SB 146: "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; imposing a school tax in the unorganized borough; and providing for an effective date."

00SENATE BILL NO. 146 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 imposing a school tax in the unorganized borough; 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 for those students attending the public schools of the state, to 10 promote local decision-making, and, through increased control of funding, to provide more 11 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. 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 public school funding for which 13 districts are eligible by the necessary percentage as determined by the department. If 14 the state share of public school funding is reduced under this subsection, the 15 department shall also reduce state funding for centralized correspondence study and the 16 state boarding school by the same percentage. 17  Sec. 14.17.410. Public school funding. (a) A district is eligible for public 18 school funding in an amount equal to the sum calculated under this section. 19  (b) Public school funding consists of a state share and a local contribution, 20 determined as follows: 21  (1) the state share equals need minus local contribution; need equals 22 the product obtained under (d) of this paragraph, multiplied by the base student 23 allocation set out at AS 14.17.475, plus any intensive services funding for which the 24 district qualifies under AS 14.17.420(a)(2); district adjusted ADM is calculated as 25 follows: 26  (A) the ADM of a funding community is multiplied by the 27 funding community size factor set out in AS 14.17.460; 28  (B) the product obtained under (A) of this paragraph is 29 multiplied by the funding community area cost factor described in 30 AS 14.17.470; 31  (C) if a funding community is the only funding community in

01 a district with an ADM of 900 or less, the product obtained under (B) of this 02 paragraph is multiplied by the appropriate factor set out in AS 14.17.460(b); 03  (D) the ADMs of each funding community in a district, as 04 adjusted according to (A) - (C) of this paragraph, are added; the sum is then 05 multiplied by the special needs factor set out in AS 14.17.420(a)(1); 06  (2) the local contribution of a city or borough school district is the 07 equivalent of a three mill tax levy on the full and true value of the taxable real and 08 personal property in the district as of January 1 of the second preceding fiscal year, 09 as determined by the Department of Community and Regional Affairs under 10 AS 14.17.510 and AS 29.45.110, not to exceed 100 percent of a district's need as 11 determined under (1) of this subsection for the preceding fiscal year; 12  (3) the local contribution of a regional educational attendance area is 13 an income tax imposed under AS 43.45.011. 14  (c) Public school funding may not be provided to a school district if the local 15 contributions required under (b) of this section have not been made. 16  Sec. 14.17.420. Special needs and intensive services funding. (a) As a 17 component of public school funding, a district is eligible for special needs funding and 18 may be eligible for intensive services funding as follows: 19  (1) special needs funding is available to a district to assist the district 20 in providing special education, gifted and talented education, vocational education, and 21 bilingual education to its students; a special needs funding factor of 1.20 shall be 22 applied as set out in AS 14.17.410(b)(1); 23  (2) in addition to the special needs funding for which a district is 24 eligible under (1) of this subsection, a district is eligible for intensive services funding 25 for each special education student who needs and receives intensive services and is 26 enrolled on the last day of the count period; for each such student, intensive services 27 funding is equal to $22,500 multiplied by the area cost factor of the funding 28 community in which the student is enrolled. 29  (b) In this section, "intensive services" has the meaning given by the 30 department by regulation adopted under AS 14.30.180 - 14.30.350. 31  Sec. 14.17.430. State funding for centralized correspondence study. Except

01 as provided in AS 14.17.400(b), funding for the state centralized correspondence study 02 program includes an allocation from the public school account (AS 14.17.300) in an 03 amount calculated by multiplying the ADM of the correspondence program by the base 04 student allocation and multiplying that product by 55 percent. 05  Sec. 14.17.435. State funding for state boarding school. Except as provided 06 in AS 14.17.400(b), funding for the state boarding school established under 07 AS 14.16.010 includes an allocation from the public school account (AS 14.17.300) 08 in an amount calculated by multiplying the ADM of the state boarding school by the 09 special needs factor in AS 14.17.420(a)(1) and multiplying that product by the base 10 student allocation. The state boarding school is also eligible for intensive services 11 funding under AS 14.17.420(a)(2). 12  Sec. 14.17.440. Local contribution. (a) The required local contribution to 13 a school district is a district's local contribution as calculated according to 14 AS 14.17.410(b)(2) and (3). 15  (b) Nothing in this section prohibits a city or borough from contributing to its 16 district amounts in excess of the local contribution required under this section if the 17 local contribution is also in compliance with federal law. 18  Sec. 14.17.450. Funding communities. The department shall adopt 19 regulations defining funding communities within each district that reflect geographic 20 and attendance area factors. The regulations may not allow for funding communities 21 smaller than 10 ADM. 22  Sec. 14.17.460. Funding community size factor. (a) For purposes of 23 calculating a district's adjusted ADM to determine public school funding, the ADM 24 of each funding community in a district shall be multiplied by a funding community 25 size factor as set out in the following table: 26 ADM Funding Community Size Factor 27 10 - 20 2.75 28 21 - 40 2.20 29 41 - 80 1.90 30 81 - 160 1.55 31 161 - 400 1.40

01 401 - 1,000 1.10 02 over 1,000 1.00. 03  (b) For a district that consists of one funding community with an ADM of 900 04 or less, the district ADM shall be multiplied according to AS 14.17.410(b)(1) by the 05 appropriate factor as set out in the following table: 06 ADM Factor 07 1 - 250 1.12 08 251 - 525 1.08 09 526 - 900 1.06 10  Sec. 14.17.470. Area cost and transportation factors. For purposes of 11 calculating a district's adjusted ADM under AS 14.17.410(b)(1), the area cost factor 12 for a funding community in a school district is as follows: 13 DISTRICT FUNDING COMMUNITY AREA COST FACTOR 14 Alaska Gateway Alcan Border 1.14 15 Alaska Gateway Dot Lake 1.14 16 Alaska Gateway Eagle 1.14 17 Alaska Gateway Mentasta 1.14 18 Alaska Gateway Northway 1.14 19 Alaska Gateway Tanacross 1.14 20 Alaska Gateway Tetlin 1.14 21 Alaska Gateway Tok 1.14 22 Aleutians East Akutan 1.32 23 Aleutians East Cold Bay 1.32 24 Aleutians East False Pass 1.32 25 Aleutians East King Cove 1.32 26 Aleutians East Nelson Lagoon 1.32 27 Aleutians East Sand Point 1.32 28 Aleutians Region Atka 1.32 29 Alyeska Central School Alyeska Central School 1.00 30 Anchorage Anchorage 1.00 31 Anchorage Eagle River 1.00

01 Anchorage Girdwood 1.00 02 Annette Island Annette 1.05 03 Bering Strait Brevig Mission 1.40 04 Bering Strait Diomede 1.45 05 Bering Strait Elim 1.40 06 Bering Strait Gambell 1.55 07 Bering Strait Golovin 1.40 08 Bering Strait Koyuk 1.40 09 Bering Strait Savoonga 1.45 10 Bering Strait Shaktoolik 1.40 11 Bering Strait Shishmaref 1.40 12 Bering Strait St. Michael 1.40 13 Bering Strait Stebbins 1.40 14 Bering Strait Teller 1.40 15 Bering Strait Unalakleet 1.40 16 Bering Strait Wales 1.40 17 Bering Strait White Mountain 1.40 18 Bristol Bay Bristol Bay 1.40 19 Bristol Bay South Naknek 1.40 20 Chatham Angoon 1.05 21 Chatham Cube Cove 1.05 22 Chatham Elfin Cove 1.05 23 Chatham Gustavus 1.05 24 Chatham Hobart Bay 1.05 25 Chatham Klukwan 1.05 26 Chatham Tenakee Springs 1.05 27 Chugach Chenega Bay 1.14 28 Chugach Icy Bay 1.14 29 Chugach Tatitlek 1.14 30 Chugach Whittier 1.05 31 Chugach Yakataga 1.14

01 Copper River Chistochina 1.05 02 Copper River Copper Center 1.05 03 Copper River Gakona 1.05 04 Copper River Glennallen 1.05 05 Copper River Kenny Lake 1.05 06 Copper River Lottie Sparks 1.05 07 Copper River Slana 1.05 08 Cordova Cordova 1.14 09 Craig Craig 1.05 10 Delta/Greely Delta Junction 1.14 11 Delta/Greely Healy Lake 1.14 12 Denali Anderson 1.14 13 Denali Cantwell 1.14 14 Denali Healy 1.14 15 Dillingham Dillingham 1.32 16 Fairbanks Eielson 1.00 17 Fairbanks Fairbanks 1.00 18 Fairbanks North Pole 1.00 19 Fairbanks Salcha 1.05 20 Fairbanks Two Rivers 1.05 21 Galena Galena 1.32 22 Haines Haines 1.05 23 Haines Mosquito Lake 1.05 24 Hoonah Hoonah 1.05 25 Hydaburg Hydaburg 1.05 26 Iditarod Anvik 1.32 27 Iditarod Grayling 1.32 28 Iditarod Holy Cross 1.32 29 Iditarod Lake Minchumina 1.32 30 Iditarod Lime Village 1.32 31 Iditarod McGrath 1.32

01 Iditarod Nikolai 1.32 02 Iditarod Shageluk 1.32 03 Iditarod Takotna 1.32 04 Iditarod Telida 1.32 05 Juneau Juneau 1.00 06 Kake Kake 1.05 07 Kashunamiut Chevak 1.32 08 Kenai Peninsula Anchor Point 1.00 09 Kenai Peninsula Cooper Landing 1.00 10 Kenai Peninsula Homer 1.00 11 Kenai Peninsula Hope 1.00 12 Kenai Peninsula Kachemak Selo 1.05 13 Kenai Peninsula Kasilof 1.00 14 Kenai Peninsula Kenai 1.00 15 Kenai Peninsula McNeil Canyon 1.00 16 Kenai Peninsula Moose Pass 1.00 17 Kenai Peninsula Nanwalek 1.05 18 Kenai Peninsula Nikiski 1.00 19 Kenai Peninsula Nikolaevsk 1.05 20 Kenai Peninsula Ninilchik 1.00 21 Kenai Peninsula Port Graham 1.05 22 Kenai Peninsula Razdolna 1.05 23 Kenai Peninsula Seldovia 1.05 24 Kenai Peninsula Seward 1.00 25 Kenai Peninsula Soldotna 1.00 26 Kenai Peninsula Sterling 1.00 27 Kenai Peninsula Tyonek 1.05 28 Kenai Peninsula Voznesenka 1.05 29 Ketchikan Ketchikan 1.00 30 Klawock Klawock 1.05 31 Kodiak Island Akhiok 1.14

01 Kodiak Island Big Sandy Lake 1.14 02 Kodiak Island Chiniak 1.05 03 Kodiak Island Danger Bay 1.14 04 Kodiak Island Karluk 1.14 05 Kodiak Island Kodiak 1.05 06 Kodiak Island Larsen Bay 1.14 07 Kodiak Island Old Harbor 1.14 08 Kodiak Island Ouzinkie 1.14 09 Kodiak Island Port Lions 1.14 10 Kuspuk Aniak 1.32 11 Kuspuk Chuathbaluk 1.32 12 Kuspuk Crooked Creek 1.32 13 Kuspuk Lower Kalskag 1.32 14 Kuspuk Red Devil 1.32 15 Kuspuk Sleetmute 1.32 16 Kuspuk Stony River 1.32 17 Kuspuk Upper Kalskag 1.32 18 Lake and Peninsula Chignik Bay 1.32 19 Lake and Peninsula Chignik Lagoon 1.32 20 Lake and Peninsula Chignik Lake 1.32 21 Lake and Peninsula Egegik 1.32 22 Lake and Peninsula Igiugig 1.32 23 Lake and Peninsula Ivanof Bay 1.32 24 Lake and Peninsula Kokhanok 1.32 25 Lake and Peninsula Levelok 1.32 26 Lake and Peninsula Newhalen 1.32 27 Lake and Peninsula Nondalton 1.32 28 Lake and Peninsula Pedro Bay 1.32 29 Lake and Peninsula Perryville 1.32 30 Lake and Peninsula Pilot Point 1.32 31 Lake and Peninsula Port Alsworth 1.32

01 Lake and Peninsula Port Heiden 1.32 02 Lower Kuskokwim Akiuk 1.32 03 Lower Kuskokwim Akula 1.32 04 Lower Kuskokwim Atmautlauk 1.32 05 Lower Kuskokwim Bethel 1.32 06 Lower Kuskokwim Chefornak 1.32 07 Lower Kuskokwim Eek 1.32 08 Lower Kuskokwim Goodnews Bay 1.32 09 Lower Kuskokwim Kipnuk 1.32 10 Lower Kuskokwim Kongiganak 1.32 11 Lower Kuskokwim Kwethluk 1.32 12 Lower Kuskokwim Kwigillingok 1.32 13 Lower Kuskokwim Mekoryuk 1.40 14 Lower Kuskokwim Napakiak 1.32 15 Lower Kuskokwim Napaskiak 1.32 16 Lower Kuskokwim Newtok 1.32 17 Lower Kuskokwim Nightmute 1.32 18 Lower Kuskokwim Nunapitchuk 1.32 19 Lower Kuskokwim Oscarville 1.32 20 Lower Kuskokwim Platinum 1.32 21 Lower Kuskokwim Quinhagak 1.32 22 Lower Kuskokwim Toksook Bay 1.32 23 Lower Kuskokwim Tuntutuliak 1.32 24 Lower Kuskokwim Tununak 1.32 25 Lower Yukon Alakanak 1.32 26 Lower Yukon Emmonak 1.32 27 Lower Yukon Hooper Bay 1.32 28 Lower Yukon Kotlik 1.32 29 Lower Yukon Marshall 1.32 30 Lower Yukon Mountain Village 1.32 31 Lower Yukon Pilot Station 1.32

01 Lower Yukon Pitkas Point 1.32 02 Lower Yukon Russian Mission 1.32 03 Lower Yukon Scammon Bay 1.32 04 Lower Yukon Sheldon Point 1.32 05 Mat-Su Beryozava 1.05 06 Mat-Su Big Lake 1.00 07 Mat-Su Butte 1.00 08 Mat-Su Colony 1.00 09 Mat-Su Glacier View 1.00 10 Mat-Su Houston 1.00 11 Mat-Su Mat-Su Valley 1.00 12 Mat-Su Palmer 1.00 13 Mat-Su Pt. McKenzie 1.00 14 Mat-Su Skwentna 1.05 15 Mat-Su Sutton 1.00 16 Mat-Su Talkeetna 1.00 17 Mat-Su Trapper Creek 1.00 18 Mat-Su Wasilla 1.00 19 Mat-Su Willow 1.00 20 Mt. Edgecumbe Mt. Edgecumbe 1.00 21 Nenana Nenana 1.14 22 Nome Nome 1.32 23 North Slope Anaktuvuk Pass 1.55 24 North Slope Atqasuk 1.45 25 North Slope Barrow 1.45 26 North Slope Kaktovik 1.45 27 North Slope Nuiqsut 1.45 28 North Slope Point Hope 1.45 29 North Slope Point Lay 1.45 30 North Slope Wainwright 1.45 31 Northwest Arctic Ambler 1.45

01 Northwest Arctic Buckland 1.45 02 Northwest Arctic Deering 1.45 03 Northwest Arctic Kiana 1.45 04 Northwest Arctic Kivalina 1.45 05 Northwest Arctic Kobuk 1.45 06 Northwest Arctic Kotzebue 1.45 07 Northwest Arctic Noatak 1.45 08 Northwest Arctic Noorvik 1.45 09 Northwest Arctic Selawik 1.45 10 Northwest Arctic Shungnak 1.45 11 Pelican Pelican 1.05 12 Petersburg Petersburg 1.00 13 Pribilof St. George 1.40 14 Pribilof St. Paul 1.40 15 Sitka Sitka 1.00 16 Skagway Skagway 1.05 17 Southeast Island Craik 1.05 18 Southeast Island Edna Bay 1.05 19 Southeast Island Hollis 1.05 20 Southeast Island Howard Valentine 1.05 21 Southeast Island Jr. Gildersleeve 1.05 22 Southeast Island Kasaan 1.05 23 Southeast Island Naukati 1.05 24 Southeast Island Polk Inlet 1.05 25 Southeast Island Port Alexander 1.05 26 Southeast Island Port Protection 1.05 27 Southeast Island Thorne Bay 1.05 28 Southeast Island Whale Pass 1.05 29 Southwest Region Aleknagik North 1.32 30 Southwest Region Clarks Point 1.32 31 Southwest Region Ekwok 1.32

01 Southwest Region Koliganek 1.32 02 Southwest Region Manokotak 1.32 03 Southwest Region New Stuyahok 1.32 04 Southwest Region Portage 1.32 05 Southwest Region Togiak 1.32 06 Southwest Region Twin Hills 1.32 07 St. Mary's St. Mary's 1.32 08 Tanana Tanana 1.40 09 Unalaska Unalaska 1.32 10 Valdez Valdez 1.05 11 Wrangell Wrangell 1.00 12 Yakutat Yakutat 1.14 13 Yukon Flats Arctic Village 1.45 14 Yukon Flats Beaver 1.45 15 Yukon Flats Birch Creek 1.45 16 Yukon Flats Central 1.32 17 Yukon Flats Chalkyitsik 1.45 18 Yukon Flats Circle 1.32 19 Yukon Flats Fort Yukon 1.45 20 Yukon Flats Northern Lights 1.32 21 Yukon Flats Rampart 1.45 22 Yukon Flats Stevens Village 1.45 23 Yukon Flats Venetie 1.45 24 Yukon/Koyukuk Allakaket 1.40 25 Yukon/Koyukuk Bettles 1.40 26 Yukon/Koyukuk Hughes 1.40 27 Yukon/Koyukuk Huslia 1.40 28 Yukon/Koyukuk Kaltag 1.40 29 Yukon/Koyukuk Koyukuk 1.40 30 Yukon/Koyukuk Manley Hot Springs 1.40 31 Yukon/Koyukuk Minto 1.32

01 Yukon/Koyukuk Nulato 1.40 02 Yukon/Koyukuk Ruby 1.40 03 Yupiit Akiachak 1.32 04 Yupiit Akiak 1.32 05 Yupiit Tuluksak 1.32 06  Sec. 14.17.475. Base student allocation. (a) The base student allocation is 07 $4,165. 08  (b) The department shall prepare and submit to the legislature by October 15 09 of each fiscal year a proposed base student allocation. In determining the proposed 10 base student allocation, the department shall consider cost-of-living changes as 11 measured by the Anchorage Consumer Price Index for all urban consumers. 12 Article 2. Preparation of Public School Funding Budget. 13  Sec. 14.17.500. Student count estimate. (a) A district shall prepare and 14 submit to the department by November 5 of each fiscal year, in the manner and on 15 forms prescribed by the department, an estimate of its ADM and other student count 16 data for the succeeding fiscal year upon which computations can be made to estimate 17 the amount of public school funding for which the district may be eligible under 18 AS 14.17.400 in the succeeding fiscal year. In making its report, the district shall 19 consider its ADM, other student count data, the pattern of growth or decline of the 20 student population in preceding years, and other pertinent information available to the 21 district. 22  (b) Part-time students and district correspondence students shall be included 23 in the student count data in accordance with regulations adopted by the department. 24  Sec. 14.17.505. Fund balance in school operating fund. (a) A district may 25 not accumulate in a fiscal year an unreserved portion of its year-end fund balance in 26 its school operating fund, as defined by department regulations, that is greater than 10 27 percent of its expenditures for that fiscal year. 28  (b) The department shall review each district's annual audit under AS 14.14.050 29 for the preceding fiscal year to ascertain its year-end operating fund balance. The 30 amount by which the unreserved portion of that balance exceeds the amount permitted 31 in (a) of this section shall be deducted from the public school funding that would

01 otherwise be paid to the district in the current fiscal year. 02  Sec. 14.17.510. Determination of full and true value by Department of 03 Community and Regional Affairs. (a) To determine the amount of required local 04 contribution under AS 14.17.440 and to aid the department and the legislature in 05 planning, the Department of Community and Regional Affairs, in consultation with the 06 assessor for each district in a city or borough, shall determine the full and true value 07 of the taxable real and personal property in each district in a city or borough. If there 08 is no local assessor or current local assessment for a city or borough school district, 09 then the Department of Community and Regional Affairs shall make the determination 10 of full and true value from information available. In making the determination, the 11 Department of Community and Regional Affairs shall be guided by AS 29.45.110. 12 The determination of full and true value shall be made by October 1 and sent by 13 certified mail, return receipt requested, on or before that date to the president of the 14 school board in each city or borough school district. Duplicate copies shall be sent to 15 the commissioner. The governing body of a city or borough that is a school district 16 may obtain judicial review of the determination. The superior court may modify the 17 determination of the Department of Community and Regional Affairs only upon a 18 finding of abuse of discretion or upon a finding that there is no substantial evidence 19 to support the determination. 20  (b) Motor vehicles subject to the motor vehicle registration tax under 21 AS 28.10.431 shall be treated as taxable property under this section. 22 Article 3. Procedure for Payments of Public School Funding. 23  Sec. 14.17.600. Student counting periods. (a) Within two weeks after the 24 end of the 20-school-day period ending the fourth Friday in October, each district shall 25 transmit a report to the department that, under regulations adopted by the department, 26 reports its ADM for that counting period and other student count information that will 27 aid the department in making a determination of its state aid under the public school 28 funding program. If it makes the district eligible for more state aid under the program, 29 a district may transmit, within two weeks after the 20-school-day period ending the 30 second Friday in February, a similar report for that counting period. For centralized 31 correspondence study, the October report shall be based on the period from July 1

01 through the fourth Friday in October, except that summer school students shall be 02 counted as a proportionate fraction as determined by the department. The department 03 may make necessary corrections in the report submitted and shall notify the district of 04 changes made. The commissioner shall notify the governor of additional 05 appropriations the commissioner estimates to be necessary to fully finance the public 06 school funding program for the current fiscal year. 07  (b) Upon written request and for good cause shown, the commissioner may 08 permit a district to use a 20-school-day counting period other than the periods set out 09 in (a) of this section. However, a counting period approved under this subsection must 10 be 20 consecutive school days unless one or more alternate counting periods are 11 necessary to permit a district to implement flexible scheduling that meets the district's 12 needs and goals without jeopardizing the public school funding for which the district 13 would be ordinarily be eligible under this chapter. 14  Sec. 14.17.610. Distribution of public school funding. (a) The department 15 shall determine the public school funding for each school district in a fiscal year on 16 the basis of the district's student count data reported under AS 14.17.600. On or 17 before the 15th day of each of the first nine months of each fiscal year, one-twelfth 18 of each district's public school funding shall be distributed on the basis of the data 19 reported for the preceding fiscal year. On or before the 15th day of each of the last 20 three months of each fiscal year, one-third of the balance of each district's public 21 school funding shall be distributed, after the balance has been recomputed on the basis 22 of student count and other data reported for the current fiscal year. 23  (b) If a district receives more public school funding than it is entitled to 24 receive under this chapter, the district shall immediately remit the amount of 25 overpayment to the commissioner, to be returned to the public school account 26 (AS 14.17.300). 27  (c) Upon an adequate showing of a cash flow shortfall of a district, and in the 28 discretion of the commissioner, the department may make advance payments to a 29 district. The total of advance payments may not exceed the amount of public school 30 funding for which the district is eligible for the fiscal year. 31 Article 4. General Provisions.

01  Sec. 14.17.900. Construction and implementation of chapter. (a) This 02 chapter does not create a debt of the state. Each district shall establish, maintain, and 03 operate under a balanced budget. The state is not responsible for the debts of a school 04 district. 05  (b) Money to carry out the provisions of this chapter may be appropriated 06 annually by the legislature into the public school account (AS 14.17.300). If the 07 amount in the account is insufficient to meet the allocations authorized under 08 AS 14.17.400 - 14.17.475 for a fiscal year, public school funding shall be reduced 09 according to AS 14.17.400(b). 10  Sec. 14.17.910. Restrictions governing receipt and expenditure of district 11 money. (a) Each district shall maintain complete financial records of the receipt and 12 disbursement of public school funding, money acquired from local effort, and other 13 money received or held by the district. The records must be in the form required by 14 the department and are subject to audit by the department at a time and place 15 designated by the department. 16  (b) Public school funding provided under this chapter is for general operational 17 purposes of the district. All district money, including public school funding, shall be 18 received, held, allocated, and expended by the district under applicable local law and 19 state and federal constitutional provisions, statutes, and regulations, including those 20 related to ethical standards and accounting principles. 21  Sec. 14.17.920. Regulations. The department shall adopt regulations to 22 interpret and implement this chapter. 23  Sec. 14.17.990. Definitions. In this chapter, unless the context requires 24 otherwise, 25  (1) "ADM or average daily membership" means the aggregate number 26 of full-time equivalent students enrolled in a funding community during the student 27 count period for which a determination is being made, divided by the actual number 28 of days that school is in session for the student count period for which the 29 determination is being made; 30  (2) "district" means a city or borough school district or a regional 31 educational attendance area;

01  (3) "district adjusted ADM" means the number resulting from the 02 calculations under AS 14.17.410(b)(1); 03  (4) "district ADM" means the sum of the ADMs in a district; 04  (5) "local contribution" means appropriations and the value of in-kind 05 services made by a city or borough to its district or money collected under 06 AS 43.45.011 from residents of the unorganized borough in the relevant regional 07 educational attendance area; 08  (6) "public school funding" means money provided under the public 09 school funding program established in this chapter; 10  (7) "taxable real and personal property" means all real and personal 11 property taxable under the laws of the state. 12 * Sec. 3. AS 14.03.120(g) is amended to read: 13  (g) In this section, "district" has the meaning given in AS 14.17.990 14 [AS 14.17.250]. 15 * Sec. 4. AS 14.03.125(e) is amended to read: 16  (e) In this section, "district" has the meaning given in AS 14.17.990 17 [AS 14.17.250]. 18 * Sec. 5. AS 14.03.150(c) is amended to read: 19  (c) The department may not award a school construction or major maintenance 20 grant under AS 14.11 to a municipality that is a school district or a regional 21 educational attendance area that is not in compliance with (a) of this section. The 22 department shall reduce the amount of public school funding [STATE FOUNDATION 23 AID] under AS 14.17.400 [AS 14.17.021] for which a school district may qualify [,] 24 by the amount, if any, paid by the department under (b) of this section. 25 * Sec. 6. AS 14.03.160(f)(2) is amended to read: 26  (2) "district" has the meaning given in AS 14.17.990 [AS 14.17.250]. 27 * Sec. 7. AS 14.03.260(c) is amended to read: 28  (c) The charter school shall provide the financial and accounting information 29 requested by the local school board or the Department of Education [,] and shall 30 cooperate with the local school district or the department in complying with the 31 requirements of AS 14.17.910 [AS 14.17.190].

01 * Sec. 8. AS 14.11.008(b) is amended to read: 02  (b) The required participating share for a municipal school district is based on 03 the district's full value per average daily membership (ADM), which is calculated 04 by dividing the full and true value of the taxable real and personal property in the 05 district, calculated as described in AS 14.17.510 [AS 14.17.025(a)(1),] by the district 06 ADM [AVERAGE DAILY MEMBERSHIP (ADM)] as defined in AS 14.17.990 07 [AS 14.17.250], for the same fiscal year for which the valuation was made. The 08 municipal district's full value per ADM determines the district's required participating 09 share, as follows: 10 Full Value Per ADM District Participating Share 11 $1 - $100,000 5 percent 12 100,001 - 200,000 10 percent 13 200,001 - 600,000 30 percent 14 over 600,000 35 percent. 15 * Sec. 9. AS 14.14.115(c)(2) is amended to read: 16  (2) "district" has the meaning given in AS 14.17.990 [AS 14.17.250]. 17 * Sec. 10. AS 14.16.050(a)(2) is amended to read: 18  (2) requirements relating to the public school funding program 19 [STATE FINANCIAL ASSISTANCE FOR EDUCATION] and the receipt and 20 expenditure of that funding [ASSISTANCE]: 21  (A) AS 14.17.500 [AS 14.17.080] (relating to student count 22 estimates); 23  (B) AS 14.17.505 [AS 14.17.082] (relating to school operating 24 fund balances); 25  (C) AS 14.17.500 - 14.17.910 [AS 14.17.160 - 14.17.220] 26 (setting out the procedure for payment of public school funding [FINANCIAL 27 ASSISTANCE,] and imposing general requirements and limits on money paid); 28 * Sec. 11. AS 14.16.080(a) is amended to read: 29  (a) AS 14.17.435 [AS 14.17.024] applies to the calculation of public school 30 funding [STATE AID] payable for operation of the state boarding school. 31 * Sec. 12. AS 14.20.177(a) is amended to read:

01  (a) A school district may implement a layoff plan under this section if it is 02 necessary for the district to reduce the number of tenured teachers because 03  (1) school attendance in the district has decreased; [OR] 04  (2) the [BASIC] need of the school district determined under 05 AS 14.17.410(b)(1) [AS 14.17.021(b) AND ADJUSTED UNDER AS 14.17.225(b)] 06 decreases by three percent or more from the previous year; or 07  (3) the state share of public school funding is reduced under 08 AS 14.17.400(b) by three percent or more in a fiscal year. 09 * Sec. 13. AS 14.30.305 is amended to read: 10  Sec. 14.30.305. State support of programs for children hospitalized or 11 confined to their homes. A child who is hospitalized or confined to home and who 12 receives at least 10 hours of special education and related services per week may be 13 counted as a pupil in average daily membership when computing state support under 14 the public school funding [FOUNDATION] program. 15 * Sec. 14. AS 14.30.315(a) is amended to read: 16  (a) To be eligible for state support under the public school funding 17 [FOUNDATION] program, special education and related services for gifted children 18 must be provided in a program that has been approved in advance by the department. 19 * Sec. 15. AS 14.30.347 is amended to read: 20  Sec. 14.30.347. Transportation of exceptional children. When transportation 21 is required to be provided as related services, an exceptional child [CHILDREN] shall 22 be carried with other children if the district provides transportation to other 23 children in the district [,] except when the nature of the [THEIR] physical or mental 24 disability [DISABILITIES] is such that it is in the best interest of the exceptional 25 child [CHILDREN], as determined by the school district, that the child [THEY] be 26 transported separately. State reimbursement for transportation of exceptional children 27 shall be as provided for transportation of all other pupils except that eligibility for 28 reimbursement is not subject to restriction based on the minimum distance between the 29 school and the residence of the exceptional child. 30 * Sec. 16. AS 14.36.030(a) is amended to read: 31  (a) A district operating a community school program under an approved plan

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

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

01 or agency head. 02 * Sec. 20. AS 36.10.125(c) is amended to read: 03  (c) In an action brought under (b) of this section, the court may, in its 04 discretion, order denial of state revenue sharing or public school funding 05 [FOUNDATION MONEY], forfeiture of office or position, or injunctive or other 06 relief. If the court finds for the plaintiff in an action brought under (b) of this section, 07 it may award the plaintiff an amount equal to the actual costs and attorney fees 08 incurred by the plaintiff. 09 * Sec. 21. AS 43 is amended by adding a new chapter to read: 10 Chapter 45. School Tax in the Unorganized Borough. 11  Sec. 43.45.011. Tax imposed. There is imposed a school tax of $525 a year 12 upon each person 19 years of age or older who resides and is employed, including self- 13 employed, in the unorganized borough of the state outside of a city. 14  Sec. 43.45.021. Collection of tax. The tax imposed under AS 43.45.011 shall 15 be paid before April 16 of the calendar year following the year for which it is 16 imposed. An employer in the unorganized borough of the state outside a city, upon 17 the first regular payroll after March 1 of each calendar year or, in the case of an 18 employee on a later payroll, on the first payroll after employment, shall deduct the tax 19 from the employee's salary or other compensation and send it to the department. A 20 deduction may not be made in the salary or other compensation of a person who 21 provides proof to the employer that the tax imposed under this section has been paid. 22 The department shall provide a return form for the tax collected under this section. 23  Sec. 43.45.031. Record of withholding. An employer who withholds a school 24 tax under AS 43.45.021 shall furnish to the employee upon request a record of the 25 amount of tax withheld from the employee. The department shall provide a form for 26 that purpose. 27  Sec. 43.45.051. Definition. In this chapter, "reside" means to have residency, 28 as defined in AS 01.10.055. 29 * Sec. 22. AS 44.47.305(c) is amended to read: 30  (c) A grant under (a) of this section may not exceed $50 per month for each 31 child the child care facility cares for, or for each full-time equivalent, as determined

01 by the department. The grant shall be adjusted on a geographic basis by the same 02 percentages as funding communities [INSTRUCTIONAL UNIT ALLOTMENTS] are 03 adjusted under AS 14.17.470 [AS 14.17.051]. 04 * Sec. 23. AS 14.17.010, 14.17.021, 14.17.022, 14.17.024, 14.17.025, 14.17.026, 14.17.031, 05 14.17.041, 14.17.043, 14.17.045, 14.17.047, 14.17.051, 14.17.056, 14.17.080, 14.17.082, 06 14.17.140, 14.17.160, 14.17.170, 14.17.190, 14.17.200, 14.17.210, 14.17.220, 14.17.225, and 07 14.17.250 are repealed. 08 * Sec. 24. TRANSITION: TRANSITION FUNDING. (a) Notwithstanding the provisions 09 of secs. 1 - 23 of this Act and except as provided in (c) of this section, if, for a fiscal year 10 beginning July 1, 1997, through July 1, 2000, a school district would receive less public 11 school funding under AS 14.17.410, enacted by sec. 2 of this Act, than the district would have 12 received as state aid for the fiscal year beginning July 1, 1997, and, if a city or borough 13 school district, the district meets the requirements of (b) of this section, the district is eligible 14 to receive instead a percentage of the state aid the district would have received for the fiscal 15 year beginning July 1, 1997, according to the following table: 16 For the fiscal year beginning Percentage of state aid for the fiscal year beginning July 1, 1997 17 July 1, 1997 100 18 July 1, 1998 98 19 July 1, 1999 95 20 July 1, 2000 90 21 (b) A school district in a city or borough is not entitled to the transition funding 22 percentage set out in (a) of this section for a fiscal year unless the city or borough makes a 23 local contribution to the district for that fiscal year as required under this subsection. For the 24 transition funding for the fiscal year beginning July 1, 1997, the required local contribution 25 is the equivalent of a four mill tax levy; for the fiscal year beginning July 1, 1998, the 26 required local contribution is the equivalent of a five mill tax levy; for the fiscal year 27 beginning July 1, 1999, the required local contribution is the equivalent of a six mill tax levy; 28 and for the fiscal year beginning July 1, 2000, the required local contribution is the equivalent 29 of a seven mill tax levy. 30 (c) For the purposes of the reduction required under AS 14.17.400(b), enacted by 31 sec. 2 of this Act, transition funding authorized under (a) and (b) of this section is treated the

01 same as the state share of public school funding under AS 14.17.410, enacted by sec. 2 of this 02 Act. 03 (d) For purposes of this section, "state aid" means state foundation aid distributed 04 under the provisions of AS 14.17, repealed by this Act, and additional district support 05 appropriated by the legislature. 06 * Sec. 25. TRANSITION: REGULATIONS. To the extent the regulations are not 07 inconsistent with the language and purposes of this Act, regulations relating to state aid for 08 public schools adopted by the Department of Education before the effective date of this Act 09 remain in effect as valid regulations implementing this Act; all other regulations relating to 10 state aid for public schools adopted by the Department of Education before the effective date 11 of this Act are annulled. The Department of Education may administer and enforce those 12 previously adopted regulations relating to state foundation aid for public schools. 13 * Sec. 26. TRANSITION: BASE STUDENT ALLOCATION. Notwithstanding 14 AS 14.17.475, enacted in sec. 2 of this Act, the base student allocation is as follows: 15 For the fiscal year beginning Base student allocation 16 1997 $3,790 17 1998 3,910 18 1999 3,990 19 2000 4,075 20 2001 4,165 21 * Sec. 27. TRANSITION: FUNDING COMMUNITIES. For purposes of determining 22 funding communities under AS 14.17.450, enacted under sec. 2 of this Act, the students in a 23 funding community smaller than 10 ADM on the effective date of this Act shall be included 24 in the largest funding community in the school district existing on the effective date of this 25 Act. 26 * Sec. 28. REQUIRED REPORT; ENACTMENT OF COST FACTORS. (a) The chairs 27 of the House and Senate Health, Education and Social Services Committees shall form a joint 28 committee for the purpose of conducting a study of funding community size factors under 29 AS 14.17.450, enacted by sec. 2 of this Act, and area cost factors under AS 14.17.470, 30 enacted by sec. 2 of this Act. The members of the joint committee will be selected from the 31 members of the House and Senate Health, Education and Social Services committees. The

01 committee may allow members of the executive branch or the public to participate in the work 02 of the committee. 03 (b) The study required under (a) of this section must be completed by December 31, 04 1998, and must include recommended funding community size and area cost factors. The 05 recommended factors contained in the study may be enacted by the legislature, but may not 06 be enacted by the legislature in amended form. 07 * Sec. 29. AS 43.45, enacted by sec. 21 of this Act, applies to income received on or after 08 January 1, 1998. 09 * Sec. 30. AS 14.17.410(b)(3), added by sec. 2 of this Act, takes effect January 1, 1998. 10 * Sec. 31. Except as provided in sec. 30 of this Act, this Act takes effect July 1, 1997.