Legislature(2023 - 2024)ADAMS 519
02/28/2023 01:30 PM House FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| HB39 || HB41 | |
| Fy 24 Budget Overview: Department of Education and Early Development | |
| Presentation: History of the Base Student Allocation Formula: Legislative Finance Division | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 39 | TELECONFERENCED | |
| += | HB 41 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| + | TELECONFERENCED | ||
| + | TELECONFERENCED |
HOUSE BILL NO. 39
"An Act making appropriations for the operating and
loan program expenses of state government and for
certain programs; capitalizing funds; amending
appropriations; making reappropriations; making
supplemental appropriations; making appropriations
under art. IX, sec. 17(c), Constitution of the State
of Alaska, from the constitutional budget reserve
fund; and providing for an effective date."
HOUSE BILL NO. 41
"An Act making appropriations for the operating and
capital expenses of the state's integrated
comprehensive mental health program; and providing for
an effective date."
1:33:05 PM
^FY 24 BUDGET OVERVIEW: DEPARTMENT OF EDUCATION AND EARLY
DEVELOPMENT
1:33:07 PM
HEIDI TESHNER, ACTING COMMISSIONER, DEPARTMENT OF EDUCATION
AND EARLY DEVELOPMENT, introduced herself and relayed there
were numerous people from the department available for
questions. She provided a PowerPoint presentation titled
"Department of Education and Early Development FY2024
Budget Overview," dated February 28, 2023 (copy on file).
She began with the department's mission, vision, and
purpose on slide 2:
Mission:
An excellent education for every student every day.
Vision:
All students will succeed in their education and work,
shape worthwhile and satisfying lives for themselves,
exemplify the best values of society, and be effective
in improving the character and quality of the world
about them.
-Alaska Statute 14.03.015
Purpose:
DEED exists to provide information, resources, and
leadership to support an excellent education for every
student every day.
1:34:21 PM
Acting Commissioner Teshner moved to slide 3 titled
"Strategic Priorities: Alaska's Education Challenge." She
detailed that about five years back, parents, students,
educators, policy makers, and tribal leaders had all gotten
together to answer Alaska's call to create a shared vision
for improving the state's public education system. The
outcome had been Alaska's Education Challenge, which
included five shared priorities [shown on the slide] to
guide the Department of Education and Early Development's
(DEED) work. She relayed that the implementation work
continued.
Acting Commissioner Teshner discussed the department's
organizational chart on slide 4. The commissioner reported
to the State Board of Education and Early Development. The
state board was appointed by the governor and consisted of
nine members including a military advisor and a student
advisor. The commissioner provided leadership and direction
for the department. There were five divisions providing
service to Pre-K through grade 12 including the Division of
Innovation and Education Excellence, the Division of
Finance and Support Services, the Division of
Administrative Services, Mt. Edgecumbe High School, and the
Division of Libraries, Archives and Museums. There were
three boards, commissions, and corporations that fell under
DEED administratively including the Alaska State Council on
the Arts, the Professional Teaching Practices Commission,
and the Alaska Commission on Postsecondary Education. She
noted that a colleague would provide more detail on the
budgets of each of the divisions and components.
Representative Hannan asked how long the position had been
vacant under the Division of Finance and Support Services.
Acting Commissioner Teshner answered that the position had
been vacant for a little while, but she did not have an
exact timeframe. She reported there was currently active
recruitment underway that would be closing soon to hire for
the position.
Representative Hannan asked if the vacancy had been a year
or a couple of months. She stated that much of the current
presentation would be about financing for schools. She
remarked that having the position empty drew her attention.
She was looking to figure out problem solving down the road
and wondered how long schools had not had support from the
specific position. Alternatively, she considered whether
the situation was a normal transition where someone had
retired, and the department was in the recruitment phase.
Acting Commissioner Teshner answered the position had been
vacant not quite a year. She had been promoted to the
deputy commissioner role and had previously filled the
role. She was still supporting the [Division of Finance and
Support Services] staff. There had been someone in acting
status in the position for a while. She was currently
helping to fulfill multiple roles within the department.
She stated there had been no lack of support for districts
in that area [covered by the division].
1:37:44 PM
Acting Commissioner Teshner addressed a budget
organizational chart on slide 5. The chart reflected the
same organizational structure but included the budget
terminology. She explained that the organizational chart
may help legislators to locate where funding was located
within the department. For example, The Division of
Innovation and Education Excellence included student and
school achievement, teacher certification, early learning
coordination, and Pre-K grants. She moved to a graphical
representation of the department's operating budget and
position history from FY 22 through FY 24 governor amended
on slide 6. The bar chart represented the funding sources
that made up the department's overall budget. The dark blue
reflected undesignated general funds (UGF), green
represented federal COVID-19 relief funding, orange
reflected "other" funds, light blue was designated general
funds (DGF), and gray depicted federal funding. She noted
that the green portion of the FY 24 governor amended bar
was grayed out because it reflected an estimate of what
DEED thought would be carried forward. She explained that
the department's federal programs allowed DEED to carry
over money and DEED did not know how much federal COVID
money would carry over into FY 24. The amount would depend
on when districts and other grantees requested drawdowns
and submitted requests for reimbursements. She stated it
would not likely be $316 million, but DEED did not yet
know.
Acting Commissioner Teshner continued to review slide 6. On
average, UGF accounted for about 67 percent of the
department's budget from FY 22 through FY 24. The figure
was about 79 percent when excluding COVID funding. The
department's total operating budget for FY 24 was $1.65
billion. She noted the figure did not include the $316
million in COVID relief funds (the budget would be about
$1.9 billion with COVID relief funds). She detailed that
about 94 percent (~$1.213 billion) of the department's UGF
budget was the foundation formula and pupil transportation
program.
1:40:30 PM
Representative Cronk asked how much money was impact aid
that came back to the state.
Acting Commissioner Teshner answered that on average DEED
took between $70 million and $80 million into consideration
in the foundation funding formula.
Representative Ortiz highlighted that the foundation
formula was also known as the Base Student Allocation
(BSA).
Acting Commissioner Teshner agreed.
Representative Ortiz asked why the BSA had decreased from
FY 23 to FY 24.
Acting Commissioner Teshner clarified that the foundation
formula and pupil transportation did not account for the
department's entire UGF budget. Those items accounted for
about $1.213 billion and a small portion of the UGF budget
was unrelated. The FY 24 budget was built on projected
student counts by districts for the following year. The
number was trued up annually during the October count
period and the department paid based on the actual number
of students served. The number used to build the FY 24
budget would be trued up after the count period in October
2023.
Representative Ortiz looked at the $1.361 billion in UGF
spending in FY 23 compared to the $1.285 billion in FY 24.
He asked if the difference in the numbers resulted from
projected enrollment decline.
Acting Commissioner Teshner stated it could be part of the
reason, but she did not have the data on hand. She noted
that the APS [Alaska Performance Scholarship] had moved
from UGF to the Higher Education Fund, which would have
contributed to a lesser amount in FY 24 UGF. There were
several other contributing factors. She highlighted that
the DGF line increased from $2.7 million [in FY 23] up to
$25.9 million [in FY 24]. Part of the issue was a switch
between UGF and DGF.
1:43:30 PM
Representative Ortiz recalled that the FY 23 budget had
included a one-time increment. He asked if it was included
in the number and helped explain the difference.
Acting Commissioner Teshner confirmed there had been a $57
million UGF one-time increment outside the funding formula,
which was reflected in the FY 23 column and not FY 24.
Representative Stapp acknowledged visitors in the audience.
Acting Commissioner Teshner moved to two pie charts on
slide 7 and discussed the FY 24 governor's amended budget.
She noted the slide included the $316 million in federal
COVID relief funding for a total of $1.97 billion. The pie
chart on the left broke out the information by line. She
detailed that 94 percent of the budget was passthrough
grants to school districts and other entities for the
foundation formula, pupil transportation, state grant
programs, and federal grant programs (e.g., Title 1 and
special education). The pie chart on the right provided a
breakdown of the divisions and amount associated with each.
1:45:45 PM
Representative Galvin looked at slide 7, specifically
related to Innovation and Education Excellence. She asked
if anything related to early education for kids up to five
years of age was included in that segment of the budget.
Acting Commissioner Teshner answered that children from age
zero to three were served by the Department of Health. The
Department of Education and Early Development served young
children from three to five years of age. She explained
that any Pre-K grant funding that went to school districts
and ~$6.8 million for Head Start was included in the early
learning and Pre-K grant components under the Division of
Innovation and Education Excellence.
Representative Galvin asked for the number of students
currently served by early education programs in the three
to five-year old population.
Acting Commissioner Teshner would follow up with the
information.
Representative Galvin asked for the dollar figure.
Acting Commissioner Teshner answered there was about $6.8
million in grants allocated to Head Start entities for
their match requirement.
Representative Galvin asked for the federal match figure.
Acting Commissioner Teshner replied that the department
would follow up with the information.
Representative Galvin requested data on the number of early
learning students presently served and the amount of
associated funding. She was particularly interested in the
department's mission of ensuring children were ready to
read. She wanted to make certain children were arriving
ready at the age of five.
1:49:19 PM
Acting Commissioner Teshner referred to a DEED early
learning report she had just been handed and would provide
to the committee. She detailed there were 674 children
served by Pre-K grants of about $5.7 million in 2023. The
Parents as Teachers program currently served 123 students
with $474,000.
SABRINA JAVIER, ADMINISTRATIVE SERVICES DIRECTOR,
DEPARTMENT OF EDUCATION AND EARLY DEVELOPMENT, relayed that
the department's total FY 24 budget (excluding federal
COVID-19 relief funding) was approximately $1.65 billion.
She would break down the budget to the division level on
the coming slides. She reviewed the budget for the
Executive Administration Division on slide 8. The division
included the commissioner's office and the State Board of
Education. The division provided policy direction to the
other DEED divisions and provided support to the
department's stakeholders. The FY 24 budget for the
division totaled just under $1.5 million comprised of ~$1
million UGF and $500,000 in interagency receipts. There
were seven full-time positions and one non-permanent
position within the division.
1:51:04 PM
Ms. Javier turned to the budget for the Division of Finance
and Support Services on slide 9. The division included
School Finance, School Facilities, and Child Nutrition
programs. The largest portion of DEED funding resided
within the division at a total of just under $1.4 billion.
There were 22 full-time positions within the division. The
School Finance Section administered the foundation formula
and pupil transportation funding and provided financial
support to school district business offices. The School
Facilities Section oversaw school capital projects and
administered the Major Maintenance and School Construction
grant programs. The Child Nutrition Section administered
child nutrition programs that most school districts
participate in including the national school lunch program,
the school breakfast program, and the summer foods service
program. She reviewed a bar chart on slide 9 showing the
division's budget. The majority of the UGF shown in blue
was allocated to the foundation and pupil transportation
programs for school districts. The gray section of the bars
represented federal receipts, which were primarily awarded
by the U.S. Department of Agriculture as passthrough funds
for child nutrition programs. The small orange portion of
the bar reflected "other" funds of about $32.7 million from
federal impact aid revenue. She clarified that the $32
million was the Public School Trust Fund.
Representative Hannan asked what impact aid entailed.
Acting Commissioner Teshner replied that the $20 million
shown on the slide represented what the department applied
for on behalf of three military bases and Mt. Edgecumbe
High School. The $70 million to $80 million figure she had
provided to Representative Cronk earlier in the
presentation was what the department applied towards the
foundation formula to determine how much state aid DEED
paid to school districts. Most districts applied directly,
but DEED had an agreement to apply on behalf of the three
military bases (in Kodiak, Fairbanks, and Anchorage) and
Mt. Edgecumbe High School.
Representative Hannan asked if impact aid was about federal
nontaxable lands within a district's boundaries.
Acting Commissioner Teshner agreed.
1:54:22 PM
Representative Ortiz looked at the UGF figure of
$1,285,331,800 for the BSA on slide 6 compared to slide 9
showing funding for the foundation formula at
$1,140,791,600. He asked for the difference in the two
figures.
Acting Commissioner Teshner answered the UGF column on
slide 9 was included in the $1.28 billion shown on slide 6.
Slide 9 broke the figure down to show which components
contributed to the UGF total.
Representative Ortiz stated the BSA was a big topic during
the current session. He remarked that the two [UGF] numbers
[shown on slides 6 and 9] were different. He stated it did
not all match up.
Acting Commissioner Teshner replied that the answer would
become clearer as they moved through the slides. She
explained that all of the UGF components should add up to
the total on slide 6.
Representative Tomaszewski used slide 6 as an example and
requested totals at the bottom of the FY 22 actuals, FY 23
management plan, and FY 24 governor amended budget columns.
Acting Commissioner Teshner agreed to make the change to
the slides.
Ms. Javier discussed the Division of Administrative
Services budget on slide 10. The division provided internal
department services including accounting, information
technology, human resources, procurement, and grants
administration. The budget components included
administrative services, information services, facilities
rent. The total FY 24 budget for the division was $6.5
million and included 17 full-time positions. The one
significant budget change within the division's budget was
a $2 million request for interagency receipt authority to
allow the division to have a more consistent method for
allocating the chargebacks it received from the Department
of Administration Office of Information Technology, Shared
Services of Alaska, personnel and labor relations, and
services provided by the Division of Finance. The services
did not all use the same rate methodology; therefore, it
was DEED's intention to streamline the methodology for all
of the expenditures, collect the funds from each of the
divisions, and pay them from the appropriation under the
Division of Administrative Services. There was no budgetary
impact to the department and the change would help DEED
manage and track its chargeback costs more efficiently.
1:59:16 PM
Ms. Javier discussed the budget for the Division of
Innovation and Education Excellence on slide 11. The
division was comprised of the early learning coordination,
Pre-K grants, student and school achievement, and teacher
certification components. The division's total FY 24 budget
(excluding estimated federal COVID-19 carryforward funding)
was approximately $201.4 million with 68 full-time
positions and five non-permanent positions. The division
had received a considerable amount of federal COVID-19
funds from the U.S. Department of Education from all three
[relief funding] acts. The funds were housed within the
division. The green section of the bar chart reflected the
spend in FY 22, the FY 23 management plan, and the
estimated carryforward amount. She encouraged members to
visit the department's COVID-19 funding dashboard on the
DEED website, which enabled the user to drill down to
awarded and expended funding at the school district and
grantee levels.
2:00:59 PM
Representative Galvin asked for verification that Ms.
Javier had stated there were 68 positions for the division.
Ms. Javier agreed.
Representative Galvin asked for the number of early
learning coordination and Pre-K positions. She assumed
there were no other positions in other areas of the
department for the two specific components.
Acting Commissioner Teshner responded there were currently
no positions in the Pre-K grants component. The staff
supporting the Pre-K grants were in the early learning
coordination component. She believed there were a total of
five positions including three positions recently added
through the Alaska Reads Act. She would follow up with the
precise information.
Representative Galvin asked for verification that there
were around five early learning positions (for three to
five year olds) out of 68.
Acting Commissioner Teshner agreed.
Representative Josephson asked about the $312 million in
COVID-19 funds. He asked why the funding kept coming and
what it was for.
Acting Commissioner Teshner responded that the federal
COVID relief funding was appropriated by the U.S.
Department of Education and encompassed the Coronavirus
Aid, Relief, and Economic Security (CARES) Act, Coronavirus
Response and Relief Supplemental Appropriations Act
(CRRSAA), and American Rescue Plan Act (ARPA). The funding
was provided to states in response to the COVID-19 pandemic
to help with learning loss, personal protective equipment,
and other items. She elaborated there was a wide variety of
allowable expenditures. Under ARPA, there was a [federal]
requirement that districts had to spend 20 percent of the
funding on learning loss.
2:03:42 PM
Representative Josephson asked if districts could use the
federal COVID-19 funding like they used BSA dollars.
Acting Commissioner Teshner agreed. She relayed there had
been significant flexibility [in the way the federal
funding could be used]. She noted that DEED had to review
and approve how the funds were spent.
Representative Josephson asked if the funding was FY 24
dollars.
Acting Commissioner Teshner replied it was the amount the
department anticipated could be carried over into FY 24.
She did not believe the amount would be quite $312 million.
She explained that districts already knew their allocations
under each of the three federal acts. She detailed that the
CARES Act had closed in September 2022, funds from CRRSAA
could be spent until September 2023, and funds from ARPA
could be used until September 2024. She noted that
districts had not all allocated how they would spend the
money. She noted that the department's COVID dashboard [on
the DEED website] included detailed information. She
explained that the budget indicated a long-term range where
districts were planning how they would spend the money.
Representative Coulombe asked if the $312 million would
expire in September 2023 or 2024.
Acting Commissioner Teshner answered that a portion of the
funding would expire in 2023 and another portion would
expire in 2024. She did not have the breakdown on hand. She
clarified that school districts did not receive the money
up front; the department only paid them for what they
expended.
Representative Ortiz saw that a large portion of the COVID
relief funding went to support the Division of Innovation
and Education Excellence. He remarked that the funding
would go away at some point. He wondered what kind of
problems the situation would bring the division.
Acting Commissioner Teshner answered that the funding was
primarily for pass through grants and DEED kept very little
internally for daily operations. The department had hired
three nonpermanent positions to help support the additional
work that came with the COVID funding including federal
reporting and the review of additional applications from
school districts. The positions would expire when the
funding expired. The department had not added a lot of
long-term range expenditures that would require ongoing
support from the state. The department tried to ensure it
was spending the money on one-time expenditures at the
state level in order to sustain its work for the long term.
Representative Ortiz asked for verification that Pre-K
grants and student and school achievement would not be
impacted even though it appeared the COVID funding made up
a large portion of the [Division of Innovation and
Education Excellence] budget.
2:07:48 PM
Acting Commissioner Teshner replied that the funding
included in the first four columns [in the table on the
lower half of slide 11] included the division's ongoing
work. The COVID money was additional work added on. She
stated that everything else would continue when the COVID
money expired.
Representative Galvin asked for verification that the $312
million was passthrough funding for districts to cover
anything related to catching students up. She had heard
from some districts that were using the funds to do the
work at hand. She asked if it was something the department
had heard as well.
Acting Commissioner Teshner responded affirmatively. She
relayed that when the department had reviewed the
districts' budgets, it had cautioned districts if an item
was an ongoing expenditure. The department had provided a
memorandum to districts cautioning them against using the
one-time funding for ongoing expenditures. The department
could not deny districts' from using the funding [on
ongoing expenditures] because it had been an allowable use
from the federal government.
Representative Hannan asked for a description of work
provided under student and school achievement for
standards, assessment, and accountability on a regular
basis.
Acting Commissioner Teshner deferred to a colleague.
DEB RIDDLE, OPERATIONS MANAGER, INNOVATION AND EDUCATION
EXCELLENCE, DEPARTMENT OF EDUCATION AND EARLY DEVELOPMENT,
replied that the Division of Innovation and Education
Excellence had nine teams, which covered assessments, data,
and reporting, early learning, federal programs, special
education, school improvement, and the Alaska Reads Act. On
a day to day basis the department collaborated and provided
support. The majority of the federal money went out to
districts as grants. The department managed the grants and
provided support. She detailed that programs like the
academic support team and school improvement team provided
support to help struggling districts. The special education
team managed special education programs and ensured
students were served the way they were needed. The early
education program had one staff who worked with Head Start.
There was also a staff who worked with special education
and Pre-K grants. The department had found out earlier in
the day that it had an administrator for the team
associated with the Reads Act. Primarily, the division
supported districts in moving their programs forward and
providing resources as needed.
2:12:16 PM
Ms. Javier finished with slide 11 pertaining to the
Division of Innovation and Education Excellence. The
majority of the division's budget was federal receipts and
primarily included pass through title funding from the U.S.
Department of Education. The federal increase from FY 23 to
FY 24 was the governor's amended request of $22.3 million
of federal receipt authority in order to address the
increase title rewards from the U.S. Department of
Education. The proposed FY 24 UGF for the division was
approximately $30 million. The significant change in FY 24
UGF was primarily $6.3 million for the second year
implementation of the Alaska Reads Act passed in 2022.
Additionally, there was a temporary increase for Pre-K
grants of $2.5 million. The department was requesting to
consolidate the system of support component into the
student and school achievement component; therefore, it was
not included on the slide. The two components performed
overlapping work and the department decided it was wise to
consolidate them for efficiency.
Ms. Javier addressed the budget for the Division of
Libraries, Archives, and Museums on slide 12. The division
included components for Andrew P. Kashevaroff Facilities
Maintenance, Broadband Assistance Grants, Library
Operations, Live Homework Help, Museum Operations, and
Online with Libraries (OWL). The Andrew P. Kashevaroff
building in Juneau housed the Alaska state archives, the
state library, and state museum. The state also had the
Sheldon Jackson Museum in Sitka. The total operating budget
for FY 24 was approximately $18.26 million with 49 full-
time positions and one non-permanent position. The
division's budget remained flat, and the department did not
have a proposed request for FY 24.
Representative Josephson referenced Ms. Javier's mention of
OWL funding in the division's budget. He referred to a
similar program called SLED [Statewide Library Electronic
Doorway]. He detailed that the legislature had repeatedly
appropriated money, particularly at the request of state
libraries, and the governor had repeatedly vetoed the
funds. He asked for the status on SLED funding.
Ms. Javier deferred to a colleague.
2:15:22 PM
DR. AMY PHILIPS-CHAN, DIRECTOR, DIVISION OF LIBRARIES,
ARCHIVES AND MUSEUMS, answered that the SLED database was
part of the department's IMLS [Institute of Museums and
Library Services] funding received annually as part of an
interlibrary cooperation grant. She explained the
competitive grant program had been around since the 1980s
and the SLED database was run by the Alaska Library
Network, which applied for the grant annually.
Representative Josephson stated that the librarians he met
with annually told him the money had been vetoed or had not
been supplemented in years. He was taking his "marching
orders" from Steve Rollins, the head librarian at the
University of Alaska Anchorage. He did not believe Mr.
Rollins was wrong about that. He thought Dr. Philips-Chan
was suggesting the funding was there.
Ms. Philips-Chan replied that in FY 23 the SLED databases
received $500,351 in grant monies through the IMLS
interlibrary cooperation grant program.
Representative Hannan asked about broadband assistance
grants component on slide 12. She presumed the funds had
been used to support school districts with limited
broadband. She asked if the specific grant funding would be
eliminated in five years once Alaska implemented state of
the art broadband throughout the entire state. She
referenced the new Broadband Office and associated funding.
Acting Commissioner Teshner replied it was a standalone
grant separate from the Broadband Office. The department
had not yet had conversations with the office; DEED had a
department representative as part of the specific group.
The department was assuming the program would continue as
long as the statute remained in place.
Representative Hannan encouraged the department to speak
directly with the Broadband Office. She detailed that the
office was floating maps of underserved communities. She
stated that the future distribution of the federal funding
depended on verifying that the service in a variety of
locations was not adequate. She highlighted the importance
of ensuring the grantees [currently receiving broadband
assistance funding] were represented as the maps were being
developed. She explained it was important for the state to
communicate where it had been giving grants because the
state knew the locations did not have service.
2:19:10 PM
Ms. Javier discussed the budget for the Professional
Teaching Practices Commission on slide 13. She explained
that the commission had the responsibility and power to
discipline members of the teaching profession and may issue
reprimands, suspensions, and revocations of educators'
certificates. The commission's executive director was its
one full-time employee and the commission was comprised of
five teachers, one superintendent, one principal, one
university representative, and one department
representative. The commission's total proposed FY 24
budget was $268,000 with a request for a fund change of
$100,000 from general fund program receipts to UGF. The
commission was funded through teacher certification fees
under the teacher certification component; however, the
department was anticipating the revenue would not be
sufficient to cover the teacher certification component and
the Professional Teaching Practices Commission component.
She explained the shortfall was primarily because the cost
of teacher certification fees had not been increased since
FY 16 to meet the increasing operational costs in both
components. She detailed that taking regular salary
increases, increased chargeback costs, and other increases
into account left a shortfall in the budget. The fund
change would allow teacher certification and the commission
to continue operations without increasing fees for
teachers. The commission also had a $105,000 request to
address increased administrative hearing and legal services
costs for FY 23. The commission had been assigned four
administrative law judges in response to four
administrative hearing requests. She explained it was a
unique situation that did not occur annually; the last
hearing was in 2018. She noted it was difficult to budget
for the requests.
Ms. Javier reviewed the budget for the Alaska State Council
on the Arts on slide 14. The mission of the council was to
represent, support, and advance the creative endeavors of
individuals, organizations, and agencies throughout Alaska.
The council was a public corporation that provided a wide
range of services and programs to Alaskans. The council's
FY 24 budget totaled ~$4.4 million with five full-time
positions and one nonpermanent position. The council was
primarily funded by other funds (statutory designated
program receipts) reflected by the orange portion of the
bars in a graph on slide 14. She detailed that the council
received program receipt funding the Rasmuson Foundation
and the Margaret A. Cargill philanthropies. The next
largest funding source was federal receipts from the
National Endowment for the Arts [shown in gray], followed
the UGF shown in blue, reflecting the general fund match
requirement for the federal funds.
Ms. Javier continued to review the budget for the Alaska
State Council on the Arts on slide 14. The council had
received federal COVID-19 funding that would expire at the
end of the current fiscal year. The council had two
requests in the FY 24 budget. The first request was for
$20,000 in arts in public places funding. She explained the
arts in public places were receipts collected under the
authority of AS 44.27.060, which placed 1 percent of the
construction costs of the building or facility into the
fund. Currently, the council had authority to spend up to
$30,000 of the fund. The one-time increase of $20,000 would
bring the total up to $50,000 in order for the council to
digitize inventory and track its art bank collection and
allow borrowers to review and request the available artwork
online. The second request was for $5,000 UGF in response
to the passage of Senate Bill 71 in 2022, which created a
special vehicle registration plate celebrating the arts.
The council would use the receipts from the license plates
to sustain the program and cover the cost for the artists'
design fee, preparation for production, and educational
materials about the program.
2:24:02 PM
Ms. Javier reviewed the budget for the Alaska Commission on
Postsecondary Education (ACPE) on slide 15. The
commission's mission was to promote access to and success
in education and career training beyond high school. The
commission's budget was comprised of the Alaska Performance
Scholarship (APS) award, Alaska education grants, loan
servicing, program administration and operations, and the
Washington, Wyoming, Alaska, Montana, and Idaho (WWAMI)
medical education program. The commission had 53 full-time
positions and one nonpermanent position budgeted for FY 24
with a total budget of ~$43.3 million. The largest
budgetary change from FY 23 to FY 24 was a fund change of
approximately $21.4 million from UGF to DGF from the Alaska
Higher Education Investment Fund. In the current fiscal
year, the APS, Alaska education grants, WWAMI, and some of
the program administration and operations for ACPE were
funded with UGF.
Ms. Javier continued with slide 15 and addressed an
increase of $1,647,500 in the Higher Education Investment
Fund to continue the expansion of WWAMI from 20 to 30 seats
for Alaskan students. The increment had initially been
added to the budget in 2022 as a multiyear appropriation,
but after further discussions with the University of Alaska
Anchorage (UAA) and the University of Washington School of
Medicine it had been determined that UAA needed to expand
its facilities to meet the need. The request would cover
the additional costs associated with the University of
Washington School of Medicine contract.
Ms. Javier noted high level budget changes on slide 16.
Acting Commissioner Teshner looked at a chart showing the
BSA Funding history from FY 99 through FY 24 on slide 18.
The chart also included an inflation chart and instances
where appropriations had been made that fell outside of the
funding formula. She detailed that in FY 23, $57 million
had been funded outside of the formula that was distributed
through grants based on average daily membership.
Representative Stapp asked how much progress had been made
on the state tribal compacting initiatives discussed in
recent years.
Acting Commissioner Teshner replied that the State Board of
Education would select up to five tribes from Senate Bill
34 at its March 17th meeting. She explained that the state
board could work with up to five tribes to go through the
negotiation process. On March 16 the board would make its
final decision on the tribes it would select. She shared
that the board had issued a request for applications (RFA)
and five tribes had submitted applications. In April the
department would have a kickoff meeting with the tribes to
start off the process to hit the ground running in May to
begin negotiating on who would do what. There was a
timeline over the next 10 months and a report would be
provided to the legislature in January 2024 that would
summarize the negotiation process with potential
legislation of what tribal education compacting would look
like.
Representative Stapp asked which five tribes had applied.
2:29:03 PM
Acting Commissioner Teshner answered the department had to
wait a couple of weeks before making the names public.
Representative Galvin looked at the chart showing the
historical BSA amounts on slide 18. She asked if the
department had a visual representation showing the change
in cost of educating students with regard to inflationary
costs.
Acting Commissioner Teshner answered that slide 19 included
a historical graph showing what had been paid out as state
aid. The department's website included budget and actual
reporting showing how districts had spent their operating
and special revenue funding. The information was not
included in the current presentation.
Representative Galvin wondered if it would be helpful for
the committee to understand the various cost changes. For
example, the committee knew districts were changing up
their programs and reducing the number of people. She was
interested in a measurement of inflation compared to the
dollars spent on education.
Acting Commissioner Teshner would follow up with the
information.
Representative Ortiz looked at high-level budget changes on
slide 16 specifically related to a $6.3 million increment
for second year implementation of the Alaska Reads Act. He
had been hearing a lot of concern from around the state
that the program was significantly underfunded. He asked
for comment.
Acting Commissioner Teshner answered that the Reads Act
called for best practice and districts should be doing that
already. The department recognized that it would be a large
amount of work in the beginning for districts with a number
of students who were not proficient in reading (especially
with individual reading plans and extra support needed
based on the Reads Act). She noted the small $30 BSA
increase to help support the implementation of the act at
the district level.
2:33:19 PM
Representative Josephson thought that if he asked the
Legislative Finance Division (LFD) to inflation adjust the
FY 17 numbers, LFD would say the budget was short by about
$260 million. He asked if there had ever been a funding gap
of that size historically.
Acting Commissioner Teshner answered not to her knowledge.
Representative Josephson asked if the state should be
concerned about litigation related to the state's duty to
fully fund public schools.
Acting Commissioner Teshner answered that the department
recognized BSA funding had not kept up with inflation and
it needed to be addressed. She stated that whether or not
the state was adequately funding its schools was a policy
call that needed to be determined based on data and the
students served.
Co-Chair Johnson stated it was up to the legislature as
policy makers to grapple with.
2:35:17 PM
Representative Josephson had asked his staff to follow up
the University's top librarian at the UAA campus. The
individual reported that SLED did not have funding and it
had been vetoed by the governor.
Co-Chair Johnson thanked the presenters. She noted there
was another presentation.
2:36:14 PM
AT EASE
2:41:23 PM
RECONVENED
^PRESENTATION: HISTORY OF THE BASE STUDENT ALLOCATION
FORMULA: LEGISLATIVE FINANCE DIVISION
2:41:28 PM
ALEXEI PAINTER, DIRECTOR, LEGISLATIVE FINANCE DIVISION,
provided a PowerPoint presentation titled "K-12 Funding
History: House Finance Committee," dated February 28, 2023
(copy on file). His overview would address funding for
school districts including direct and indirect sources,
funding comparison to other states, the state's formula
funding history, and funding levers for the legislature. He
began with a pie chart on slide 3 reflecting FY 23 school
district budgeted revenues by payor (from the Department of
Education and Early Development). He detailed that 63
percent of the revenue came from the state, 25 percent came
from local governments, 11 percent came from the federal
government (including E-rate funding), and about 1 percent
in other funding from tuition and investment returns. The
vast majority of the funding was from the state, with local
governments making up the second largest contribution.
Mr. Painter turned to slide 4 and addressed FY 23 sources
of funding for school districts. The largest funding source
was the foundation program at about $1.2 billion, which
represented just over half of the funding [to districts].
Local funding accounted for 23 percent of the funding
including indirect funding the state paid towards school
districts. There were numerous funding sources going to
districts including the direct foundation program, pupil
transportation, additional foundation funding paid out for
FY 23, deductible federal impact aid that went against the
foundation formula, local contributions, federal funding,
Teachers' Retirement System (TRS) and some Public
Employees' Retirement System (PERS) payments on behalf of
school districts (the funding did not show up in the
classroom, but the state paid the amount on behalf of
school districts directly to the retirement system), school
debt reimbursement (the state reimbursed municipalities for
their share of debt service on school projects; the cost
was not shown in district revenue because the money went to
local governments, but it was part of the state's
contribution to education funding) Regional Educational
Attendance Area (REAA) funding went to rural school
construction and major maintenance (also funding that did
not show up in the classroom, but reflected funding the
state paid for local projects).
2:45:39 PM
Representative Coulombe asked where the Public School Trust
Fund funding was included in the pie chart [on slide 4].
Mr. Painter answered it was included in the foundation
program. He elaborated that currently all of the Public
School Trust Funds were used as one of the state sources of
money for the foundation program.
Representative Coulombe thought it sounded like the trust
fund had numerous limitations on the amount that could be
withdrawn. She asked for the current balance of the fund.
Mr. Painter answered that the balance was in the $600
million to $700 million range at present.
Representative Ortiz asked if it was optional for the state
to fund school bond debt reimbursement.
Mr. Painter answered that while the state had agreed
through statute to take on the debt, it was subject to
appropriation by the legislature annually.
Representative Ortiz asked if the legislature had ever not
funded school debt reimbursement under the statutory
guidelines.
Mr. Painter responded affirmatively. He elaborated that
school debt reimbursement had not been fully funded in FY
17, FY 20, FY 21, and initially in FY 22. He noted the
state had repaid the past unfunded amounts from those years
in the FY 22 supplemental budget. There were some other
periods in the 1990s where the funds had not been paid in
full.
Representative Ortiz asked for verification that the
administration had the power to veto the funds.
Mr. Painter agreed.
2:48:06 PM
Representative Stapp asked if there was any issue with
paying existing bond debt while maintaining the moratorium
on new [school construction costs].
Mr. Painter answered the moratorium (on new debt) period
was 2015 through 2025. The debt the state was paying had
been incurred since the moratorium. He thought districts
would prefer to keep being reimbursed for debt that had
already occurred. He explained that if districts incurred
new debt, the state would not kick in a share. If the
election was held after July 1, 2025, districts would be
entitled to a share of state reimbursement at that point.
Mr. Painter reviewed direct versus indirect sources on
slide 5:
• School districts receive direct funding through the
State foundation and pupil transportation formulas,
federal impact aid and title programs, municipal
contributions, and E-Rate funding.
• They also receive indirect funding that does not show
up in their revenue reports but is spent by the State
on their behalf. This includes PERS and TRS funding
above the employer caps, school debt reimbursement,
school construction and major maintenance funding.
• The Census Bureau's school finance data (used for
cross-state comparisons) includes PERS and TRS funding
but not other indirect sources.
• Most of this presentation will focus on the foundation
and pupil transportation formulas, as well as
municipal contributions.
Mr. Painter elaborated that when looking at various ways to
slice the funding, there were different totals that did not
add up to the same thing. For example, [the pie charts] on
slides [3 and 4] did not add up to the same thing because
one included indirect funding and the other did not.
Additionally, the Census Bureau's numbers would not add up
to the same thing because not all indirect sources were
included.
Mr. Painter moved to slide 6 showing a chart of all states
education funding for FY 20 sorted by state funding (from
the U.S. Census Bureau). The chart sorted the states by per
pupil funding of state funds only. He reported that by
state funds only, Alaska ranked fourth in the nation in FY
20. He noted that it was not necessarily a particularly
logical way to sort the bars; the total funding bars did
not really line up. He remarked that sometimes it was said
that Alaska spent more on education than any other state or
was in the top few. He confirmed that the state share was
fourth in FY 20, but it would be a bit lower in FY 23. He
explained that when considering all funds, Alaska ranked
th
11 rather than fourth. The reason for the difference was
that Alaska was ninth nationally in the proportion of funds
coming from state government. While Alaska had an unusually
large amount of federal funding, it had a more "state
heavy" versus "municipal heavy" education formula. The
state had chosen to take on the majority of that funding,
whereas in many states, there was more of a mix.
2:52:11 PM
Mr. Painter moved to slide 8 titled "Notes on National
Comparisons." He relayed that Alaska's formula in FY 20 was
64 percent funded by state government compared to the
national median of about 48 percent. Alaska's system was
more state heavy. He clarified it did not mean the system
was more expensive, but when doing a comparison of state
funds only it made Alaska look more expensive than a
comparison using all funds. He relayed that Institute of
Social and Economic Research (ISER) had done comparisons
adjusting for cost of living differentials.
Representative Hannan looked at the comparison of education
funding for all states in FY 20 on slide 7. She asked if
LFD had done any analysis between municipal school
districts and REAAs. She observed that other states had
counties contributing to local governments. She clarified
she was not advocating for lowering funds. She asked if the
state had accounted for what Alaska funded in city school
districts compared to city school districts in other states
versus Alaska's rural school districts and counties that
may contribute.
Mr. Painter answered that he had not tried to look at the
comparison of only looking at municipal school districts.
He considered the fact that there were districts that did
not contribute would likely be a factor in why Alaska was
relatively state heavy. He had done analysis in the past,
but it was very speculative and difficult to get numbers
on. He explained that if every area in the state organized
there would be a few results that would impact the state.
First, the municipalities would have a local contribution
in those areas; however, the entire property tax went to
the state in unorganized areas with significant oil and gas
property. He explained that if those areas organized the
municipalities could levy a tax on the property that would
be deducted from the state tax, which would result in a
revenue deduction to the state. There were certain areas in
Alaska where the state would lose money if they had a local
government.
Mr. Painter stated another factor was in the deductible
impact aid. One of the reasons Alaska was relatively high
on the federal funding number was due to a significant
amount of impact aid for military activity and Alaska
Native tribal lands that were not taxed. In municipal
school districts, the deductible portion of the impact aid
was multiplied by a factor relating to the local taxing
effort. The state could only deduct about half of 90
percent of deductible impact aid. For some of the districts
with significant amounts of local impact aid, the amount
the state deducted would go down by so much that it would
outweigh any local contribution because their most valuable
land was often nontaxable because it was tribal land. There
were many factors about whether the system resulted in the
state cost being "on net" higher than if there were
organized areas. He thought it was ambiguous at best.
2:56:53 PM
Mr. Painter turned to slide 8a and provided "Basics of
Foundation Formula." He provided a brief description of how
the formula worked:
• Average Daily Membership (ADM) student count taken
in 20-day period ending in the last Friday in October
• Adjusted Average Daily Membership (AADM) student
count as modified by factors:
o Correspondence students are not multiplied by
other factors, but count as 0.9 ADM
o Non-correspondence student count is multiplied
by:
square4 School size factor, providing more funds per
student for smaller schools. District values
range from 1.12 (Anchorage) to 2.83
(Pelican)
square4 District cost factor, adjusting for cost
differentials between districts. Values
range from 1.000 (Anchorage) to 2.116 (Yukon
Flats)
square4 Special Needs Factor, a block grant
multiplying every district's ADM by 1.20
square4 Career and Technical Education (CTE) Factor,
a block grant multiplying every district's
ADM by 1.015
square4 Special Education (SPED) Intensive factor,
providing 13x ADM for special education
students in a high-need category
• The AADM is then multiplied by the Base Student
Allocation (BSA) to get Basic Need
• Basic Need is paid by a combination of the required
local contribution, deductible federal impact aid, and
state aid.
Mr. Painter elaborated on slide 8a. He expounded that the
BSA was often conflated with the entire formula, but basic
need was the end result. The state aid was calculated by
taking basic need, subtracting the required local
contribution and the deductible federal impact aid.
Co-Chair Johnson asked if the information was written out
in the formula structure somewhere.
Mr. Painter answered that DEED had a presentation showing
more detail on how the foundation formula worked; the
information was also on the DEED website. The LFD website
included the citizen's guide to the K-12 formula that also
showed the calculation in depth. He offered to provide the
information to the committee.
3:01:20 PM
Representative Stapp asked if the school size factor was
amalgamated through the entire district or reflected a
multiplier per school per student.
Mr. Painter answered it was based on per school
calculations.
Representative Stapp asked if someone had ever looked at
the urban districts in Anchorage and Fairbanks and the
number of facilities and students enrolled compared to
other areas. He stated if it were him, he would try to
maximize potential revenues by considering the idea.
Mr. Painter replied that LFD did not look at district funds
that way. There was a hold harmless provision added by the
legislature several years back that enabled districts to
consolidate schools and retain their previous school size
factor declining over several years in order to balance the
local revenue piece against cost savings. He noted it had
been an area of controversy in Anchorage in the past
several years. The provision had been added in order enable
districts to get the savings from consolidating schools
rather than the savings going to the state (at least for
the three years of the hold harmless provision).
Representative Ortiz looked at the special education
intensive factor providing 13x the ADM. He asked for more
detail. He thought the federal government had something to
do with added funding for the particular category.
Mr. Painter answered the federal government did have a
funding piece for the [special intensive factor], but the
13x was the state cost. There may be other federal funds
available for some students. To be categorized as
intensive, the district had to certify that the student
needed the services and to provide a certain level of
services to the student. He deferred to the department for
more detail.
Representative Ortiz asked if an IEP [individual education
plan] was required to qualify for the funding.
Mr. Painter would follow up.
3:04:49 PM
Representative Coulombe followed up on Representative
Ortiz's question related to the special education intensive
factor. She relayed that DEED had explained in subcommittee
that the funding was for children with severe physical and
mental needs. She agreed the students would be on an IEP
and reiterated the funding was for students with high
needs.
Representative Hannan considered the school size factor
created in 1998. She asked if the state had changed the
school size factor for Hooper Bay in 2022. She wondered if
it was an anomaly.
Mr. Painter replied there were a couple of kink points in
the school size factor where a district lost out on a
significant amount of money when its school size hit those
points. He stated that Hooper Bay had a charter school and
charter schools were treated differently. He did not recall
the specifics of the bill, but it related to a very
specific situation around one of the kink points.
Representative Galvin looked at the local contribution for
education. She knew there was a cap and that several of the
state's communities (those with taxation) had been
contributing to the cap. She asked if there had
historically been talk about raising the cap and what the
ramifications to the overall formula and federal funding
would be.
Mr. Painter replied that he would answer the question on an
upcoming slide.
Representative Tomaszewski asked if there was an average
total BSA with all of the factors.
Mr. Painter answered the BSA in statute was the same for
all districts and was currently $5,960 for FY 24. The BSA
was multiplied by all of the factors [shown on slide 8a].
He noted that a subsequent slide would show what the
multipliers ended up being for all of the districts.
Co-Chair Johnson thanked Mr. Painter for including the
information on slide 8a.
3:08:12 PM
Mr. Painter discussed foundation formula history on slide
9. He relayed that the current formula was established in
1998 and the legislature had modified the factors several
times. He explained that $1 in the BSA in FY 99 was not
equivalent to $1 in the BSA in FY 23. He elaborated that
graphs showing the BSA only did not reflect the entire
picture because $1 in the BSA was not equivalent over time.
The same was true for looking only at state contributions
over time versus the entire amount of basic need; it was
not the entire picture and could be misleading because
there were other payors. The district cost factors were the
largest change. The original factors were adopted in 1998
and modified in 2008 to implement a study commissioned by
the legislature conducted in 2005, which was based on data
collected from FY 00 through FY 03. The new factors were
phased in from FY 09 through FY 13 and had remained. He
stated that the data behind the current factors was 20 to
25 years old.
Mr. Painter continued to review the foundation formula
history on slide 9. The intensive special education factor
had been increased from 5x in FY 10 to 11x in FY 11 and to
13x in FY 12. The factor had remained at 13x ever since. In
FY 15, the career and technical education factor was added
[Mr. Painter later corrected that the career and technical
education factor was added in FY 10] and the correspondence
multiplier increased from 0.8 to 0.9.
3:10:18 PM
Representative Hannan asked for more information on
district cost factors. She presumed the original study had
been done on the cost of goods and services delivered in
various areas and looking at geographic cost differentials.
She asked what other things may have been included and
whether it reflected things like a school district losing a
building to a fire.
Mr. Painter answered that the study adopted in 2005 was the
third take of the study. The original study had been
conducted by the McDowell Group and had developed the
original formula. There was another study commissioned by
the legislature that had not been implemented.
Additionally, DEED had a statutory requirement to develop
formula factors every two years. He explained that when the
department had done so in the early years, the legislature
had rejected DEED's work as well. Finally, there had been a
study conducted in 2005 by Institute of Social and Economic
Research (ISER) school finance experts. The ISER study
looked at a broad range of factors, the largest of which
was the difference in the cost of employees. The study had
considered what a teacher needed to be paid in order to
have an equivalent quality educator throughout the state.
In addition to cost, the study had looked at the
desirability of districts. The study also included amounts
for energy costs based on actual costs experienced by
districts in those years. He remarked that the energy costs
may have changed and the form of energy consumption in
those districts may have changed. He believed there had
been about 11 factors, which also included shipping costs.
The original study was on DEED's website. The attempt had
been to look at all of the places districts were spending
money and determine how costs would need to be adjusted to
make them equivalent across districts.
3:13:17 PM
Representative Galvin asked if anything popped out as
something that one community may have changed drastically
over another when considering the many factors explored by
ISER. She remarked that everyone in the [Capitol] building
was talking about that the current formula needed to change
in terms of the base dollar amount. She asked if anything
jumped out as a red flag that needed to be fixed before
making a basic adjustment to help all districts and
students.
Mr. Painter replied that given that the study was released
18 years back, it was hard to isolate an individual thing
that may be wrong. He stated that the study reflected a
very different world. He elaborated that it had been
conducted in a pre-Amazon Prime world for shipping costs
and there had been very different energy prices and energy
mixes compared to the present day. He highlighted educator
salaries and health insurance and explained there may have
been quite a number of differences that had arisen in the
past 25 years that made it very difficult to look at any
particular factor as standing out as out of date.
Representative Galvin stated that much had changed in 15
years. She remarked that everyone had experienced Amazon
Prime in Alaska. Additionally, everyone had experienced the
changes in many of the other costs associated with
education including inflation. She commented that the study
had taken a significant amount of time. She highlighted
that the schools needed to be able to retain and attract
teachers. She reasoned that if Mr. Painter did not see any
red flags about one community over another, perhaps the
legislature could still proceed with shoring up education.
3:15:53 PM
Representative Coulombe noted that the previous year DEED
had failed the 25 percent disparity test. She asked if it
was a red flag indicating the formula was off.
Mr. Painter answered that initially the state had failed
the disparity test. He explained that the disparity test
was performed by the federal government to determine
whether the state's districts were equalized in their
funding. The state was allowed to use the adjusted average
daily membership level in the test. He noted that because
the state foundation formula was equal for every district,
the state always passed that component. The variable was
local funding. The reason the state had failed was due to
the inclusion of the pupil transportation formula. He
clarified there were many districts that did not have a
pupil transportation program for practical reasons. Adding
pupil transportation [to items considered under the
disparity test] had caused the state to fail. The
department had successfully appealed, and pupil
transportation was now excluded; therefore, the state had
passed the disparity test. He stated he would address the
local funding component on the next slide.
Co-Chair Johnson asked members to hold questions until the
end of the presentation.
Mr. Painter reviewed changes in state and local
contributions on slide 10:
• 34 of Alaska's 53 school districts are in organized
areas, meaning that their boundaries correspond to
municipal boundaries. The remaining 19 districts are
Regional Educational Attendance Areas (REAAs), with no
municipal government and no taxing power.
• Municipal school districts have a required local
contribution and a maximum local contribution.
• Until FY01, the required local contribution is the
lesser of 4 mills (0.4% of property value) or 45% of
Basic Need. From FY02 to FY11, only 50% of the
increase in property values could be added to the
local contribution each year, resulting in many
districts paying less than 4 mills. From FY12 on, the
contribution has been fixed at 2.65 mills or 45% of
Basic Need.
Mr. Painter elaborated on the third bullet point on slide
10. The required local contribution had increased over the
entire period faster than the education formula as a whole
because local property tax values had increased faster than
the educational formula despite the lower mill rate. He
reviewed the last bullet point on the slide:
• The maximum optional local contribution for most
districts is 23% of Basic Need, allowing Alaska to
pass the federal disparity test (which requires no
more than 25% difference in funding per AADM and
allows Alaska to deduct $73.3 million of federal
impact aid from the State share of funding).
Mr. Painter elaborated on the last bullet point on slide
10. He explained that if the state did not pass the federal
disparity test, it could not deduct the federal impact aid
from basic need. He elaborated that districts would still
receive the $73.3 million in impact aid, but the state
would not be able to deduct it from its local share, which
would cause state cost to increase by $73 million. The
legislature had made the policy decision to cap local
contributions in order to ensure the state passed the
disparity test and to keep costs down by deducting the
federal impact aid. He clarified that if the state failed
the disparity test and allowed districts to contribute
whatever they wanted, it would result in a much more
unequal formula. He expounded that there would be districts
receiving impact aid that would not be deducted; therefore,
those districts would receive much more federal money and
total funding. He explained that districts with high tax
bases would be able to contribute much more because there
would be no cap. Districts without a local tax base and no
impact aid would be no better off and the state would be
picking up their cost.
3:21:58 PM
Mr. Painter advanced to a bar chart on slide 11 showing a
history of the average daily membership in blue and the
adjusted average daily membership in red. He noted that LFD
could provide the data prior to FY 05 at the committee's
request. He highlighted that the ADM had not really
increased over time. In FY 05, the ADM had been just under
$131,000 and it had been around $130,000 ever since. He
noted the number of students had been about the same since
the late 1990s. The number of students in the AADM had
increased substantially beginning in FY 09 through FY 13 as
the new district cost factors came online. He remarked that
it was important to look at the difference because a BSA
only chart made it look like funding in FY 08 and FY 24 was
multiplied against the same thing, but that was not the
case; there was a significant difference from year to year.
Mr. Painter turned to slide 12 showing the impact of
factors per non-correspondence ADM from FY 05 to FY 24. The
chart reflected the relative value of each of the factors
and how it had changed over time. The data showed the
impact of the various factors on an individual non-
correspondence student. The school size factor had mostly
remained the same with the exception of FY 21 because
during the COVID-19 pandemic many students had gone from
brick and mortar classrooms to correspondence programs,
which triggered hold harmless provisions in many districts.
In FY 21, there was a spike in the school size/hold
harmless multiplier. The cost factor multiplier had
increased significantly as a result of building in the
higher cost factors from FY 09 through FY 13. The special
needs factor was 1.2 every year and did not change. The new
career and education factor began at .1 in FY 10 and
increased to .15 in FY 15. He noted an error on a previous
slide [slide 9] specifying that it began in FY 15. The
multiplier for the special education intensives went up
several times over the FY 09 through FY 13 period due to
the higher multiplier and more students being counted as
intensives when more funding was available. He relayed that
between FY 05 to FY 08 each ADM had been worth about 1.6 to
1.7 AADM, compared to the present number of about 2.2. The
result of all of the changes in the factors was
significantly more money going out to districts per $1 in
the BSA.
3:26:38 PM
Representative Stapp provided an example where a student
started off in the school system and enrolled in a
correspondence program through their own brick and mortar
school district. Under the scenario he asked if brick and
mortar schools could use the hold harmless provision to
maintain brick and mortar funding.
Mr. Painter answered it could be done through the life of
the hold harmless, but not repeatedly. He stated it had
happened in some cases where students had switched from
brick and mortar to correspondence in their own school
district. He explained that the action had triggered the
hold harmless provision and the student had been counted as
a correspondence student. The schools had seen an increase
in funding, but it had largely worked its way through the
formula "at this point" because the three-year hold
harmless period had concluded. He confirmed that in the
first year some districts had been able to get funding on
both sides. He highlighted that many schools without a
correspondence program had lost students. He stated that
the impact had been disparate by district.
Representative Galvin was interested in the different cost
multipliers that changed from FY 09 to FY 15. She mentioned
the school size factor. She asked for verification that
special education and special needs were not included.
Mr. Painter answered that the district cost factor had
changed from FY 09 through FY 13. Additionally, the special
education multiplier increased from 5 to 13 from FY 09
through FY 12. He pointed to the green portion of the bars
on slide 12 reflecting an increase in the cost factor
multiplier from FY 09 through FY 13. The orange portion of
the bars showed an increase in the special education
intensives from FY 09 to FY 12.
Representative Galvin stated her understanding that the
special needs factor and the special education intensive
factor were intended to address legal challenges brought
against the state. She asked for verification that the
state could not make changes to reduce the items.
Mr. Painter responded it was not optional for the state to
pay for the items, but the payment method was up to the
legislature. The 13x multiplier had been selected based on
districts presenting the actual costs for students, finding
that the factor did not meet the actual costs districts
were facing. The change was made based on the feedback from
districts on the costs they were experiencing and what
multiplier was needed to meet the costs. The multiplier had
been selected by the legislature based on the feedback. He
explained that some states specified that the state would
pick up any cost over a certain dollar figure directly.
Other states allowed districts to submit invoices to the
state for costs incurred for students. Other states had a
more complex system where there may be many different
levels of need and different factors for the different
levels. He stated it was another system the state could go
to. It was difficult because the costs did have to be paid
by the district; it was just a question of how the state
chose to fund the costs. The state had the constitutional
responsibility to provide for assisting public schools.
3:31:37 PM
Mr. Painter looked at the BSA history in nominal dollars on
slide 13. He reiterated his earlier statement that looking
at the BSA alone was misleading because it did not include
all funding. The chart showed a significant increase in the
BSA from FY 05 through FY 07. The BSA had not changed
substantially since that time. He highlighted that between
FY 07 and FY 24 the number had increased from $5,380 to
$5,960.
Mr. Painter moved to slide 14 and discussed the BSA history
in FY 22 dollars. Over the last 20 years the peak BSA year
was FY 07 (the last year of a three-year increase) and the
number had since declined. The BSA was currently below the
lowest it had been in the last 20 years adjusted for
inflation. He noted that FY 23 and FY 24 were based on 2.5
percent inflation projections.
3:33:05 PM
Mr. Painter looked at a chart titled "Basic Need, FY 05-
FY24 Projection (Nominal dollars)" on slide 15. He believed
the slide was more useful than the prior slide because it
included the differences in the factors and differences in
the BSA in the total funding amount. In terms of nominal
dollars, the required local contributions had increased for
the entire period despite the 4 percent dropping to 2.65
percent [shown on slide 10]. The deductible state impact
aid had also increased state funding and had increased over
the period but had been relatively flat since around FY 18.
He noted the slide did not include funding outside of the
foundation formula.
Mr. Painter addressed a chart titled "Basic Need, FY 05-
FY24 Projection (FY22 dollars)" on slide 16. He relayed
that despite the BSA being $1,000 lower, the factors were
much bigger and as a result the amounts in FY 05 and FY 24
were relatively similar. The slide showed a peak total
funding level in FY 17 with a reduction to the FY 05 level
in FY 24 in terms of total basic need in inflation adjusted
dollars. He noted that factor dollars did not impact all
districts equally. He explained that Anchorage was one in
all of the scenarios because it had always been the base.
He elaborated that Anchorage did not receive an increase
from the school size factor, but other districts did. He
highlighted that while FY 05 and FY 24 were [close to] the
same, they were not necessarily the same on a district by
district level (some districts may have benefited from the
higher school size factor adjustments, while others did
not).
3:35:16 PM
Mr. Painter turned to a chart on slide 17 titled
"Foundation Funding Plus Additional Formula Funding and
Pupil Transportation, FY05-24 (Nominal dollars)." The slide
layered in the pupil transportation formula and additional
formula funding. He detailed that the pupil transportation
formula went to districts that operated a pupil
transportation system (busses and aircraft in one case).
The amounts had been a fixed amount per student since FY 15
with no adjustments. Prior to that there had been periodic
inflation adjustments, the most recent was implemented from
FY 13 through FY 15. The program had originally been a
state reimbursement program where the state reimbursed the
actual costs experienced by districts. The program had
subsequently switched to a per ADM grant and had been
rebased a few times in the mid-2000s and early 2010s to try
to adjust to the actual cost districts were experiencing.
The rebasing had not occurred in over a decade and the
number had not been inflation adjusted since FY 15. The
green portion of the bar reflected additional funding
provided by the state on top of the BSA formula to be
distributed according to the formula (including the $57
million in FY 23).
Mr. Painter turned to slide 18 and reviewed a chart showing
the same information but in FY 22 dollars. The peak year
was no longer FY 17 as it was based on BSA only; the peak
year was now FY 15 because of outside the formula funding.
He noted that FY 24 was comparable to FY 05.
3:37:38 PM
Mr. Painter looked at slide 19 and addressed a chart titled
"Foundation Funding Plus Additional Formula Funding, Pupil
Transportation, and Additional Local Contribution, FY05-24
(Nominal Dollars)." The slide added in optional funding
from local government. He noted the slide did not show the
complete picture, but included funding that went out
through the formula and municipal appropriations. The
amounts had increased a bit over time because they were
based on basic need. He explained the amounts could not
really increase much faster than basic need; therefore,
additional local contributions had not changed
substantially over time.
Mr. Painter turned to slide 20 and discussed the same
information [shown on slide 19] in FY 22 dollars with
inflation adjustments. He stated it was a pretty similar
picture to the last several slides.
3:38:27 PM
Mr. Painter turned to slide 21 and discussed funding levers
for the legislature. He stated that the legislature had
several levers to impact school funding, each with
different impacts to districts. The first was the BSA,
which provided across-the-board funding to all school
districts on an equal per-adjusted-student basis. The
second was outside-the-formula funding, which was
distributed the same way, but as a one-time item through
the budget. He noted that districts did not necessarily
want to build the funding into their base because of the
one-time nature of the funding. The third was changing the
formula factors that would affect districts differently. He
explained that the option could result in more funding
going to some districts and less funding going to some
districts. The method could be used to target funding to
particular districts or particular types of districts in
need. In the past there had often been studies to determine
the cost factors, some of which were never implemented.
Mr. Painter continued to review funding levers on slide 21.
The fourth lever was the TRS on-behalf payment cap of 12.5
percent. He explained that adjusting the payment cap up or
down would change the amount districts paid in their
budget, which provided an equal amount of funding to
districts on a per-employee salary basis (rather than per-
student). He pointed out that changing TRS funding or the
BSA by an equivalent amount would impact districts
differently. The fifth lever was to change the required
local contribution of 2.65 mills. He explained it would
shift who paid between State and local governments, but it
would not necessarily impact the amount of money districts
received. The last lever on slide 21 was to change the
local contribution cap, which could allow greater
contributions by some municipalities, but it could result
in losing an equalized formula, which would increase the
state costs but would provide more funding to some
districts. He offered that LFD could provide numbers
showing how different levers would impact districts. He
noted there were a few additional options that were more
complex. The presentation contained several appendices
showing the numbers behind some of the slides.
3:41:44 PM
Representative Galvin referenced slide 12 and noted that
the special education factor had been increased to 13 by FY
12. She was hearing a lot of buzz about the topic in
various news reports. She stated her understanding that
changing the BSA in a way that did not look at specific
students would be to the detriment of some rural
communities. She asked for comment.
Mr. Painter answered that if the special needs factor was
eliminated and replaced with a block grant, the districts
with a disproportionate number of the students would not
have sufficient funding. The special education factor count
by district was not equivalent; the students were not
equally distributed throughout the state and there were
significant differences on a district by district level.
There would be some districts that would likely be better
off and other districts (especially small districts) may
not have the resources to handle the costs.
Mr. Painter continued to answer Representative Galvin's
question. He referenced a special needs block grant and
relayed that the legislature had commissioned a study in
2015 that looked at the formula. The study considered
whether the special needs factor should be converted to a
per student formula providing different levels of funding
based on counts of special needs students. The study had
found there were significant differences in the number of
special needs students, especially English language
learners, by district. The study recommended looking into
turning the block grant into a counted program like the
special education program. There were differences in the
underlying characteristics of districts that the block
grant did not reach, whereas the special education
intensives did, but only for certain students with the
highest level of need.
Representative Galvin appreciated the explanation and
wanted to make certain the state did not set itself up for
litigation. She surmised that the per pupil transportation
had changed. She stated that originally there had been a
reimbursement. She considered larger districts and the fact
that buses had to run whether they were picking up one
student or 24. She noted that it had not changed since 2015
and local governments had tried to contribute what they
could. She asked if it would be more beneficial for some of
the larger districts to move back to receipts.
Mr. Painter responded that he had looked at the reasoning
behind why the legislature chose to go from the
reimbursement method to a per student method (it was a
different per student amount by district based on their
historical cost). The reasoning was to try to ensure the
accountability for the funding was with the districts where
districts would provide the services for the lowest cost
possible because they received a set amount of money
instead of getting reimbursed no matter what the costs
were. The legislature had rebased the numbers several times
after looking at what districts were actually spending on
pupil transportation versus how much the state was paying.
He believed the most recent change had been in FY 13. He
stated it was a policy choice, but the legislature had not
gone back to determine whether costs districts were
incurring for pupil transportation being adequately covered
by the pupil transportation formula or whether some
districts were over funded or underfunded.
3:47:13 PM
Representative Galvin asked about funding for
transportation and classroom learning. She thought it
sounded like there were opportunities in place to shore
them up in a lasting way. She asked what Mr. Painter was
hearing from superintendents about the preference for one-
time funding versus a systemic BSA increase.
Mr. Painter replied that he had not spoken with any
superintendents in the current year. He relayed that
generally the districts preferred predictable funding in
the BSA. He explained that one-time funding would not be
included in the budget the following year, just as the $57
million in FY 23 was not included in the base FY 24 budget.
He explained that changing the BSA provided more
consistency from year to year. He stated that the outside
the formula funding had been used when the legislature
wanted to provide more money than it was comfortable with
giving permanently. He relayed that districts would prefer
getting more money in statute versus in an appropriation
bill.
Co-Chair Johnson thanked Mr. Painter for the presentation.
She reviewed the schedule for the following day.
HB 39 was HEARD and HELD in committee for further
consideration.
HB 41 was HEARD and HELD in committee for further
consideration.
| Document Name | Date/Time | Subjects |
|---|---|---|
| DEED Budget Overview H FIN 02.28.23.pdf |
HFIN 2/28/2023 1:30:00 PM |
HB 39 |
| HFIN LFD Foundation Presentation 2-28-23.pdf |
HFIN 2/28/2023 1:30:00 PM |
LFD BSA Presentation |
| (H)FIN 2.28.23 DEED Budget Overview Follow-up Responses.pdf |
HFIN 2/28/2023 1:30:00 PM |
|
| Enclosure 3 - BSA Inflation Pencil Chart from Alaska Council of School Administrators.pdf |
HFIN 2/28/2023 1:30:00 PM |
DEED - HFIN Follow-up |
| Enclosure 2 - DEED Budget Overview H FIN 02.28.23 rev 03.02.23.pdf |
HFIN 2/28/2023 1:30:00 PM |
DEED - HFIN Follow-up |
| Enclosure 4 - FY23 ILC Grant Payout_SLED.pdf |
HFIN 2/28/2023 1:30:00 PM |
DEED HFIN Follow up |
| Enclosure 1 - DEED EARL 2023 Report revised 3-7-2023.pdf |
HFIN 2/28/2023 1:30:00 PM |
DEED - HFIN Follow-up |