.17.021, 14.17.022, 14.17.024, 14.17.025, 17 14.17.026, 14.17.031, 14.17.041, 14.17.043, 14.17.045, 14.17.047, 14.17.051, 14.17.056, 18 14.17.080, 14.17.082, 14.17.140, 14.17.160, 14.17.170, 14.17.190, 14.17.200, 14.17.210, 19 14.17.220, 14.17.225, 14.17.250; and AS 14.30.010(b)(7) are repealed. 20 * Sec. 25. TRANSITION: AREA COST FACTORS. (a) Notwithstanding AS 14.17.470, 21 enacted by sec. 2 of this Act, for the fiscal years beginning July 1, 1997, and July 1, 1998, 22 and for the purposes of calculating public school funding under AS 14.17, as enacted by sec. 2 23 of this Act, the area cost factor of a funding community of a school district is as follows: 24 DISTRICT FUNDING COMMUNITY AREA COST FACTOR 25 Alaska Gateway Alcan Border 1.14 26 Alaska Gateway Dot Lake 1.14 27 Alaska Gateway Eagle 1.14 28 Alaska Gateway Mentasta 1.14 29 Alaska Gateway Northway 1.14 30 Alaska Gateway Tanacross 1.14 31 Alaska Gateway Tetlin 1.14

01 Alaska Gateway Tok 1.14 02 Aleutians East Akutan 1.32 03 Aleutians East Cold Bay 1.32 04 Aleutians East False Pass 1.32 05 Aleutians East King Cove 1.32 06 Aleutians East Nelson Lagoon 1.32 07 Aleutians East Sand Point 1.32 08 Aleutians Region Atka 1.32 09 Alyeska Central School Alyeska Central School 1.00 10 Anchorage Anchorage 1.00 11 Anchorage Eagle River 1.00 12 Anchorage Girdwood 1.00 13 Annette Island Annette 1.05 14 Bering Strait Brevig Mission 1.40 15 Bering Strait Diomede 1.55 16 Bering Strait Elim 1.40 17 Bering Strait Gambell 1.55 18 Bering Strait Golovin 1.40 19 Bering Strait Koyuk 1.40 20 Bering Strait Savoonga 1.55 21 Bering Strait Shaktoolik 1.40 22 Bering Strait Shishmaref 1.40 23 Bering Strait St. Michael 1.40 24 Bering Strait Stebbins 1.40 25 Bering Strait Teller 1.40 26 Bering Strait Unalakleet 1.40 27 Bering Strait Wales 1.40 28 Bering Strait White Mountain 1.40 29 Bristol Bay Bristol Bay 1.40 30 Bristol Bay South Naknek 1.40 31 Chatham Angoon 1.05

01 Chatham Cube Cove 1.05 02 Chatham Elfin Cove 1.05 03 Chatham Gustavus 1.05 04 Chatham Hobart Bay 1.05 05 Chatham Klukwan 1.05 06 Chatham Tenakee Springs 1.05 07 Chugach Chenega Bay 1.14 08 Chugach Icy Bay 1.14 09 Chugach Tatitlek 1.14 10 Chugach Whittier 1.05 11 Chugach Yakataga 1.14 12 Copper River Chistochina 1.05 13 Copper River Copper Center 1.05 14 Copper River Gakona 1.05 15 Copper River Glennallen 1.05 16 Copper River Kenny Lake 1.05 17 Copper River Lottie Sparks 1.05 18 Copper River Slana 1.05 19 Cordova Cordova 1.14 20 Craig Craig 1.05 21 Delta/Greely Delta Junction 1.14 22 Delta/Greely Healy Lake 1.14 23 Denali Anderson 1.14 24 Denali Cantwell 1.14 25 Denali Healy 1.14 26 Dillingham Dillingham 1.32 27 Fairbanks Eielson 1.00 28 Fairbanks Fairbanks 1.00 29 Fairbanks North Pole 1.00 30 Fairbanks Salcha 1.05 31 Fairbanks Two Rivers 1.05

01 Galena Galena 1.32 02 Haines Haines 1.05 03 Haines Mosquito Lake 1.05 04 Hoonah Hoonah 1.05 05 Hydaburg Hydaburg 1.05 06 Iditarod Anvik 1.32 07 Iditarod Grayling 1.32 08 Iditarod Holy Cross 1.32 09 Iditarod Lake Minchumina 1.32 10 Iditarod Lime Village 1.32 11 Iditarod McGrath 1.32 12 Iditarod Nikolai 1.32 13 Iditarod Shageluk 1.32 14 Iditarod Takotna 1.32 15 Iditarod Telida 1.32 16 Juneau Juneau 1.00 17 Kake Kake 1.05 18 Kashunamiut Chevak 1.32 19 Kenai Peninsula Anchor Point 1.00 20 Kenai Peninsula Cooper Landing 1.00 21 Kenai Peninsula Homer 1.00 22 Kenai Peninsula Hope 1.00 23 Kenai Peninsula Kachemak Selo 1.05 24 Kenai Peninsula Kasilof 1.00 25 Kenai Peninsula Kenai 1.00 26 Kenai Peninsula McNeil Canyon 1.00 27 Kenai Peninsula Moose Pass 1.00 28 Kenai Peninsula Nanwalek 1.05 29 Kenai Peninsula Nikiski 1.00 30 Kenai Peninsula Nikolaevsk 1.05 31 Kenai Peninsula Ninilchik 1.00

01 Kenai Peninsula Port Graham 1.05 02 Kenai Peninsula Razdolna 1.05 03 Kenai Peninsula Seldovia 1.05 04 Kenai Peninsula Seward 1.00 05 Kenai Peninsula Soldotna 1.00 06 Kenai Peninsula Sterling 1.00 07 Kenai Peninsula Tyonek 1.05 08 Kenai Peninsula Voznesenka 1.05 09 Ketchikan Ketchikan 1.00 10 Klawock Klawock 1.05 11 Kodiak Island Akhiok 1.14 12 Kodiak Island Big Sandy Lake 1.14 13 Kodiak Island Chiniak 1.05 14 Kodiak Island Danger Bay 1.14 15 Kodiak Island Karluk 1.14 16 Kodiak Island Kodiak 1.05 17 Kodiak Island Larsen Bay 1.14 18 Kodiak Island Old Harbor 1.14 19 Kodiak Island Ouzinkie 1.14 20 Kodiak Island Port Lions 1.14 21 Kuspuk Aniak 1.32 22 Kuspuk Chuathbaluk 1.32 23 Kuspuk Crooked Creek 1.32 24 Kuspuk Lower Kalskag 1.32 25 Kuspuk Red Devil 1.32 26 Kuspuk Sleetmute 1.32 27 Kuspuk Stony River 1.32 28 Kuspuk Upper Kalskag 1.32 29 Lake and Peninsula Chignik Bay 1.32 30 Lake and Peninsula Chignik Lagoon 1.32 31 Lake and Peninsula Chignik Lake 1.32

01 Lake and Peninsula Egegik 1.32 02 Lake and Peninsula Igiugig 1.32 03 Lake and Peninsula Ivanof Bay 1.32 04 Lake and Peninsula Kokhanok 1.32 05 Lake and Peninsula Levelok 1.32 06 Lake and Peninsula Newhalen 1.32 07 Lake and Peninsula Nondalton 1.32 08 Lake and Peninsula Pedro Bay 1.32 09 Lake and Peninsula Perryville 1.32 10 Lake and Peninsula Pilot Point 1.32 11 Lake and Peninsula Port Alsworth 1.32 12 Lake and Peninsula Port Heiden 1.32 13 Lower Kuskokwim Akiuk 1.32 14 Lower Kuskokwim Akula 1.32 15 Lower Kuskokwim Atmautlauk 1.32 16 Lower Kuskokwim Bethel 1.32 17 Lower Kuskokwim Chefornak 1.32 18 Lower Kuskokwim Eek 1.32 19 Lower Kuskokwim Goodnews Bay 1.32 20 Lower Kuskokwim Kipnuk 1.32 21 Lower Kuskokwim Kongiganak 1.32 22 Lower Kuskokwim Kwethluk 1.32 23 Lower Kuskokwim Kwigillingok 1.32 24 Lower Kuskokwim Mekoryuk 1.40 25 Lower Kuskokwim Napakiak 1.32 26 Lower Kuskokwim Napaskiak 1.32 27 Lower Kuskokwim Newtok 1.32 28 Lower Kuskokwim Nightmute 1.32 29 Lower Kuskokwim Nunapitchuk 1.32 30 Lower Kuskokwim Oscarville 1.32 31 Lower Kuskokwim Platinum 1.32

01 Lower Kuskokwim Quinhagak 1.32 02 Lower Kuskokwim Toksook Bay 1.32 03 Lower Kuskokwim Tuntutuliak 1.32 04 Lower Kuskokwim Tununak 1.32 05 Lower Yukon Alakanak 1.32 06 Lower Yukon Emmonak 1.32 07 Lower Yukon Hooper Bay 1.32 08 Lower Yukon Kotlik 1.32 09 Lower Yukon Marshall 1.32 10 Lower Yukon Mountain Village 1.32 11 Lower Yukon Pilot Station 1.32 12 Lower Yukon Pitkas Point 1.32 13 Lower Yukon Russian Mission 1.32 14 Lower Yukon Scammon Bay 1.32 15 Lower Yukon Sheldon Point 1.32 16 Mat-Su Beryozava 1.05 17 Mat-Su Big Lake 1.00 18 Mat-Su Butte 1.00 19 Mat-Su Colony 1.00 20 Mat-Su Glacier View 1.00 21 Mat-Su Houston 1.00 22 Mat-Su Mat-Su Valley 1.00 23 Mat-Su Palmer 1.00 24 Mat-Su Pt. McKenzie 1.00 25 Mat-Su Skwentna 1.05 26 Mat-Su Sutton 1.00 27 Mat-Su Talkeetna 1.00 28 Mat-Su Trapper Creek 1.00 29 Mat-Su Wasilla 1.00 30 Mat-Su Willow 1.00 31 Mt. Edgecumbe Mt. Edgecumbe 1.00

01 Nenana Nenana 1.14 02 Nome Nome 1.32 03 North Slope Anaktuvuk Pass 1.55 04 North Slope Atqasuk 1.55 05 North Slope Barrow 1.55 06 North Slope Kaktovik 1.55 07 North Slope Nuiqsut 1.55 08 North Slope Point Hope 1.55 09 North Slope Point Lay 1.55 10 North Slope Wainwright 1.55 11 Northwest Arctic Ambler 1.45 12 Northwest Arctic Buckland 1.45 13 Northwest Arctic Deering 1.45 14 Northwest Arctic Kiana 1.45 15 Northwest Arctic Kivalina 1.45 16 Northwest Arctic Kobuk 1.45 17 Northwest Arctic Kotzebue 1.45 18 Northwest Arctic Noatak 1.45 19 Northwest Arctic Noorvik 1.45 20 Northwest Arctic Selawik 1.45 21 Northwest Arctic Shungnak 1.45 22 Pelican Pelican 1.05 23 Petersburg Petersburg 1.00 24 Pribilof St. George 1.40 25 Pribilof St. Paul 1.40 26 Sitka Sitka 1.00 27 Skagway Skagway 1.05 28 Southeast Island Craik 1.05 29 Southeast Island Edna Bay 1.05 30 Southeast Island Hollis 1.05 31 Southeast Island Howard Valentine 1.05

01 Southeast Island Jr. Gildersleeve 1.05 02 Southeast Island Kasaan 1.05 03 Southeast Island Naukati 1.05 04 Southeast Island Polk Inlet 1.05 05 Southeast Island Port Alexander 1.05 06 Southeast Island Port Protection 1.05 07 Southeast Island Thorne Bay 1.05 08 Southeast Island Whale Pass 1.05 09 Southwest Region Aleknagik North 1.32 10 Southwest Region Clarks Point 1.32 11 Southwest Region Ekwok 1.32 12 Southwest Region Koliganek 1.32 13 Southwest Region Manokotak 1.32 14 Southwest Region New Stuyahok 1.32 15 Southwest Region Portage 1.32 16 Southwest Region Togiak 1.32 17 Southwest Region Twin Hills 1.32 18 St. Mary's St. Mary's 1.32 19 Tanana Tanana 1.40 20 Unalaska Unalaska 1.32 21 Valdez Valdez 1.05 22 Wrangell Wrangell 1.00 23 Yakutat Yakutat 1.14 24 Yukon Flats Arctic Village 1.45 25 Yukon Flats Beaver 1.45 26 Yukon Flats Birch Creek 1.45 27 Yukon Flats Central 1.32 28 Yukon Flats Chalkyitsik 1.45 29 Yukon Flats Circle 1.32 30 Yukon Flats Fort Yukon 1.45 31 Yukon Flats Northern Lights 1.32

01 Yukon Flats Rampart 1.45 02 Yukon Flats Stevens Village 1.45 03 Yukon Flats Venetie 1.45 04 Yukon/Koyukuk Allakaket 1.40 05 Yukon/Koyukuk Bettles 1.40 06 Yukon/Koyukuk Hughes 1.40 07 Yukon/Koyukuk Huslia 1.40 08 Yukon/Koyukuk Kaltag 1.40 09 Yukon/Koyukuk Koyukuk 1.40 10 Yukon/Koyukuk Manley Hot Springs 1.40 11 Yukon/Koyukuk Minto 1.32 12 Yukon/Koyukuk Nulato 1.40 13 Yukon/Koyukuk Ruby 1.40 14 Yupiit Akiachak 1.32 15 Yupiit Akiak 1.32 16 Yupiit Tuluksak 1.32 17 (b) The Department of Education shall research and report to the governor and the 18 legislature regarding the area costs in the funding communities in the school districts in the 19 state for the public school funding program under AS 14.17, as enacted by sec. 2 of this Act. 20 The department shall submit the report by January 1, 1999. 21 (c) For the period during which the area cost factors set out in (a) of this section serve 22 as the public school funding area cost factors under AS 14.17, as amended by this Act, those 23 area cost factors apply for purposes of geographic adjustments to child care grants under 24 AS 44.47.305(c), as amended by sec. 23 of this Act. 25 * Sec. 26. TRANSITION: STUDENT TRANSPORTATION. (a) Notwithstanding 26 AS 14.09.010(b), as repealed and reenacted by sec. 8 of this Act, and AS 14.17.470(b), 27 enacted by sec. 2 of this Act, for the fiscal years beginning July 1, 1997, and July 1, 1998, 28 and for the purposes of calculating public school funding under AS 14.17, as amended by this 29 Act, a school district that provides student transportation shall have its adjusted ADM 30 multiplied by a transportation factor as follows: 31 DISTRICT TRANSPORTATION FACTOR

01 Alaska Gateway 1.07 02 Aleutian Region 1.00 03 Aleutians East 1.01 04 Anchorage 1.04 05 Annette Islands 1.00 06 Bering Strait 1.00 07 Bristol Bay 1.07 08 Chatham 1.00 09 Chugach 1.00 10 Copper River 1.09 11 Cordova 1.01 12 Craig 1.00 13 Delta/Greely 1.10 14 Denali 1.07 15 Dillingham 1.04 16 Fairbanks 1.05 17 Galena 1.02 18 Haines 1.04 19 Hoonah 1.01 20 Hydaburg 1.00 21 Iditarod 1.01 22 Juneau 1.04 23 Kake 1.01 24 Kashunamiut 1.00 25 Kenai Peninsula 1.05 26 Ketchikan 1.04 27 Klawock 1.00 28 Kodiak Island 1.03 29 Kuspuk 1.02 30 Lake and Peninsula 1.02 31 Lower Kuskokwim 1.01

01 Lower Yukon 1.00 02 Mat-Su 1.08 03 Nenana 1.05 04 Nome 1.03 05 North Slope 1.02 06 Northwest Arctic 1.00 07 Pelican 1.00 08 Petersburg 1.02 09 Pribilof 1.00 10 Sitka 1.04 11 Skagway 1.00 12 Southeast Island 1.03 13 Southwest Region 1.02 14 St. Mary's 1.00 15 Tanana 1.01 16 Unalaska 1.03 17 Valdez 1.04 18 Wrangell 1.03 19 Yakutat 1.03 20 Yukon Flats 1.01 21 Yukon/Koyukuk 1.01 22 Yupiit 1.00 23 * Sec. 27. TRANSITION: HOLD HARMLESS. (a) Notwithstanding the provisions of 24 secs. 1 - 26 of this Act and except as provided in (c) of this section, if, for a fiscal year 25 beginning July 1, 1997, through July 1, 2000, a school district would receive less public 26 school funding under AS 14.17.410, enacted by sec. 2 of this Act, than the district would have 27 received as state aid for the fiscal year beginning July 1, 1997, and if the district meets the 28 requirements of (b) of this section, the district is eligible to receive instead a percentage of 29 the state aid the district would have received for the fiscal year beginning July 1, 1997, 30 according to the following table: 31 For the fiscal year beginning Percentage of state aid for the fiscal year beginning July 1, 1997

01 July 1, 1997 100 02 July 1, 1998 80 03 July 1, 1999 60 04 July 1, 2000 40 05 July 1, 2001 20 06 (b) A school district in a city or borough is not entitled to the hold harmless 07 percentage set out in (a) of this section for a fiscal year unless the city or borough makes a 08 local contribution to the district for that fiscal year as required under this subsection. For the 09 hold harmless for the fiscal year beginning July 1, 1997, the required local contribution is the 10 equivalent of a four mill tax levy; for the fiscal year beginning July 1, 1998, the required local 11 contribution is the equivalent of a five mill tax levy; for the fiscal year beginning 12 July 1, 1999, the required local contribution is the equivalent of a six mill tax levy; and for 13 the fiscal year beginning July 1, 2000, the required local contribution is the equivalent of a 14 seven mill tax levy. 15 (c) For the purposes of the reduction required under AS 14.17.400(b), enacted by 16 sec. 2 of this Act, hold harmless funding authorized under (a) and (b) of this section is treated 17 the same as the state share of equalization funding under AS 14.17.410, enacted by sec. 2 of 18 this Act. 19 (d) For purposes of this section, "state aid" means state foundation aid distributed 20 under the provisions of AS 14.17, repealed by this Act, additional district support appropriated 21 by the legislature, and student transportation support reimbursed by the Department of 22 Education. 23 * Sec. 28. TRANSITION: REGULATIONS. To the extent the regulations are not 24 inconsistent with the language and purposes of this Act, regulations relating to state aid for 25 public schools adopted by the Department of Education before the effective date of this Act 26 remain in effect as valid regulations implementing this Act; all other regulations relating to 27 state aid for public schools adopted by the Department of Education before the effective date 28 of this Act are annulled. The Department of Education may administer and enforce those 29 previously adopted regulations relating to state foundation aid for public schools. 30 * Sec. 29. TRANSITION: BASE STUDENT ALLOCATION. Notwithstanding 31 AS 14.17.475, enacted in sec. 2 of this Act, the base student allocation is as follows:

01 For the fiscal year beginning Base student allocation 02 1997 $3,400 03 1998 3,880 04 1999 3,890 05 * Sec. 30. This Act takes effect July 1, 1997.