Legislature(2023 - 2024)ADAMS 519
03/30/2023 01:30 PM House FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| HB39 || HB41 | |
| HB65 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | HB 65 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| + | TELECONFERENCED | ||
| += | HB 39 | TELECONFERENCED | |
| += | HB 41 | TELECONFERENCED | |
HOUSE BILL NO. 65
"An Act relating to education; increasing the base
student allocation; and providing for an effective
date."
Co-Chair Edgmon announced that the committee would hear HB
65. He noted the meeting would end by 3:30 p.m.
2:29:00 PM
REPRESENTATIVE DAN ORTIZ, SPONSOR, provided a PowerPoint
presentation titled "House Bill 65 "Increase the Base
Student Allocation": House Finance Committee," dated March
30, 2023 (copy on file). He read from prepared remarks:
House Bill 65 will increase the Base Student
Allocation (BSA) by $680 for the first year for a
total BSA of $6,640 per eligible student. In the bill,
the second year calls for a BSA increase by an
additional $120 for a total increase of $800 from the
current BSA amount to a total BSA of $6,760 per
eligible student. As you can see with the recently
updated fiscal notes, total cost of the proposed
increase is $174 million (almost $175 million) and
$205 million in FY 25 and beyond.
Representative Ortiz stated the legislature had heard a lot
about the needs across the state from almost all of the
districts about the problems they were having with the
current funding level. He was honored to sponsor the bill
and looked forward to the important conversation the body
needed to have about education funding. He continued to
read from prepared remarks:
In the House Education Committee, they amended the
bill to include a two-year step up approach, which I
support. It will help us ease into a BSA increase
during a current challenging revenue forecast and it
will also help offset the ever increasing inflation
experienced by school districts. Based on what we've
heard from almost all of the 54 school districts and
their residents across the state. The $680 that would
be added to the BSA under this bill, would
significantly fall short of the real needs of many of
our districts and particularly more rural districts.
As the bill moves through the process in the
committee, I would welcome any amendment that would
increase the BSA up to $800 rather than the $680.
2:31:49 PM
Representative Ortiz moved to slide 2 and discussed
increases in inflation with prepared remarks:
Since 2012, inflation has increased by at least 24
percent, while the BSA has only increased 4.2 percent.
Although we have flat funded education, in recent
years because of inflation spending power for
education funding has actually decreased by almost 20
percent.
Representative Ortiz highlighted that the graph on slide 2
reflected that the real spending power of the BSA had
decreased significantly. He stated it was quite clear the
legislature needed to address the issue.
He turned to slide 3 and discussed increased costs
throughout Alaska with prepared remarks:
In the Lower Kuskokwim, they have seen a 46 percent
increase in fuel costs. In the Juneau School District,
they have seen 155 percent increase since 2017 in
property and liability, auto, and cyber insurance. In
the Annette Island School District in the community of
Metlakatla, electricity costs have gone up by 26
percent. In the Anchorage School District, medical
coverage for employees' accounts for over 17 percent
of their general fund expenditures and high inflation
within the medical sector will necessitate increased
district and/or employee contributions to health plans
or a reduction in benefits. Some of these costs like
freight and shipping are unique to Alaska. Taking into
consideration Alaska's specific cost of living, Alaska
spends less per pupil on public education than the
national average. Yes, Alaska ranks six in the
national per pupil K-12 funding in raw dollars, but in
a study recently conducted by Institute of Social and
Economic Research (ISER), they found that when 2019
education spending in Alaska was adjusted for the cost
of living, Alaska was underfunding education in
comparison to the national average. The actual study
can be found in your bill packet.
2:34:09 PM
Representative Ortiz turned to slide 4 and discussed
decreased services with prepared remarks:
As a result, school districts are having to make very
difficult decisions to balance their budgets. Every
district is cutting teachers and increasing classroom
size. Counselors, librarians, custodians, and other
support staff are currently on the chopping block. For
example, in the Fairbanks North Star School District
they have decided to close and restructure a couple of
schools, increase class sizes, and eliminate over 130
positions including teachers, counselors, classroom
aides, and other support staff. The Kenai Peninsula
School District would have to eliminate 33 to 49
fulltime certified teachers, which would raise the
student teacher classroom ratio by plus five per
classroom. In the Annette Island School District, they
are looking at a 12 percent decrease in staffing to
address their $1.2 million shortfall this upcoming
year. Anchorage is increasing their pupil to teacher
ratio across the K-12 system by plus one and
eliminating 62 fulltime teaching positions to save
about $7.3 million.
Fine arts programs, language classes, and even AP
classes are at risk. After school and extracurricular
activities are also being considered to be on the
chopping block and we have heard anecdotally from
students that losing programs they care about
decreases their motivation to stay engaged. These are
all potential and would become reality unless we do
something to address the BSA this particular year.
Despite the decrease in services, school districts are
still prioritizing funding for instruction.
Instructional costs make up 74 percent of education
funding expenditures, while administrative costs only
make up about 14 percent of expenditures. As we debate
the merits of an increase to the BSA, it is important
to put that investment in context of the budget. Now
that the Department of Health and the Department of
Family and Community Services are two separate
departments, the Department of Education and Early
Development is the second largest budget item.
Unfortunately, that makes it the easiest budget to
target in times of budgetary challenges without
necessarily taking into account the long-term impacts
on children and our future workforce. Meanwhile, I'd
like to note that our largest budget is the PFD as
this particular slide denotes.
Representative Ortiz recognized that many Alaskans needed
and could use the PFD. He thought Alaska was very unusual
as a state to be supporting something like a PFD allotment
for all of its residents and spending more on that than on
education for its residents. He believed the situation had
to be addressed.
2:37:23 PM
Representative Ortiz turned to slide 7 showing K-12
foundation formula funding and PFD appropriations. He
highlighted that the state had not always spent more on the
PFD than it had on education. He pointed out that in FY 13
the state had spent almost twice as much on education as it
had on the PFD. The first time the state spent more on the
PFD than education was in FY 16. He stated it had gone back
down with the difficult decisions made by the
administration at the time. He stated that it had been only
in the past few years that the amount the state was
spending on the PFD significantly outstripped the amount
spent on education. He clarified that he was not
underestimating the importance of the PFD; however, he
believed it was a problem when the state was putting more
towards the PFD than education. He believed the committee
had heard loud and clear from many of the districts
regarding the needs for the BSA. He concluded that the bill
sought to address the issue. He looked forward to a debate
on the topic.
2:39:20 PM
Co-Chair Edgmon recognized Representative Andi Story in the
audience.
Co-Chair Johnson looked at slide 7 and was uncertain about
the correlation between the PFD and BSA. She asked if the
presentation was saying that a high PFD took away from
education. She remarked there were other departments
spending money and there were no claims that spending money
in one area was taking away from another area.
Representative Ortiz responded that the presentation
illustrated that education had been flat funded since FY
13, a period in which there had been substantial inflation.
The presentation indicated that students across the state
needed to keep on living with the support they had 11 to 12
years ago. He stated it was okay because the state was in a
fiscal situation with declining oil revenues. However, at
the same time, there had still been the ability to
distribute record setting PFDs. He stated that the PFD in
FY 23 and the proposed 50/50 PFD [for FY 24] were still
substantially higher than what the state was spending on
educating its children. He remarked that many other
departments such as the Department of Commerce, Community
and Economic Development had been significantly reduced. He
explained that there had been cuts to education and health
and human services, while the PFD had been increased.
Co-Chair Johnson noted the legislature had recently
proposed $16 million to the budget in a recent amendment by
the governor. She asked how it interplayed with the funding
request in HB 65. She explained that the funding proposed
by the governor went to teachers and some locality pay.
Representative Ortiz asked if Co-Chair Johnson was
referring to teacher salary bonuses proposed by the
governor.
Co-Chair Johnson agreed.
Representative Ortiz replied that he was aware of the
proposals. He stated his understanding that the proposals
were not a substitute for BSA funding. He would be
supportive of more financial support for educators, but he
had not heard details on the structure and whether the
proposal would occur inside or outside of the BSA.
Additionally, he did not know what kind of reception the
proposal had received in the other body and whether there
had been a bill hearing in the House Education Committee.
2:44:52 PM
Representative Tomaszewski looked at slide 7 and estimated
the slide showed approximately $1.3 billion in funding [in
K-12 foundation formula funding]. He highlighted that the
Department of Education and Early Development (DEED) had
recently given a presentation to the committee and had
reported $1.991 billion for FY 23. He asked Representative
Ortiz about the discrepancy in the numbers. He referenced
FY 22 funding actuals for DEED of $1.865 billion and a 6.5
percent increase to the $1.991 billion in FY 23.
Representative Ortiz replied that the numbers referred to
by Representative Tomaszewski included items outside the
BSA such as pupil transportation and federal expenditures.
He clarified that the blue lines in the graph on slide 7
reflected the BSA only.
Representative Tomaszewski pointed out a 6.5 percent
funding increase for DEED from FY 22 to FY 23. He
highlighted that an increase to education had occurred. He
thought it looked like the budget would be pretty flat from
the past year.
2:47:38 PM
Representative Galvin asked why the BSA was talked about so
much and how it was so different than funding outside of
the BSA. She asked how school districts and school boards
looked at the funding differently as they made decisions.
She remarked there were letters from many districts in the
packets. She asked how Representative Ortiz had come up
with the initial proposed number in the bill.
Representative Ortiz responded that the BSA was how the
state supported the education of its youth. He elaborated
that it was the primary chunk of money that went into
education support. While there were other important facets
including money for transportation and federal money, they
played a relatively minor role overall. He explained that
the BSA had been essentially flat for 11 to 12 years and
due to inflation it was no mystery why the districts had
stressed that a significant increase in the BSA was
critical.
CAROLINE HAMP, STAFF, REPRESENTATIVE DAN ORTIZ, shared that
the original version of the bill was an increase of $1,250,
which was an increase of about 20 percent. She explained
the amount was about the size of the gap between inflation
over the past ten years and the BSA.
2:51:07 PM
Representative Ortiz elaborated that the original number
had been selected because it came close to catching up with
inflation, but it still fell short. He relayed that the
actual number put out by DEED or ISER was approximately
$1,350. He added that he had selected the number in light
of the state's fiscal reality.
Representative Galvin had heard that because the dollars
had gone through the formula for decades, [the BSA] was
considered predictable for important decision making by
school boards.
Representative Ortiz responded that he had previously been
a teacher and had taught for 32 years. He stated it really
was about the BSA. He relayed that every spring the local
school boards were responsible for compiling a budget,
which was based on the BSA number because it accounted for
the largest portion of funding and was what districts had
to go on to make estimates for the year ahead. Currently,
because the school districts had not heard from the
legislature, some were laying their deficits out there and
making decisions accordingly. He stated that some districts
were hedging their bets and had heard it was likely the
legislature would come up with a BSA increase, while at the
same time they realized if an increase did not occur, they
would need to make significant reductions. He stated that
school districts would have to make reductions even with
the proposed increase in the bill. He added that the
legislature had heard loud and clear that the cost of doing
business on a per student basis was much higher in rural
areas and those districts were looking at some very tough
choices. He thought the legislature needed to bump the
number up to [an increase of] about $800.
2:54:19 PM
Representative Stapp thanked Representative Ortiz for
introducing the legislation and agreed on the importance of
education in Alaska. He looked at slide 7 and noted that
the slide showed funding for BSA only. He asked how much
the legislature had appropriated for education outside of
the formula in the past few years.
Ms. Hamp requested to hear from DEED.
HEIDI TESHNER, ACTING COMMISSIONER, DEPARTMENT OF EDUCATION
AND EARLY DEVELOPMENT, replied that there had been $57
million appropriated outside of the formula in FY 23. She
relayed that there had been funding appropriated outside of
the formula 11 times since 1999.
Co-Chair Edgmon looked at the chart on slide 7 in terms of
overall foundation formula in addition to the increased
costs for heating fuel, utilities, transportation,
etcetera. He noted that slide 3 aligned with the swoop
graph [showing the governor's FY 24 budget] on slide 6. He
asked if the additional money addressed by Representative
Tomaszewski and Representative Stapp went to other things.
Acting Commissioner Teshner replied it was her
understanding that the blue bar [on slide 7] reflected the
K-12 foundation formula only. She noted that Representative
Tomaszewski had been referring to all of the additional
funding that went to fund the department including pupil
transportation, youth and detention residential schools,
boarding homes, and other items.
Representative Stapp stated that sometimes it was confusing
when it was stated that education was flat funded. He
reasoned that it effectively meant that the foundation
formula had been flat funded, although previous
legislatures had appropriated education funding for other
reasons. He referenced the ISER study in members' packets.
He highlighted that the study discussed how Alaska's
unadjusted per pupil spending and educator and employee
benefits was 64 percent above the U.S. average. He noted
the study also talked about high energy costs. He thought
the real problem was that the inflationary costs of energy
and healthcare were driving the reductions in education. He
surmised that education funding was a symptom of an
underlying problem, which was the increase in inflationary
pressure and cost of living for Alaska.
2:59:01 PM
Representative Ortiz agreed. He remarked that everyone
could remember what things used to cost. He recalled all of
the things he could buy with 50 cents when he was a kid. He
explained that most of the money for education came from
the BSA and it had been relatively flat. He stated that the
increments outside of the BSA that occurred a bit less than
half of the years since 1999 did not necessarily keep
[education funding] up with inflation or in a predictable
way that enabled districts to plan. He explained that a
one-year bump in funding did not enable schools to increase
programs, implement programs, or plan for the funding in
future years.
3:02:09 PM
Representative Josephson referenced the Coalition for
Education Equity of Alaska that had been instrumental in
the Kasayulie case (a capital budget disparity case for
rural Alaska) and the Moore case 19 years ago (overseen by
Judge [Sharon] Gleason). He referred to Judge Gleason's
ruling that included four elements that spoke to the State
of Alaska's constitutional responsibility for public
education. He highlighted the element requiring adequate
funding for schools to provide instruction in the
standards. He noted that element appeared to be the most
expensive of the four. He noted another requirement for
adequate assessment systems. He looked at the flat funding
for a decade shown on slide 7 and asked if the state was at
risk of being taken to court for not meeting the elements
in Judge Gleason's ruling. He asked if Acting Commissioner
Teshner had heard anything about that.
Ms. Tesher answered that she had not heard anything. She
surmised it depended on how a person defined adequate. She
stated that no two people would define it the same way. She
thought part of the intent of HB 65 was to determine the
adequate amount of funding needed for the BSA to meet the
state's obligations through the two court cases mentioned
by Representative Josephson.
Representative Josephson reasoned that a court may say that
what was adequate 10 years ago was no longer adequate.
Representative Cronk shared that he was a former teacher of
25 years and for six of the years he received no salary
increase. He also had experience serving on a regional
school board, which was responsible for providing budgets.
He noted that insurance costs were drivers. He asked if
school districts were rallying around HB 21 to pool
insurance to save money.
Representative Ortiz responded that he had heard talk about
the proposal and at face value it seemed to make good
economic sense; however, he knew the issue was more
complicated than that. For example, the teachers' insurance
program comingled with the borough employees in his
district. He did not know how it would impact the borough's
insurance pool if the teachers joined a statewide teacher
pool. He did not know whether it would save the borough
money. He believed there were all kinds of variations on
what may happen to the overall cost of any particular
school district if such a bill were adopted.
3:06:54 PM
Representative Cronk stated that part of the state's
problem was it had been doing things for so long in a
certain way that it did not look to change anything. He
considered that it may not be the most beneficial for some,
but overall it would benefit the majority of the state. He
thought something should be looked at like the insurance
pool proposal should be looked at to make the state's
dollars go further. He considered perhaps it could be a
bigger insurance pool where the borough benefitted as well.
Representative Coulombe looked at the resolutions in the
packet from various school districts. She stated that the
Anchorage School District wanted $1,268 and the school
board administrators wanted $860. She highlighted various
amounts requested including $1,000, $278, and $860. She was
struggling with settling on a number. She believed it was
important. She elaborated that some of the resolutions
referred to inflation rates, which varied. She preferred a
one-time outside the formula increment for education due to
the differences. She thought the BSA felt like putting one
number on districts with various needs. She suggested that
perhaps one-time funding could be formulated in a way that
adjusted to each of the needs. She asked for Representative
Ortiz's thoughts. She remarked that most of the resolutions
in the resolutions were lower or close to the same as the
figure in Representative Ortiz's bill.
Representative Ortiz answered that it made sense that the
needs of the 54 school districts were different from one
another. He stated that one of the problems with the BSA
was that it is a uniform amount per student; however, there
is a cost differential factored in for rural areas and less
costly areas. He explained that the problem with a one-time
increase was that it would still be difficult to craft a
way to distribute the money based on a higher need in one
district versus another because needs were subjective. He
clarified that needs were based on numbers, but what may
appear to be a greater need in one area may not actually be
that much greater than in another. He highlighted that one-
time funding was only for one year and did not give school
districts predictability and the ability to plan for the
future. He expounded that an increase to the BSA would
allow districts to plan for the future. He stated that
there was no guarantee that another one-time increment
would be given in the next budget cycle.
3:12:53 PM
Co-Chair Edgmon added that the total amount of formula
funding going through a school district included local,
state (the BSA), and federal funds (for Regional
Educational Attendance Areas (REAA) without a tax base). He
explained that the foundation formula incorporated things
like the size of a district, school district factors,
intensive needs, special education needs, and
correspondence schools. As a legislator from a rural
district, the one disparity that leapt out to him was the
cost of energy. He highlighted a small school relying on an
independent electrical grid powered by diesel versus a
larger school with a much larger economy of scale powered
by natural gas. He elaborated that every school had a
different business model. He discussed enrollment where
some rural schools were increasing in enrollment numbers
and many schools were declining in enrollment such as
Anchorage, which was the largest of the state's school
districts. He stated that whatever BSA number the
legislature may provide would be a mean of all of the
school districts including the different cost factors
throughout each school district. He stated that the special
needs component was 13 times the average dollar that may go
to the district cost factor or something else. He shared
that had been in the building when former Senator Gary
Wilken had passed the last full foundation formula rewrite
in 1998 (SB 36). He remarked that the foundation formula
was up there with the oil tax formula in terms of
complexity. He underscored the formula was just one
component of the overall funding stream going to schools.
He viewed it as a moving target.
3:15:34 PM
Representative Coulombe discussed that school districts
were saying inflation had raised the fixed cost of
everything. She believed the BSA would go towards funding
utility bills and there was no promise to increase test
scores and student improvement. She stated, "This is like a
dire need of keeping it warm, water, and all of the things
that go into running a school." She asked if Representative
Ortiz anticipated seeing any improvement in school
achievement the following year [if the bill passed].
Representative Ortiz responded that the legislature had
passed the Reads Act [in 2022], which addressed regular
assessment and tracking student growth and improvement. He
stated that it may not meet everyone's needs in terms of
assessing or measuring growth, but it was one key component
that would inform the public on where improvement was
happening and where it was not. He remarked that it would
not necessarily explain all of the different factors, but
it was a measure that had not been there previously. He
recognized that based on measurements thus far in recent
years, Alaska seemed to be at the bottom, which was a
concern. He emphasized that not addressing the real needs
due to heavy inflation would not help outcomes.
3:18:12 PM
Representative Coulombe explained that she had asked the
question because she wanted to ensure her constituents had
appropriate expectations. She stated that when schools
asked for another increase the following year and student
achievement was the same, she wanted people to understand
that the funding was going towards helping schools with the
inflation part of schooling. She stated there were no
promises that student achievement would go up. She added
that the only hope of an increase in student achievement
was in the implementation of the Reads Act, which had its
own separate funding. She noted that surely an increase in
BSA would help move the implementation. She did not want
anyone to expect student achievement would increase once
the BSA increased. She understood it to be an inflationary
problem paying for buildings, teachers, and schools. She
clarified that she wanted that and she understood there
were issues with transportation as well.
3:19:30 PM
Acting Commissioner Teshner introduced a PowerPoint
presentation titled "Alaska Public School Funding Formula
Overview," dated March 30, 2023. She began on slide 3 and
highlighted that the current formula was adopted under SB
36 in 1998 and implemented in 1999, which was defined in AS
14.17. She advanced to slide 5 and discussed that the
average daily membership (ADM) was the number of enrolled
students during the 20 school-day count period ending the
fourth Friday of October annually. She elaborated that
reports were due to DEED within two weeks after the end of
the count period. Additionally, projected student counts
were due annually on November 5. She explained that the
department used the projected counts for the budget and
DEED used the actual numbers districts reported within two
weeks of the count period to determine what they were paid
during that current fiscal year.
Acting Commissioner Teshner turned to slide 6 and addressed
who qualified as a student:
Eligibility for State Foundation Funding:
• A child who is 6 years of age on or before
September 1, and under the age of 20, and has not
completed the 12th grade (AS 14.03.070)
• A child who is 5 years of age on or before
September 1, may enter kindergarten (AS 14.03.080
(d))
• A child with a disability and an active
Individualized Education Program (IEP) may attend
school if at the age of 3 or if under the age of
22 by July 1 (AS 14.30.180 (1))
Co-Chair Edgmon communicated that he wanted to get through
each segment of the presentation and would pause at the end
of each for questions.
Acting Commissioner Teshner looked at slide 7, which showed
the six steps to district adjusted ADM. She noted intent to
cover a slide explaining how the formula was calculated.
Representative Hannan looked at slide 6 and asked how five-
year-olds in kindergarten were differentiated under the
formula in statute.
Acting Commissioner Teshner asked if Representative Hannan
was asking how they were calculated under the formula.
Representative Hannan replied affirmatively.
Acting Commissioner Teshner answered that a full-time
kindergarten student was counted as one ADM, whereas half-
time students were counted as half-time. She explained it
depended on how the student was enrolled in the school. She
highlighted that nothing in the formula addressed how
students may be counted under the Alaska Reads Act. She
remarked that those kids were counted as half-time and were
not included in the calculation presented in the
presentation.
Representative Hannan stated that prior to the Reads Act
some schools had pre-K programs. She asked if they were
counted in the foundation formula the same as a five-year-
old or separately.
Acting Commissioner Teshner answered that they would be
counted if they had an IEP, otherwise they would not be
counted in the formula at all.
ELWIN BLACKWELL, SCHOOL FINANCE MANAGER, DEPARTMENT OF
EDUCATION AND EARLY DEVELOPMENT, discussed Step 1 of the
district adjusted ADM on slide 8: Adjust the ADM for school
size. He explained that after the count period, the
department took each school within a community and applied
the school size table. He detailed that the table gave more
weighting to small schools and started to step back the
weighting the bigger the school got based on the concept
that a small school lacked economy of size; therefore, more
resources were needed for a smaller school. He explained
that schools with under 10 students were added to the next
smallest school in a community (with an ADM greater than
10). For communities with an ADM of 10 to 100, the grades
K-12 would run through the formula as one school. For
communities with an ADM of 101 to 425, grades K-6 and 7-12
were adjusted separately as two schools. For communities
with an ADM greater than 425, the ADM of each facility
administered as a separate school was adjusted. If a
community with an ADM greater than 425 had a single
facility, it was adjusted as two schools.
3:26:32 PM
Mr. Blackwell turned to slide 9 and continued to address
Step 1: Adjust the ADM for school size. Alternative and
charter schools were adjusted separately. He detailed that
alternative schools with an ADM of 175 or greater that were
administered as a separate facility received their own
adjustment unless:
1. It is in the 1st year of service with ADM between 120
to 175 receives an adjustment of 1.33; OR
2. It had an ADM of 175 or greater in the prior year but
drops below 175 in the current fiscal year it will
receive an adjustment of 1.33; OR
3. It has an ADM of less than 175 it shall be counted as
a part of the school in the district with the highest
ADM
Mr. Blackwell continued to review slide 9:
Charter school with an ADM of 150 or greater is
adjusted as a separate facility unless:
1. It is in the 1st year of service with ADM between
75 to 150 it receives an adjustment of 1.45; OR
2. It had an ADM of 75 or greater in the prior year
but drops below this in the current fiscal year
it will receive an adjustment of 1.45; OR
3. It continues to stay below 75 ADM then it
receives an adjustment of 1.18
Mr. Blackwell turned to slide 10 showing Nome public
schools projected FY 24 ADM by school as an example for
Step 1. He would use the numbers shown on slide 10 in the
upcoming slides.
Mr. Blackwell moved to slide 11 and continued with the
example using Nome public schools. A K-6 adjustment was
applied because Nome had an elementary and secondary
school. Nome also had a charter school with an ADM below
75; therefore, the 1.18 adjustment was applied. The
department added the school size adjusted numbers for each
of the facilities to come up with a school size adjusted
ADM, which would be carried through the formula.
Mr. Blackwell addressed the hold harmless provision on
slide 12. The hold harmless provision was enacted in 2008
under HB 273 (prior to that there was no hold harmless
provision). The department looked at the school size
adjusted ADM for a district and compared it to the prior
year. He detailed that if the school size adjusted ADM had
decreased by 5 percent or more from one year to the next,
the hold harmless provision was triggered. He elaborated
that in the first year, the department would take 5 [75]
percent of the difference between the prior and current
year, which would be added to the current year and carried
forward. If the school size adjusted ADM was still below
the base year in the second year, the department would add
50 percent of the difference to the base year and carry it
forward. In the third year, if the school size adjusted ADM
was still below the base year, the department would add 25
percent of the difference to the base year to be carried
forward. By the fourth year, the school district would be
adjusted down to its school size adjusted ADM.
Mr. Blackwell moved to slide 13 and discussed the hold
harmless provision based on the Nome example. He explained
that Nome had completed the hold harmless three-year step
down provision in FY 23 and subsequently had been
transitioned to the lower ADM.
3:30:26 PM
Representative Galvin asked about the hold harmless
provision and wondered if there had been any particular
exception for COVID-19. She assumed there were many people
who decided to home school for at least a short period of
time and longer than a year in some cases.
Mr. Blackwell replied that the state had experienced an
unexpected situation when COVID hit. He explained that in
FY 21, a significant number of students had moved out of
brick and mortar schools into correspondence. He elaborated
that because the hold harmless provision only looked at
school facilities, the vast majority of the districts
triggered hold harmless in that year even though they may
have retained the students in correspondence. He relayed
that most of those districts had been moving their way out
of the hold harmless provision at present.
Representative Galvin asked if there had been a thought of
extending the exception knowing that it took some time
before some families were comfortable sending their kids
back to school.
Acting Commissioner Teshner replied in the negative and
explained that the department was following statute.
Representative Coulombe provided a scenario where a
school's attendance dipped down for a year, went up the
following year, and back down the year after. Under the
scenario the hold harmless provision would be triggered in
the first year, but not in the second year. She asked if
the provision was triggered again in the third year whether
it would be considered the third year or it would start
over on the first year.
Mr. Blackwell responded that a school could restart the
hold harmless provision if it fell out of the hold harmless
provision but experienced a 5 percent decrease the next
year. There were situations where a district may trigger
hold harmless followed by a year or two of an additional 5
percent decrease. Under the circumstance, the school had
the option to restart or continue to let the hold harmless
play out.
3:33:14 PM
Representative Tomaszewski asked how many kids the school
system had lost over the COVID years and what the number
was at present.
Acting Commissioner Teshner did not have the percent
difference on hand. She offered to follow up with the
information. She asked what year Representative Tomaszewski
was interested in.
Representative Tomaszewski clarified that he did not need
the percentage. He was interested in the number of students
the school districts lost [during the COVID-19 pandemic].
Acting Commissioner Teshner answered that in 1999 there had
been about 132,904 ADM and in 2022 there were 127,584.
Representative Tomaszewski asked about the difference in
the numbers over the past four years.
Acting Commissioner Teshner replied that in 2019 there were
129,000 students and the current number was 127,000.
3:35:03 PM
Representative Stapp stated his understanding that the hold
harmless provision could be triggered by students leaving
[a school district's] brick and mortar schools. He asked
about a scenario where a student left a brick and mortar
school and enrolled in a correspondence program. He asked
if the district could take the hold harmless in addition to
the funding for the same student for the correspondence.
Acting Commissioner Teshner responded affirmatively. She
elaborated that the scenario had occurred during COVID. She
explained there were a few districts that lost students in
their brick and mortar schools and triggered the hold
harmless provision and then counted the students in the
correspondence count.
Representative Stapp asked how many times it could be done.
He provided a scenario where a district used the hold
harmless provision for two years and then rolled the
students back into the brick and mortar school. He asked if
a district could be double dipping through the formula.
Acting Commissioner Teshner responded with a hypothetical
scenario where a school district triggered hold harmless in
2021 and was still below the base year in 2022, hold
harmless would be turned off when the district experienced
an increase in 2023.
Representative Tomaszewski requested details on the student
count in brick and mortar schools, home schools, and
charter schools between 2013 to 2023.
Acting Commissioner Teshner agreed to follow up with the
information.
3:37:55 PM
Mr. Blackwell turned to slide 14 and addressed Step 2:
District Cost Factors. After going through the hold
harmless look the department moved the school size adjusted
number to the district cost factor. Each school district
had a unique cost factor, which ranged from 1.000
(Anchorage) to 2.116 (Yukon Flats). The numbers were
established through an ISER study conducted in 2005 and
were implemented from FY 09 to FY 13. The slide used Nome
as an example and multiplied its school size adjusted ADM
by its district cost factor of 1.450. Slide 15 showed Step
3: Special Needs Funding. He detailed that the formula
included special education (excluding intensive needs that
were treated later in the formula), vocational education,
gifted/talented, and bilingual/bicultural, which were block
funded at a 20 percent multiplier.
Mr. Blackwell turned to slide 17 showing Step 4: Vocational
and Technical Funding. The vocational and technical funding
factor was 1.015 and was intended to assist districts in
providing career and technical education (CTE) services in
grades 7 to 12. He noted it excluded costs associated with
administrative expenses and instruction in general
literacy, math, and job readiness skills. Slide 18 showed
an example of the application of the CTE factor. Slide 19
showed a provision for consolidation of schools. He
explained that typically very large districts did not
trigger the hold harmless provision (with the exception of
COVID) due to the high number of students and adjustments.
The consolidation of schools had been implemented for
districts choosing to consolidate one or more schools. He
explained that the first two fiscal years following
consolidation was 100 percent offset of the reduction in
basic need for the affected schools. The percentage was 66
percent in the third year and 33 percent in the fourth
year. He relayed that it gave an incentive to the larger
districts to consolidate and get rid of extra space without
an initial hit to their budgets.
3:41:46 PM
Mr. Blackwell turned to slide 20 showing Step 5: Intensive
Services Funding. He detailed that a school district
received the funding for students that:
1. Are receiving intensive services and
2. Enrolled on the last day of the 20-school-day count
period and
3. Meet intensive qualifications for each intensive
services student
(Intensive Student Count) x 13 = Intensive Student
Funding
An Intensive Services student generates $77,480 based
on the current BSA
Mr. Blackwell looked at an example of the intensive
services funding using Nome public schools on slide 22. He
explained that Nome public schools had 15 intensive
students. The number was multiplied by 13 and carried
forward. He moved to slide 22 showing Step 6:
Correspondence Programs. He explained that the total
correspondence ADM was multiplied by .90, which was added
back into the adjusted number carried through the formula
process. He noted that each correspondence ADM generated
$5,364.
3:43:18 PM
Mr. Blackwell turned to slide 23 using Nome public schools
as an example in the correspondence calculation. Nome had
25 correspondence students multiplied by the .9 and
included in the adjusted ADM.
Representative Galvin looked at the intensive services
funding on slide 20. She understood there were different
gradations of what an intensive student was. She stated
that the multiplying by 13 signified a student with
specific needs. She asked for detail on the need for
additional aid and why it got to be expensive, especially
in rural school districts.
Acting Commissioner Teshner responded that intensive needs
were defined as students with disabilities requiring
specialized instruction and related services beyond what
was typically provided to general education. She explained
that the students needed more complex and frequent services
at varying levels of disability. She used a student in a
wheelchair as an example where the student could not go to
the restroom on their own and may need specific equipment.
She stated those students would be more identified as an
intensive student and receive the 13x the BSA.
3:45:43 PM
Representative Stapp looked at the consolidation of schools
provision on slide 19. He asked if it would be fair to say
the provision was needed because when a school district
closed a school, the foundation formula would technically
provide the district less money for the same amount of
students.
Mr. Blackwell responded affirmatively. He explained that
the school district would lose a school size adjustment and
their adjusted ADM would decrease even though the base ADM
would remain the same.
Representative Stapp thought it appeared the school size
multiplier would incentivize districts to build as many
schools as possible with as few people as possible,
especially in conjunction with the state's school bond debt
reimbursement program.
Mr. Blackwell understood that in theory the argument could
be made. Although in reality he did not know many districts
that would take the approach because as school size was
decreased the schools would lose some of the amenities
within the schools. He stated there was a balance. He
elaborated that rural school districts were looking to keep
their numbers up and school buildings as large as possible
in order to have full size gyms and that sort of thing. He
elaborated that in urban areas if a school district started
running numerous small schools with small populations, the
district would start to lose amenities.
3:47:52 PM
Representative Hannan asked about correspondence programs.
She recalled that in the past DEED had correspondence
programs that spanned the state. She assumed Mt. Edgecumbe
did not offer a correspondence school because it was a
boarding school. She asked if the other 53 school districts
were operating correspondence schools. She stated there
were a couple of school districts who had offered
correspondence programs early and had recruited students.
For example, there were students in Juneau attending the
Galena correspondence school but were playing basketball on
a Juneau team. She thought there were about five major
correspondence programs drawing students from around the
state versus within a district's boundaries where a parent
had opted to home school with their district's
correspondence program.
Acting Commissioner Teshner replied that there were 36
correspondence programs statewide. She detailed that 18
were district run programs and 18 were state run programs.
She relayed that not all school districts ran a
correspondence program.
Representative Cronk considered the day the student count
was conducted. He provided an example where a student moved
to another school district five days after the count. He
asked for verification, "they don't get the money anymore."
Acting Commissioner Teshner answered that if a student
moved from Mat-Su to Anchorage five days after the 20-day
count, Mat-Su would get the funding.
Representative Cronk used an intensive needs student in the
example. He asked if the individual moved to Tok [after the
student count], the district would have to eat the costs to
service the intensive needs student.
Acting Commissioner Teshner agreed.
Representative Coulombe looked at slide 16 showing the
multiplier for the special needs factor. She asked if a
school could have one special needs student or 30 and it
would still receive the multiplier.
Acting Commissioner Teshner agreed.
Co-Chair Edgmon thanked the presenters.
HB 65 was HEARD and HELD in committee for further
consideration.
Co-Chair Edgmon reviewed the schedule for the following
day.