Legislature(2015 - 2016)CAPITOL 106
02/18/2015 08:00 AM House EDUCATION
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| Audio | Topic |
|---|---|
| Start | |
| Overview: Alaska's Participation in Impact Aid (public Law 874) | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
| + | TELECONFERENCED |
ALASKA STATE LEGISLATURE
HOUSE EDUCATION STANDING COMMITTEE
February 18, 2015
8:05 a.m.
MEMBERS PRESENT
Representative Wes Keller, Chair
Representative Jim Colver
Representative Paul Seaton
Representative Harriet Drummond
MEMBERS ABSENT
Representative Lora Reinbold, Vice Chair
Representative Liz Vazquez
Representative Jonathan Kreiss-Tomkins
COMMITTEE CALENDAR
OVERVIEW: ALASKA'S PARTICIPATION IN IMPACT AID (PUBLIC LAW 874)
- HEARD
PREVIOUS COMMITTEE ACTION
No previous action to record
WITNESS REGISTER
ELIZABETH SWEENEY NUDELMAN, Director
School Finance and Facilities Section
Department of Education and Early Development (EED)
Juneau, Alaska
POSITION STATEMENT: Provided the presentation on Alaska's
Participation in Impact Aid (Public Law 874), and responded to
questions.
LES MORSE, Deputy Commissioner
Office of the Commissioner
Department of Education and Early Development (EED)
Juneau, Alaska
POSITION STATEMENT: Responded to questions, during the
presentation on Alaska's Participation in Impact Aid (Public Law
874).
ACTION NARRATIVE
8:05:24 AM
CHAIR WES KELLER called the House Education Standing Committee
meeting to order at 8:04 a.m. Representatives Keller, Seaton,
Colver, and Drummond were present at the call to order.
^OVERVIEW: ALASKA'S PARTICIPATION IN IMPACT AID (PUBLIC LAW
874)
OVERVIEW: ALASKA'S PARTICIPATION IN IMPACT AID (PUBLIC LAW 874)
8:05:46 AM
CHAIR KELLER announced that the only order of business would be
a presentation on Alaska's Participation in Impact Aid (Public
Law 874).
8:07:45 AM
ELIZABETH SWEENEY NUDELMAN, Director, School Finance and
Facilities Section, Department of Education and Early
Development (EED), explained that Impact Aid is a federal
formula grant program that is designed to assist local school as
identified by one, or both, of the qualifying characteristics:
lost revenue due to tax-exempt federal related property; or
incurred increased expenditures due to the enrollment of
federally connected children. The federal Impact Aid law was
effected in 1950, and Alaska has been a participant since
inception; primarily due to the military bases. The
equalization provision was added to the law in 1976, and Alaska
adopted the change upon introduction. Program participants
include: children of military personnel and others whose
parents work on federal land, such as park ranger dependents;
and children whose parents reside on Indian lands or live in
federally eligible, low rent, housing. Although the majority of
districts apply directly to the federal government for Impact
Aid, a special provision allows the department to apply for
three districts: Anchorage, Fairbanks, and Kodiak. Mt.
Edgecumbe is another exception with the department making
application. Under the provision, created by the late Honorable
U.S. Senator Ted Stevens, receipts are received for direct
transmittal to the named districts and Mt. Edgecumbe.
8:11:52 AM
MS. NUDELMAN said that other participation eligibility guideline
requirements may be met by a district if: the number of
eligible federally connected children equals at least 3 percent
of the total number of students in average daily attendance
(ADA); or the average number of eligible federally connected
children in ADA is equal to 400. The count date is selected by
the district but can be no earlier than the fourth day of school
and no later than January 31. The reason for the restriction
based on the ADA is to create a practical working base number
and ensure that an effective program is being administered. She
explained the application process, stating that it is open to
any public school district with an enrollment concentration of
federally connected children. The application deadline is
January 31 and a signed electronic form may be submitted through
the government site. Late applications are accepted for up to
60 days following the deadline; however, a 10 percent reduction
in funding will be applied. Following the application, a
district may make modifications or updates until September 30.
8:14:37 AM
REPRESENTATIVE DRUMMOND asked whether the application deadline
and 60 day grace period is designed to tie in with military
relocation schedules.
MS. NUDELMAN answered that the districts identify a meaningful
count date, to suit the local situation. Further, an
application can be amended, and the flexibility allows time to
alter the count number. The sixty day deadline for late
applications is an administrative measure.
8:17:10 AM
MS. NUDELMAN identified the funding categories to which Impact
Aid applies: 8003 is the basic support for students living on
federal lands; heavily impacted districts, which in Alaska is
Annette Island and receives higher funding; and children with
identified special needs/disabilities; 8007 relates to
construction; and two other categories exist, for which Alaska
does not qualify, property and facilities, 8002 and 8007
respectively. She pointed out that the special education and
construction receipts are minimal.
8:20:22 AM
MS. NUDELMAN expanded on the 8003 basic support payments, which
are based on a formula considering the number of eligible,
federally connected students in a district. The average,
statewide, per pupil, expenditure is aggregated at the highest
level and identified as discretionary to the point that it is
spent on free education for eligible students. Disability
payments are incremental, with a payment rate ranging from $500
to $1,200 per child. The construction fund payment is provided
when the federally connected children equal at least 50 percent
of the membership in the school districts ADA.
8:24:05 AM
MS. NUDELMAN directed attention to the committee packet, page
11, and the page titled, "Sample Impact Aid Payment Vouchers,"
to illustrate the process. Using the two sample vouchers shown,
she pointed out key lines and amounts, to explain how the
aggregate number is determined, and to explain that the state
has set the local contribution rate at 50 percent of the
expenditures per student. Using the figures on the Bering
Strait School District payment voucher sample, she described the
computations used to arrive at the receipt totals, including the
construction component, and compared the totals: basic support
payment equals $19,367,805 versus the special needs payment of
$178,926 and the construction total of $219,130. The second
sample on the same page, she indicated, is the military voucher,
which is similar and uses the same contribution rate. Ms.
Nudelman held up a voucher from 1956, not available in the
packet, to demonstrate the consistency of the form through over
the years.
8:29:53 AM
MS. NUDELMAN moved to the handout page titled, "State
Consideration of Impact Aid Payments in Providing State Aid," to
address Public Law 874, which allows a state to seek permission
to consider Impact Aid in its state formula, if the formula
meets a specified equalization standard. She said that
Alaska's, public school, Foundation Formula is designed as an
equalized formula. Each year Alaska submits a disparity test
calculation showing that the per-pupil revenue between the
highest and lowest districts does not exceed a 25 percent
difference. She explained that the disparity test is calculated
using the Impact Aid program requirements. Basically, the test
aggregates revenues per district and divides by the adjusted
average daily membership (AADM) to arrive at adjusted per-pupil
revenues for each district. The districts are sorted by highest
to lowest AADM revenues and differences greater than 25 percent
are disallowed.
8:33:56 AM
MS. NUDELMAN said Alaska integrates the Impact Aid into the
Foundation Formula and the two programs are applied in concert.
Prior to the calculation, the state must remove the count of
children receiving disabilities funding. Additionally, one
fifth of the funding for children who reside on Indian lands may
not be considered. The construction funding and the heavily
impacted district allowances are also removed for formula
purposes. Annette Island School District (AISD) is Alaska's
heavily impacted district. Thus, prior to considering the
Impact Aid with the state education formula, of the $140 million
federal receipts, approximately $26 million is removed prior to
calculating the disparity consideration. Federal guidelines
allow consideration on 100 percent of the remaining funds but
under AS 14.17.410 the state only calculates 90 percent of the
eligible Impact Aid. Districts with a local contribution can
choose to further offset the 90 percent.
8:38:26 AM
MS. NUDELMAN turned attention to the committee handout pages 16
and 17, labeled, "District Example #1," and "District Example
#2." She said these two areas are used to illustrate the
calculations for a municipality, Anchorage, versus a regional
educational attendance area (REAA), Lower Kuskokwim. She
reviewed the Anchorage FY2014 worksheet calculations to show the
application of the eligible Impact Aid, $20,220,105, with the
local contribution percentage as required in statute and applied
in the example at 48.73 percent, and the states 10 percent
reduction, to arrive at the final figure of $8,867,931. Thus,
of Anchorage's $20,887,370 in Impact Aid receipts, the state
will withhold $8,867,931 as payment towards Basic Need in the
Foundation Formula rather than using state general funds.
8:43:45 AM
MS. NUDELMAN moved to example #2, using the Lower Kuskokwim
FY2014 figures to explain the calculation. Kuskokwim is an
REAA, meaning more money is subtracted as non-eligible,
resulting in $17,622,665. The Impact Aid percentage arrived at
is at the 100 percent level, as no local contribution is
required and only 10 percent is held back in the final
calculation to arrive at $15,860,399. Thus, of Lower
Kuskokwim's $22,417,251 in Impact Aid receipts, the state will
withhold $15,860,399 as payment towards Basic Need in the
Foundation Formula rather than using state general funds.
8:47:03 AM
MS. NUDELMAN pointed out that federal Impact Aid revenues are
approximately $140 million annually, to Alaskan schools. She
directed attention to page 19, of the committee handout, titled,
"Impact Aid Summary," and the statewide listing, to indicate how
the Anchorage and Lower Kuskokwim numbers fit into the district
funding worksheet. Recapping the statistics shown, she stated
that, in FY2014, districts received approximately $132 million
in Impact Aid, the state considered $71 million as funding in
the Foundation Formula, and districts retained $61 million. The
eligibility for the state to consider Impact Aid as a funding
component of basic need, and the requirements, such as the
percentage to be considered and the calculations required, are
contained in the federal Impact Aid law. If the state did not
consider Impact Aid as a funding source, in the Foundation
Formula, the state general fund dollars would have been
increased by $71 million in FY14.
8:51:21 AM
MS. NUDELMAN turned to page 21, to illustrate how all the pieces
fit together and briefly reviewed the ten columns. She said
this page is posted on the EED website and is a familiar
reference for the users. The fifth column contains the 90
percent deductible Impact Aid for each district, and Mt.
Edgecumbe., and she pointed out where the Example #1 and #2
computations are located in the spreadsheet.
8:54:31 AM
REPRESENTATIVE DRUMMOND returned to the question regarding the
hard deadline, to ask how military students, arriving after the
count date, are accounted for.
MS. NUDELMAN said districts can select a count date up to
January 31, and have 60 days to amend the number; essentially
changes can be made to an application through March 31.
However, an influx of students on April 1 would not be included.
The Impact Aid is not forward funded, she added.
REPRESENTATIVE DRUMMOND asked whether the number of students on
the count date generates the funding for the following school
year.
MS. NUDELMAN explained that the funding is received from the
federal program in the fall of the same year in which the
application is made. The department anticipates the
appropriation to be made at the federal level each fall. A
nuance to the program is that, when the offset is made in the
foundation program, the state looks back one year. Districts
are directed to bank the Impact Aid, as a fund balance, because
that year's Impact Aid will be looked at the following year in
basic need.
8:59:05 AM
REPRESENTATIVE KELLER clarified that the term offset represents
a budget term.
MS. NUDELMAN concurred, and further clarified the count date
restriction as being between the fourth day of school and
January 31.
9:00:43 AM
REPRESENTATIVE COLVER questioned the disparity test requirement
and opined that perhaps the reverse effect is occurring. He
pointed out that the districts receiving larger amounts of
Impact Aid are subsidizing the metro areas. He asked what
flexibility the state has for adjusting the 90 percent
retention.
9:03:24 AM
LES MORSE, Deputy Commissioner, Office of the Commissioner,
Department of Education and Early Development (EED), clarified
the question as being whether the 90 percent requirement could
be adjusted, and what the subsequent effect would be on the
Impact Aid distribution. He then deferred.
MS. NUDELMAN offered to provide further information, to include
where the 90 percent requirement can be found in statute.
9:07:19 AM
REPRESENTATIVE COLVER pondered the effect if the state removed
the Impact Aid from the formula contributions and allowed the
federal funds to go directly to the applicable districts, and
whether that would be a plausible action.
MS. NUDELMAN responded that, considering the federal program
administratively, it may be a possible option. However, most
states use formulas for equalization purposes and the Alaskan
formula model is viewed as very strong. The case of Moore, et
al. v. State of Alaska, 3AN-04-9756 CI, (2010), although not
specifically focused on the formula, tested its efficacy and
found it to be adequate. She opined that for an education
formula to stand the test of time, equalization is a major
consideration. This equalization has the additional effect of
the dollars being used in place of general fund money. Also,
she said, feedback from the REAA's would need to be solicited
regarding the pros and cons of that concept.
9:10:21 AM
REPRESENTATIVE COLVER turned to page 12 and read [original
punctuation provided]:
Public Law 874 allows a state to seek permission to
consider Impact Aid in its state formula if the
formula meets a specified equalization standard.
REPRESENTATIVE COLVER said arguments can be made for districts
paying their own way, and questioned whether the current formula
benefits students throughout the state, opining that it may not.
He underscored his concern for unorganized school districts that
may not be seeing the best benefit. Returning to his previous
question regarding the 90 percent requirement, he said the
answer may be contained in that response.
MR. MORSE offered that it may be possible to allow the federal
funds to pass directly to the districts; possibly requiring
legislative action. He reiterated that the idea behind the
equalized formula is to ensure that everyone receives a fair
educational learning opportunity, regardless of location. The
other concern is for implementation of a funding formula that
protects the state from litigation.
REPRESENTATIVE KELLER clarified that the disparity test is a
federal requirement and the state funding formula is a means for
compliance. It may be appropriate to further review the state
education funding formula.
9:17:16 AM
REPRESENTATIVE SEATON directed attention to page 16, using
Anchorage as an example district and asked how eliminating the
local contribution would change the calculation, and conjectured
that it would fail the federal disparity test.
MS. NUDELMAN responded that it would be difficult to know at
what point the test is passed, but alteration, or removal, would
cause volatility in the system.
REPRESENTATIVE SEATON opined that it is purely speculative, but
making a change in the formula could result in unintended
consequences.
9:21:17 AM
REPRESENTATIVE DRUMMOND turned to page 13, and asked about the
per pupil range used for the disparity test calculation.
MS. NUDELMAN said the best resource would be to visit the
department's website and view actual numbers.
REPRESENTATIVE DRUMMOND suggested that a review of the state
Foundation Formula would also be helpful.
9:25:30 AM
REPRESENTATIVE KELLER asked how much of the Impact Aid funding
is retained by the department for salaries or other
administration.
MS. NUDELMAN answered zero; no Impact Aid funds are retained.
The position she holds is funded under general funds. Further,
she said the department makes application for the military
districts, but all receipts are dispersed.
9:27:38 AM
REPRESENTATIVE KELLER clarified that the Impact Aid criteria is
based on where a student's parents live and noted that some
military families live off-base, and questioned the residency
qualifiers.
MS. NUDELMAN offered to provide a detailed list of the criteria.
In general, it is residing on government land; however, there is
a smaller category of federally connected children whose parents
are civilian employees who work, rather than live, on federal
property.
REPRESENTATIVE DRUMMOND commented that the population living off
base but working on government land, would pay property tax.
9:32:13 AM
REPRESENTATIVE KELLER announced the upcoming meeting.
9:32:39 AM
ADJOURNMENT
There being no further business before the committee, the House
Education Standing Committee meeting was adjourned at 9:32 a.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| 2015ImpactAidPresentation_2-17-15_fullslide.pdf |
HEDC 2/18/2015 8:00:00 AM |