Legislature(1995 - 1996)

1996-01-26 House Journal

Full Journal pdf

1996-01-26                     House Journal                      Page 2541
HB 452                                                                       
HOUSE BILL NO. 452 by the House Rules Committee by request of                  
the Governor, entitled:                                                        
An Act relating to state foundation aid and supplementary state               
aid for education; and providing for an effective date.                        
was read the first time and referred to the Health, Education & Social         
Services, State Affairs and Finance Committees.                                
The following fiscal note applies:                                             
Fiscal note, Dept. of Education, 1/26/96                                       
The Governor's transmittal letter, dated January 26, 1996, appears             

1996-01-26                     House Journal                      Page 2542
HB 452                                                                       
Dear Speaker Phillips:                                                         
Under the authority of article III, sec. 18 of the Alaska Constitution,        
I am transmitting a bill relating to state aid for education.  This bill       
ensures the continued receipt of approximately $35 million in federal          
dollars for public schools and fixes the long-standing problem of              
funding for single site school districts.                                      
I promised Alaskans I would build a school funding program that is             
better than what we have today.  I envision a foundation program that          
is fair, equitable, and accountable.  At the same time it must have            
funding levels that are affordable, both now and in the future, and it         
must protect the partnership between state, federal and local dollars.         
While we continue to make progress toward this goal, this bill takes           
a substantial first step in addressing the immediate funding issues.           
This fiscal year, the state has allocated approximately $640 million           
through the foundation program.  Almost all of this is from the state          
general fund, with $5 million from the Public School Trust Fund, and           
$35 million from the federal impact aid program (the so-called P.L. 81-        
874 funds).                                                                    
In order to consider  the impact aid when calculating the states portion       
of school funding, the federal government requires the state to pass a         
disparity test which  measures the variation in revenues between our           
richest and poorest school districts.  The federal government recently         
lowered the maximum allowable disparity in revenues between the                
districts from 25 percent to 20 percent.  The program will also be             
based on two-year prior data.  Thus, in order to consider impact aid           
dollars in the states FY 1998 school funding, we must have no more             
than a 20 percent disparity in FY 1996.  Under our current formula,            
the state cannot meet this new disparity test.                                 
This bill will fix the disparity test problem beginning with fiscal year       
1997 by providing supplemental state aid of $500 per instructional unit        
value for regional educational attendance areas (REAAs),  the districts        
that receive the least revenue because of their inability to levy taxes        
for a local contribution to their schools.   This essentially raises the       
floor of our school district funding levels -- bringing it closer to the       
ceiling of the wealthier districts.                                            

1996-01-26                     House Journal                      Page 2543
HB 452                                                                       
This supplemental funding will not mean a substantial cost to the state        
because we will also consider more of the federal funding to REAAs             
as an offset to state funding.  Currently, only 90 percent of federal aid      
to REAAs is considered in determining the amount of state aid.  This           
bill increases that to 95 percent -- for REAAs only.  This will not            
affect the school districts that make larger local contributions.              
Unfortunately, this bill cannot help us achieve 20 percent disparity for       
FY 1996.  To accomplish that, I will be requesting reallocating $1.2           
million in expected lapse money in this years foundation formula               
program.  That will provide additional funding to the REAAs,                   
mirroring what section 2 of this bill will accomplish through                  
supplemental state aid in FY 1997.   This bill, together with my               
reappropriation request, will ensure that Alaska meets the federal 20          
percent disparity test this year and in future years, protecting the states    
ability to consider federal impact aid when allocating state aid.              
This bill also provides full funding for districts that have come to be        
known as single site school districts.  These districts have lobbied           
for years for a change in the foundation formula that would adequately         
fund their schools.  While permanent funding changes have not been             
affected in statute, the legislature has annually included special grants      
in the budget for single site districts. It is time to fix this problem once   
and for all.                                                                   
To that end, this bill increases the instructional units of a qualifying       
district by multiplying its units by a percentage between six and 12.          
The smaller the district, the higher the percentage multiplier.  More          
instruction units translates into more state aid.  This simple revision        
corrects a longstanding problem, and obviates the need for the annual          
battle for single site appropriations. It is time to let the single site       
districts go home and redirect their efforts to where they are needed          
most, to children in the classroom.                                            
This bill is the result of many hours of work by the public, including         
those citizens who served on the Task Force on School Funding, and             
the State Board of Education.  As my administration continues to               

1996-01-26                     House Journal                      Page 2544
HB 452                                                                       
explore better ways to fund our schools, this legislation represents a         
favorable step toward addressing two immediate concerns.  I urge your          
prompt and favorable action on this bill.                                      
						Tony Knowles