Legislature(1995 - 1996)
1996-01-26 Senate Journal
Full Journal pdf1996-01-26 Senate Journal Page 2224 SB 244 SENATE BILL NO. 244 BY THE SENATE 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 and Social Services and Finance Committees. Fiscal note published today from Department of Education. Governor's transmittal letter dated January 26: Dear President Pearce: 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 1996-01-26 Senate Journal Page 2225 SB 244 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. 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. 1996-01-26 Senate Journal Page 2226 SB 244 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 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. Sincerely, /s/ Tony Knowles Governor