Legislature(2023 - 2024)ADAMS 519
04/24/2023 01:30 PM House FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| HB65 | |
| Presentation: Fiscal Scenarios by the Legislative Finance Division | |
| Presentation: Covid Funding and School District Funding by the Department of Education and Early Development | |
| 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 |
HOUSE FINANCE COMMITTEE
April 24, 2023
1:40 p.m.
1:40:21 PM
CALL TO ORDER
Co-Chair Foster called the House Finance Committee meeting
to order at 1:40 p.m.
MEMBERS PRESENT
Representative Bryce Edgmon, Co-Chair
Representative Neal Foster, Co-Chair
Representative DeLena Johnson, Co-Chair
Representative Julie Coulombe
Representative Mike Cronk
Representative Alyse Galvin
Representative Sara Hannan
Representative Andy Josephson
Representative Dan Ortiz
Representative Will Stapp
Representative Frank Tomaszewski
MEMBERS ABSENT
None
ALSO PRESENT
Alexei Painter, Director, Legislative Finance Division;
Lacey Sanders, Deputy Commissioner, Department of Education
and Early Development; Elwin Blackwell, School Finance
Manager, Department of Education and Early Development; Dr.
Bridget Weiss, Superintendent, Juneau School District; Andy
Ratliff, Chief Financial Officer, Anchorage School
District; Representative Andi Story.
SUMMARY
HB 65 INCREASE BASE STUDENT ALLOCATION
HB 65 was HEARD and HELD in committee for further
consideration.
PRESENTATION: BASE STUDENT ALLOCATION FISCAL SCENARIOS BY
THE LEGISLATIVE FINANCE DIVISION
PRESENTATION: COVID FUNDING AND SCHOOL DISTRICT FUNDING BY
THE DEPARTMENT OF EDUCATION AND EARLY DEVELOPMENT
Co-Chair Foster reviewed the meeting agenda. He recognized
Representative Andi Story in the audience.
HOUSE BILL NO. 65
"An Act relating to education; increasing the base
student allocation; and providing for an effective
date."
1:42:27 PM
^PRESENTATION: FISCAL SCENARIOS BY THE LEGISLATIVE FINANCE
DIVISION
1:42:32 PM
Co-Chair Foster asked presenters to cite any handouts they
used throughout the meeting.
ALEXEI PAINTER, DIRECTOR, LEGISLATIVE FINANCE DIVISION,
provided a PowerPoint presentation titled "Fiscal
Scenarios," dated April 24, 2023 (copy on file). He began
with fiscal scenarios on slide 2. He detailed that the
scenarios all assumed the spring revenue forecast of $73
per barrel of oil in FY 24 and the budget transmitted by
the House a couple of weeks earlier. The scenarios also
included variables for three different capital budget
levels, Permanent Fund Dividend (PFD) appropriations, and
K-12 funding increases through the formula or as one-time
grants.
Mr. Painter explained that all of the scenarios included
the potential revenue impact of the Subchapter S
(corporation) tax provision included in Senate Bill 114. He
noted the numbers included in the presentation and fiscal
note reflected the tax on the Subchapter S corporations
taking effect January 1, 2023 retroactively resulting in
$190 million in the first year and an ongoing revenue
impact of about $120 million. He remarked that bumping the
effective date to the following year would result in a
number of about $60 million. He added that because the bill
was not before the committee he could not go into specifics
on the bill.
1:44:47 PM
Mr. Painter looked at "Scenario 1" on slide 3. The scenario
had a slight surplus, $1,500 PFD, $680 Base Student
Allocation (BSA) increase (for FY 24 only, which had been
included in the House budget, but subsequently zeroed out
due to the failure of the Constitutional Budget Reserve
(CBR) vote), and a $400 million capital budget (the number
had been used by the Senate Finance Committee for its
modeling). He stated that the three items totaled a cost of
$1.58 billion. The costs added onto the House agency
operations statewide items resulted in a $56 million
surplus under the spring revenue forecast. The S-
corporation provision would bring the surplus to $246
million.
Representative Josephson stated his understanding that HB
114 reduced corporate interest rates but increased "the
overall with the S-corp, so that the new surplus was the
net of those two things."
Mr. Painter clarified that Scenario 1 factored in SB 114
[not HB 114]. He explained that the bill had a number of
changes to oil and gas taxes and corporate income taxes.
The Scenario 1 [on slide 3] only included the Subchapter S
provision within the bill. Specifically, oil and gas
companies paid a tax on income over $4 million. He noted it
was a fairly narrow tax.
Representative Galvin noted Mr. Painter's statement that
the assumptions were based on the spring forecast at $73
per barrel. She asked what the average per barrel price of
oil had been since the forecast had come out.
Mr. Painter answered that the price per barrel had recently
been around $80 per barrel, which would result in numbers
closer to the fall forecast and would add another $665
million. He explained that traditionally the legislature
budgeted to the spring forecast for the constitutional
requirement to have a balanced budget either through the
CBR or another mechanism. The $73 per barrel was the
official number.
Representative Galvin appreciated the budget needed to be
built based on the aforementioned amount. She asked if it
would potentially be possible to find a way to achieve a
surplus of at least $500 million.
Mr. Painter confirmed that a target surplus number could be
thought of as based on the price of oil. Another way to
think about it was targeting budget balancing at a given
price. For example, Scenario 1 balanced at about $72 per
barrel. He explained that a person could determine whether
they wanted to use the $72 or a higher or lower budget
balancing price. He advised thinking about it in terms of
the desired balancing price.
1:49:09 PM
Representative Hannan believed the S-corporation $190
million amount was based on an 18-month capture versus one
year. She understood the current bill was retroactive to
January 1, 2023 and that on an annual ongoing basis the
amount would be $120 million. She asked if her
understanding was accurate.
Mr. Painter agreed.
Mr. Painter characterized Scenario 2 as the middle scenario
shown on slide 4. The scenario had a deficit prior to the
Subchapter S provision. The scenario included a $2,000 PFD
(a total of about $1.3 billion), a capital budget of just
over $300 million (the governor's amended number), and a
$540 BSA increase (a total of $139 million). The three
items added up to $1,766,900,000, which resulted in a
deficit (at $73 per barrel of oil) of about $130 million.
The $190 million from the S-corporation would leave a
projected surplus of about $60 million at the $73 per
barrel mark.
Mr. Painter reviewed Scenario 3 on slide 5 that included
the low scenario for two of the items and the high scenario
for the PFD. The scenario included the 50/50 PFD as passed
by the House at $1.76 billion, paying about $2,700 per
person. Scenario 3 also included a "bare bones" capital
budget of $191 million (the amount in the Senate's first
version, which included federal matching funds and did not
leave a lot for state priorities) and a $400 BSA increase
(a cost of slightly over $100 million). The items added up
to just over $2 billion, leaving a deficit of about $400
million. When including the Subchapter S provision for S-
corporations, the deficit would be about $230 million.
1:51:56 PM
Co-Chair Johnson looked at the PFD amount shown on slide 5.
She thought the 50/50 split resulted in a PFD of $2,763.
Mr. Painter clarified that $1,763 billion was the total
amount for the appropriation that would pay a PFD of about
$2,700 per person.
Co-Chair Foster noted the purpose of the presentation was
to be a brief warmup entering the BSA conversation. He
noted the presentation provided only several scenarios, but
there could be 100 scenarios of how to fund the BSA. He
expounded that the options included [but were not limited
to] a lower PFD and not tapping into savings, a low BSA and
a higher PFD, or a higher PFD and BSA while tapping into
savings. He stated there were many ways to look at the
issue. He wanted the public to understand the difficult
decisions ahead.
Representative Ortiz referenced the different scenarios and
stated they all understood what it meant in relationship to
more or less money for the BSA and the PFD. He asked for
some additional comments related to the capital budget. He
asked what the figure would be in order to meet capital
demand. He thought it would likely cost $1 billion. He
asked about the opportunity cost of not putting more into
the capital budget.
Co-Chair Foster noted there were so many other things that
could figure into the equation. He noted that the S-
corporation [revenue] had been hypothetically included as
the legislation passed. Additionally, there were per barrel
tax credits, statewide sales tax, budget cuts, and many
other things that could be included. He stated the
components used could mean a smaller or larger capital
budget. He wanted to ensure the public understood the type
of questions legislators were having to ask as they worked
to decide what to do with the BSA.
1:55:30 PM
Representative Stapp referenced Department of Revenue (DOR)
sensitivity tables he had previously discussed with Mr.
Painter. He surmised that if oil prices were roughly $40
per barrel and there was no PFD, the state would need to
spend all of the money on the governor's current operating
budget. He asked if the assessment was fair.
Mr. Painter agreed that Representative Stapp's
understanding was accurate on an ongoing basis. He noted
that theoretically the legislature could opt to use a
substantial portion of the approximately $2.4 billion to
$2.5 billion in the CBR.
Representative Stapp asked if it would be before adding any
additional funding to the BSA formula.
Mr. Painter agreed.
Co-Chair Foster reiterated his earlier comments about the
purpose of the presentation.
Co-Chair Edgmon surmised that the supposition in the
scenarios was that raising the BSA meant the PFD would come
down and there would potentially be a bit of revenue from
the S-corporation bill if it was included in the mix. He
noted there were several weeks left in session with the
last week being devoted to conference committee. He asked
if there were any other sources for the revenue.
Mr. Painter responded that no revenue bills had made it
through the finance committee in either body. He stated it
was hard to imagine how quickly a bill could move, but once
the 24-hour rule went into effect bills could move quickly.
There were some other tax bills that had passed one body
such as the motor fuel tax increase. He agreed that
something like a statewide sales tax would likely not pass
in several weeks given the complexity of the bill.
Co-Chair Edgmon agreed completely that a sales tax would be
a heavy lift for the legislature given everything involved.
He remarked that the legislature was facing some very
difficult choices.
1:58:59 PM
Co-Chair Foster moved to the next presentation by the
Department of Education and Early Development (DEED). He
stated there had been attention drawn to whether or not
schools had COVID funding, how much money was out there,
and what schools could spend it on. He asked to hear from
DEED regarding balances. Additionally, the committee would
hear from school districts on how much of the funding they
believed was available.
^PRESENTATION: COVID FUNDING AND SCHOOL DISTRICT FUNDING BY
THE DEPARTMENT OF EDUCATION AND EARLY DEVELOPMENT
1:59:34 PM
LACEY SANDERS, DEPUTY COMMISSIONER, DEPARTMENT OF EDUCATION
AND EARLY DEVELOPMENT, provided a PowerPoint presentation
titled "Alaska Department of Education and Early
Development (DEED): COVID Relief Funding and School
District Fund Balances," dated April 24, 2023 (copy on
file). The presentation included a high level overview of
federal COVID-19 funding awarded to DEED and a review of
the school district fund balances as of June 30, 2022. She
began on slide 3 titled "Federal COVID-19 Relief Funding
Received and Sources." She stated that in response to the
COVID-19 pandemic, the federal government awarded relief
funding in three packages. The first was the Coronavirus
Aid, Relief, and Economic Security (CARES) Act in March
2020 that awarded Alaska $74 million. She noted the CARES
Act funding expired on September 30, 2022. The second was
the Coronavirus Response and Relief Supplemental
Appropriations Act (CRRSAA) signed into law in December
2020 that awarded Alaska a total of $168 million and would
expire on September 30, 2023. The third package was the
American Rescue Plan Act (ARPA) in March 2021 that awarded
Alaska $379 million. She stated the ARPA funding would
expire on September 30, 2023.
Ms. Sanders stated that each of the packages contained
multiple federal awards including the Elementary and
Secondary School Emergency Relief Fund (ESSER), the
Governor's Emergency Education Relief Fund (GEER), and
Emergency Assistance to Non-Public Schools (EANS).
Representative Ortiz asked if the word "expired" meant the
funds needed to be expended at that time.
Ms. Sanders agreed.
Co-Chair Foster noted Representative Coulombe had joined
near the beginning of the meeting.
2:02:26 PM
Representative Hannan asked if the ESSER and GEER funds
were included in CARES, CRRSA, and ARPA or only one of the
three.
Ms. Sanders answered they were a part of the three
packages. The presentation was a high level overview, and
the department could provide additional detail on what had
been allocated within each of the packages. She noted it
was a substantial amount of information.
Representative Hannan asked for verification that there was
ESSER, GEER, and other funding within the CARES Act.
Ms. Sanders agreed that was the case in some combination.
She detailed that not all awards contained GEER.
Additionally, there had been other awards that came to the
state of Alaska through the Department of Agriculture for
child nutrition, libraries, and arts. Her presentation was
primarily focused on funding that went to school districts.
Ms. Sanders turned to a high level summary of the $621
million in federal COVID-19 funding received by Alaska on
slide 4 including obligated and unobligated funding. She
noted the data on the spreadsheet was as of January 2023.
She explained that federal guidance required DEED to
allocate 90 percent of the funding ($517 million) to school
districts (referred to as local education agencies). She
noted that the funding was allocated based on the
proportion of Title I, Part A funds a school district had
received in the most recent year when awards were made. She
elaborated that Title I, Part A was from the Elementary and
Secondary Education Act that was amended by the Every
Student Succeeds Act (ESSA). The program provided funding
to school districts serving high numbers of economically
disadvantaged children. She clarified that the funding was
not allocated to school districts around the state based on
the adjusted average daily membership (AADM) that was used
to allocate funding through the foundation formula.
Ms. Sanders referenced a handout titled "COVID-19 Federal
Relief Funding for Alaska School Districts" (copy on file).
The table showed the 90 percent funding for EESER and GEER
awards to each of the school districts for all three
packages. The second handout was a three-page spreadsheet
titled "School District COVID-19 Federal Relief Allocations
and Expenditures as of 1/23/2023" (copy on file). The
spreadsheet included awarded funding by package in addition
to what had been expended by each of the school districts.
Representative Josephson asked if Ms. Sanders was
highlighting the documents in order to lay the foundation
for the numbers on page 4. He asked if the purpose was to
prove up the numbers.
Ms. Sanders responded that the handouts were to ensure
everyone had all of the information she could provide in
anticipation of questions.
2:07:38 PM
Representative Coulombe asked about the term "obligated."
She asked for more specific detail on the term.
Ms. Sanders replied that the term obligated pertaining to
slide 4 referred to what had been awarded to school
districts. The department had worked with each of the
school districts to make sure they were aware of the
allocation they had received. She explained that because
school districts had certain time periods in which to spend
the money, the funding was considered obligated and could
not be used for another purpose.
Representative Coulombe asked if the remaining balance
shown [on slide 4] resided with DEED and was not designated
for anywhere else.
Ms. Sanders agreed. She elaborated that the remaining
$664,734 [shown on slide 4] was an optional appropriation
to school districts for certain purposes. She explained
that some of the districts declined the funding if they
could not meet the requirements and the funding would be
reallocated. She noted that the reallocation process had
not yet taken place when the presentation had been put
together.
Representative Coulombe looked at the charts [included in
the first and second handouts] and asked for verification
that one was for January 2022 and one for September 2021.
Ms. Sanders replied that the DEED document dated September
1, 2021 [handout 1] was at a point in time and included the
ESSER and GEER funding awards to all of the school. The
number reflected the 90 percent provided to school
districts and would not change. She explained that the
second document had a typo at the top and should be dated
1/26/23 instead of 1/26/22. She would provide a corrected
document to the committee. She explained that the document
had the same allocations of funding to school district (as
handout 1) with expenditures in addition to some other
small awards including homeless funds and preschool funding
allocations. She highlighted that page 3 of handout 2
showed a total of $517 million, which was also reflected on
slide 4 of the presentation.
2:10:42 PM
Representative Coulombe appreciated all of the information
provided by the department and understood it was a lot of
work. She was trying to understand what funds had been
spent. She stated that the information showed what DEED had
committed to districts, but it did not specify that the
money had actually been spent.
Ms. Sanders answered that the larger spreadsheet [handout
2] showed what the school districts had spent and requested
reimbursement for. She noted that the information was as of
January [2023]. She explained that reimbursements had come
in since that time and would come also come in April for
reimbursement in May; therefore, the numbers would
fluctuate slightly. She would address another document
later in the meeting showing remaining funds based on
actual expenditures as of April 15.
Co-Chair Edgmon asked how confident the department was that
the numbers were current. He stated his understanding that
DEED did not have the information from all 54 school
districts.
Ms. Sanders replied that the department had the information
for COVID funding as of the time reimbursements were
requested and submitted by school districts. She stated
that the January information on the slide was correct and
reflected what had been reimbursed to school districts for
expenditures they had made.
Co-Chair Edgmon surmised that the department had all of the
latest numbers on encumbered money, but DEED could not
vouch for what the money was encumbered for.
Ms. Sanders replied that the department could speak to what
school districts had budgeted for on the COVID relief
funding. She explained that districts submitted budgets for
DEED's grants management system. School districts had the
ability to change or request changes to what they budgeted
for the funds. She could speak to what had actually been
reimbursed to school districts.
Co-Chair Edgmon was struggling with the notion that the
department knew what each school district had in its
reserves and how much money the districts could use towards
fixed costs. He wanted to explore the topic more as the
presentation continued.
2:13:23 PM
Ms. Sanders turned to slide 5 titled "Purpose of Funds."
She would also discuss the allowable fund uses and
flexibility school districts had in determining their use
of funds. She relayed that all three [federal] acts were
intended to provide states with funding to respond to the
pandemic. The funds went towards supporting school
districts and reopening schools safely, maximizing in
person instructional time, and limiting the impacts of the
pandemic on students, educators, and families.
Co-Chair Edgmon referenced the Southwest School District in
Bristol Bay with seven remote schools off the road system.
He highlighted that their fuel costs doubled in the winter
of 2021 and 2022. He did not know the precise numbers for
2022/2023. He shared that when he had talked to the
leadership in the school district, he had been told that
when it came to reporting on how the money was spent, they
were not allowed to use the funding on fuel. He asked if
Ms. Sanders was saying it was ok.
Ms. Sanders agreed and turned to slide 6 related to "Broad
Allowable Activity Categories." The slide reflected broad
categories for uses of funds. She shared that she and
department staff were frequently asked how much flexibility
school districts had in spending their COVID relief funds.
She relayed there were very few limitations on the use of
the funds. The funds could be used for salaries,
improvement and maintenance of facilities including fuel
costs, supplies, summer school, and after school programs.
She reviewed expenses that were not allowable including
passenger vans, airplanes, entertainment (e.g., prom
activities), purchasing land, and paying board members or
buying computers for board members. The department had
identified the limitations in working with the U.S.
Department of Education and had articulated them to the
school districts through resources provided and online
webinars. She reiterated that fuel was an allowable
expense.
Co-Chair Edgmon appreciated the hearing and presentation;
however, his interpretation from the viewpoint of the
school districts was different than what Ms. Sanders had
just described. He stated the school districts did not feel
they had that type of flexibility. Additionally, the needs
had changed during the pandemic and enrollment numbers had
declined for many districts. He stated there were varying
amounts of reserves and COVID funding (obligated and
perhaps not spent or encumbered) in the 54 school
districts. He referenced the notion that districts were
sitting on large reserves and did not need a BSA increase
to meet operational expenses. He expounded that some of it
was related to personnel and healthcare insurance and the
cost of fuel for schools relying on diesel fuel. He wanted
the point to be addressed in the meeting. He stated it was
something that needed to be taken seriously. He underscored
that if there really were dire needs as projected by his
school districts, he believed the information needed to
come forth.
2:18:23 PM
Representative Galvin thanked Co-Chair Foster for the
opportunity to have the conversation, particularly in light
of comments just made by Co-Chair Edgmon. She acknowledged
there were a lot of questions floating around in the
building. She stated it was one thing for a district to be
told it could spend the money in particular ways versus
what was prudent. She discussed one-time money allocated to
education over time. She stated that while it was wonderful
to have investment in education, the predictability and
sense that an entire innovative program could be built was
missing. She was hearing from school board members that it
was difficult because certain expenditures may not be
prudent without the predictability of ongoing funding in
the future. She believed that without continuity and time
it made it difficult to make the investment and recruitment
that was needed. She asked for verification it was the
department's sense that school districts were making
decisions based on what they believed they could hold up on
an ongoing basis in the future when COVID funding was gone.
Ms. Sanders replied that it was an excellent point. From
the beginning, the guidance the department had provided was
to try not to spend funding that would require districts to
ask the legislature for an increase to maintain
expenditures going into the future. She remarked that the
state did not want to experience a fiscal cliff when the
funding expired on September 30, 2024. She agreed that
school districts had to weigh how they would spend their
funding to have a long-term sustainable goal moving
forward.
Representative Josephson looked at slide 5 related to the
purpose of funds. He looked at the verbs in the two bullet
points including "reopen" schools safely, "maximize"
instructional time, "address" impacts, "implement"
actionable strategies, "return" to and safely sustain,
"exacerbated," and "emerge" stronger. He saw impacts that
cost more. He believed the legislature had spent a couple
of million to have Beacon provide COVID tests [to
legislators and staff]. He shared that he had 30 tests done
[by Beacon}. He considered the additional associated costs.
He asked if advocates of increases to school funding should
feel they need to defend arguments that somehow COVID
expenses supplanted other monies. He asked if the
department took a position on the specific matter.
Ms. Sanders advanced to slide 7 titled "Flexibility in
Spending" to respond to the question. She explained that
CARES Act funding had been awarded in March of 2020 during
the initial stages of the pandemic. She detailed that at
the time, the guidance received from the U.S. Department of
Education was very specific in limiting how the funding
could be spent. As the world had progressed through the
pandemic, the U.S. Department of Education had broadened
the flexibility in spending, which was applied to all three
of the awards. She furthered that the initial takeaway was
a response to the immediate needs of the pandemic (i.e.,
making sure students and educators were safe in the
classroom), but moving forward through the pandemic the
government had worked to determine how to support school
districts and students with the funding to keep educational
facilities open and to continue educating students, whether
it meant ensuring there were mental health supports to
support students through the pandemic and making
modifications to windows in order to get fresh air. It was
DEED's position that the funding was awarded initially with
very specific limitations, but as time went by there had
been much more flexibility given to enable school districts
to be creative in how they spent the funding.
2:25:46 PM
Representative Josephson stated his sense based on who was
present in the room and what he was hearing around the
building was whether the department felt that other
resources for the 54 school districts were freed up and
that COVID freed them up and it should figure into the
debate over what the legislature would do in the next
several weeks. He asked if the department had a position.
Ms. Sanders responded that she did not have a position on
that. She thought there was an acknowledgement by the
federal government and the state by two actions taken. She
relayed that the state acknowledged there were changes in
the school districts and there was an influx of federal
funding coming into the state and made a decision to waive
the 10 percent carryforward balance until FY 25.
Additionally, the U.S. Department of Education waived much
of its period of availability for federal funds given the
school districts were focusing on responding to the
pandemic and spending more of their federal funds from the
COVID relief funds and much of the federal funding received
through the standard title appropriations were not fully
spent down. She noted the situation could be due to a
variety of reasons. She thought there was an
acknowledgement that an influx of federal funding had come
into the state. She remarked that $517 million was not a
small number. She recognized the funding was to address the
immediate response to the pandemic. She explained that the
document before the committee was only there to provide a
range of funding that may be available and should be part
of the conversation when determining what to do with
funding in education.
Co-Chair Foster noted the committee was short on time.
Ms. Sanders stated she would move quickly through the
upcoming slides in interest of time. Slide 8 addressed the
ways DEED worked with school districts to determine use of
their federal funds, how DEED approved school districts'
budgets, questions the department asked including whether
something was an allowable use under federal guidance, and
whether the use of funding was reasonable and necessary.
She turned to slide 9 and explained that school districts
received their COVID relief funds by submitting a request
for reimbursement. She expounded that school districts
spent their funds on their budgeted plans and requested
reimbursement for the funds. She explained it was part of
the department's accountability process in ensuring it was
following the federal guidance and that it was collecting
the data required in the reporting process to the U.S.
Department of Education.
2:29:44 PM
Ms. Sanders turned to slide 10 showing the "COVID-19 Relief
Funding Dashboard." She relayed that the department had
created a COVID-19 relief funding dashboard in response to
the volume of information and number of awards the state
received through the three [federal] acts. She explained
that the dashboard provided substantial information on
awards and how school districts, the department, non-public
schools, and the governor's office were spending the COVID
relief funding.
Ms. Sanders turned to slide 12 on school district fund
balances. She noted that members' packets included two
versions of the document shown on the slide. The document
labeled handout 3 (copy on file) included school district
fund balances as of June 30, 2022 in addition to federal
COVID relief fund balances as of April 15, 2023. Handout 4
(copy on file) included several additional columns based on
multiple requests including the FY 23 average daily
membership, the FY 23 total state entitlement, and the FY
23 $57 million one-time grant distributed to school
districts. She explained that when DEED was asked how much
funding school districts had available in their fund
balances, it was extremely limited to the data available.
She detailed that school districts were required to provide
their annual audited financial statements to DEED, which
included the fund balances at the end of the prior fiscal
year for their operating fund and all other governmental
funds. The department did not have access to current school
district financials.
Ms. Sanders explained that the handouts provided the
information known to DEED. She detailed that school
districts started the fiscal year with fund balances
exceeding $795 million on June 30, 2022. There was a
minimum of $237 million available or remaining to be drawn
down through the reimbursement process in COVID-19
requests. The department understood that school districts
may have used some or all of the balances. She stated the
documents were intended to provide a potential range of
available funds. She reiterated her earlier statement that
the state waived the 10 percent unreserved fund balance
requirement until 2025. She relayed that at the end of FY
22 there were 26 school districts that exceeded the 10
percent balance. Additionally, the federal government
extended the period of availability for spending down the
federal awards. She highlighted there was an increase in
the federal title awards from FY 22 to FY 23 of
approximately $5.5 million. She stated that the amount was
anticipated to increase from FY 23 to FY 24. She remarked
that school districts were the appropriate entities to
speak to their current fund balances and available COVID
relief funds, but the department felt all data points
should be considered when having a conversation about
funding for school districts.
2:34:09 PM
Ms. Sanders relayed that a colleague was present to answer
any questions about limitations and flexibility of the
funds.
Co-Chair Foster stated he had been seeing the $237 million
in remaining federal COVID funding for schools. He looked
at slide 4 that showed total remaining COVID funding of $10
million compared to the handout showing remaining COVID
funding of $237 million. He asked Ms. Sanders to explain
the difference in the numbers.
Ms. Sanders explained that DEED had used the term
"obligated" on slide 4. She detailed that $517 million had
been allocated to school districts and the department had
obligated/awarded $516 million of the total. She
underscored the obligated amount had nothing to do with
expenditures. She turned to slide 12 and explained that the
column highlighted in yellow showing a total of $236
million reflected the amount remaining after the
expenditures or the reimbursement requests had been
received by the department from school districts.
Co-Chair Foster asked for verification that the number to
focus on was the $237 million.
Ms. Sanders agreed.
Co-Chair Johnson asked if the $237 million had been spent
or obligated.
Ms. Sanders responded that the amount on slide 12 reflected
the amount that school districts had not drawn or asked for
reimbursements for. She explained that school districts may
have plans or obligations they had put into place that had
not yet been spent or they had not yet submitted their
reimbursement requests.
Co-Chair Johnson surmised that how much of the remaining
funding had been spent by districts was not yet known.
Ms. Sanders agreed. She explained that school districts may
be getting ready to submit their reimbursement. For
example, a school district may have replaced an air
conditioning unit and was now preparing to submit its
reimbursement request to DEED. She underscored that DEED
did not have information on the current financials for each
of the school districts. She stated the school districts
had to answer those questions. The department knew that
$237 million had not been requested for reimbursement by
the school districts.
Representative Hannan referenced the handouts [3 and 4] and
noted that one [handout 4] included more columns including
the average daily membership. She noted that the handout
included Mt. Edgecumbe, which resulted in a difference in
the COVID relief funds remaining shown in the column
highlighted in yellow. She asked if it was the only
discrepancy between the two in the COVID [relief funds
remaining] column.
2:38:25 PM
Ms. Sanders agreed. She relayed that DEED was asked to add
Mt. Edgecumbe and expand the information included.
Representative Hannan stated her understanding that by
statute districts were required to have a 10 percent fund
balance, but the requirement had been waived until FY 25.
She asked if the fund balance requirement would go back
into effect at the beginning or end of FY 25.
ELWIN BLACKWELL, SCHOOL FINANCE MANAGER, DEPARTMENT OF
EDUCATION AND EARLY DEVELOPMENT, answered that school
districts could have anywhere between zero to 10 percent
under the statute (the 10 percent represented a maximum).
The statute was waived to June 30, 2025. The fund balance
reflected the balance on June 30 of any given fiscal year.
He explained that the fund balance on the given date was
reported in the annual audit. He stated it only represented
what happened at the end of the fiscal year, but on July 1,
districts would still have the same fund balance. He
explained it was technically at the end of a fiscal year.
Representative Cronk asked why DEED was limited in its
knowledge about funding districts had available.
Ms. Sanders answered that the only statute providing DEED
authority to gather information was the one requiring the
year end audited statements. She stated that school
districts had local control over their funds and the
department did not have visibility into their finances
during the year.
Representative Cronk stated it was frustrating to get an
answer about the finances. He stated that when he looked at
the numbers provided, he wondered how much money districts
really had. He thought it was a struggle because districts
said they needed money, but he was uncertain there was a
real answer. He observed that one district had $351
million. He wanted transparency before agreeing to provide
additional funding to the BSA. He shared that he had
previously been a teacher for 25 years and wanted to ensure
schools were funded, but without transparency it was
difficult for him to agree to increase the BSA. He asked
for verification that DEED did not have visibility into
grant funding for school districts.
Ms. Sanders confirmed the information did not include
grants.
Representative Stapp shared that he had fairly detailed
information from his school district CFO Andy DeGraw. He
reported that the Fairbanks North Star Borough School
District (FNSBSD) only had $4.3 million available out of
the total funds listed. He noted that the district itemized
all of its expenditures. He stated that the district
disputed the amount of money DEED showed for pupil
transportation. The district reported the actual was $3.5
million, not $4.7 million. The district talked about the
capital and other government funds allocation being
appropriated already for IT replacement, insurance, and
different operational replacement values of staff
technology over a four-year period. He elaborated that Mr.
DeGraw concluded that out of the $16.1 million listed, only
$4.3 million of the funds were actually available for the
FNSBSD for appropriation. He added that the district had
already committed the FY 24 budget. He did not know where
the big discrepancy was [between the school district
numbers and the DEED numbers]. He relayed that when he had
requested the information, he had received an itemized list
showing the FNSBSD's accountability.
2:43:15 PM
Ms. Sanders answered that the school districts had more
current information. The information shown by DEED was the
information it had available in the audited financial
statements from school districts as of June 30, 2022. She
stated that school districts were the ones that should be
communicating to legislators and the public on their
current fund balances.
Representative Stapp asked for verification that the
information was from audited information from nearly one
year ago.
Ms. Sanders replied affirmatively. She added the date was
noted on the slide.
Co-Chair Johnson looked at slide 3 and asked if the funds
had to be obligated or spent by the expiration date shown.
Ms. Sanders answered that the funds had to be expended by
September 30, 2024.
Representative Galvin was concerned about the word
"honesty." She relayed that like Representative Stapp, she
had been able to receive any information she had asked
about [from her school district]. She asked if school
districts provided information to DEED when requested.
Mr. Blackwell answered affirmatively. He confirmed that if
DEED asked the school districts for particular information,
the department had a good working relationship with the
school districts.
Representative Galvin stated her understanding that the
presentation was based on existing statute with regard to
when information was reported to the department. She asked
for verification that there was other information
available, but there was no sense from DEED's perspective
that anyone was trying to keep information from the
department so that it could not get a better understanding
of the numbers.
Ms. Sanders answered that the department had limited
information available. She stated that the department did
not have access to school districts' live information. She
explained that the point of the document was to provide the
information the department had available from districts at
present.
2:46:59 PM
Co-Chair Foster moved to presentations from school
districts.
DR. BRIDGET WEISS, SUPERINTENDENT, JUNEAU SCHOOL DISTRICT,
provided a PowerPoint presentation titled "Fund Balance"
(copy on file). She spoke in support of the legislation
that would increase the BSA for school districts across the
state. She relayed that the Juneau School District (JSD)
school board policy required a 1.5 percent unassigned fund
balance. She explained reducing the fund balance below 1.5
percent required a majority on the board to vote in favor
of the action.
Ms. Weiss turned to slide 3 showing a table of JSD's
unassigned fund balance story based on the district's audit
documents. She noted the audit documents were final on June
30 and took several months to become solidified. She
highlighted that the district's budgeted fund balance for
FY 20 was $574,400. She explained that when the district
created its budget, the school board had to project what it
planned on the ending fund balance to be based on a
multitude of assumptions. She reported that the actual fund
balance in FY 20 had been -$30,603. She explained that in
the audited document there were other designated funds with
balances that would often cover [for the deficit in the
actual fund balance]. The following year, in FY 21, the
board voted to reduce its projected budgeted fund balance
to $213,700 and the year ended with an actual audited fund
balance of zero.
Ms. Weiss continued to review slide 3. She reported that in
FY 22 the board voted to take the budgeted fund balance to
zero to try to make ends meet. The district's actual fund
balance at the end of FY 22 was -$1.8 million. She
explained that when all of the district's funds had been
combined, the actual fund balance had been -$63,000 for the
first time. The district had worked to get its fund balance
back up to $272,000 in FY 23 and it did not know what the
end of the year would bring [in terms of actual numbers].
The board had gone back to its 1.5 percent [fund balance]
policy requirement for FY 24 because it could see the net
effect of what was taking place. She stated they had been
robbing Peter to pay Paul, which was not an option because
the district's budgets were so slim.
2:51:26 PM
Ms. Weiss turned to slide 3 and discussed the district's
transportation budget. She explained that the district
currently received the same amount of funding per student
for transportation that it received in August 2015. She
relayed the absence of a hold harmless statute had hurt the
district in regard to transportation. She expounded that
JSD had a little grace during COVID due to the enrollment
hold harmless statute, but it was nonexistent for
transportation. She noted the numbers on slide 4 were
audited. In 2020/2021, the district ended with a deficit in
its transportation budget, which was carried forward to
2021/2022 and the deficit subsequently increased. She
stated that the district had to run its buses, and whether
there were 200 fewer students or not, the buses had to run
across town (routes changed little when enrollment
declined). She stressed that transportation funding would
have to increase by 30 percent in order for the district to
break even in FY 24.
Ms. Weiss turned to slide 5 pertaining to property
liability insurance. There were many costs that increased
including fuel, transportation, salaries, and benefits. She
emphasized that the district had no control over the cost
increase of property liability insurance. The cost listed
on slide 5 reflected actual costs and the projected cost
for FY 24. The slide showed a radical increase that the
district did not have the budget to compensate for.
Ms. Weiss addressed COVID funding on slide 6. She explained
that one of the reasons the district did not have actual
numbers for COVID fund balances was because the district
was reimbursed on a quarterly system. She detailed that the
district could not submit its reimbursements until money
was expended and the funding was expended throughout the
year. She stated there were two upcoming reimbursement
dates that were not reflected on the sheet [presented by
DEED] including April 30 and July 31. In Juneau, like most
districts in the state, JSD looked at its resources for
COVID and worked to balance spending of the funds to
support the district through the recovery with a given
amount per year. For example, a spreadsheet [provided by
DEED labeled handout 4 (copy on file)] showed $3,331,997 in
remaining COVID funds. The district was actually budgeted
at $1.6 million for the next school year and it anticipated
the balance of about $1.7 million would be in the two
reimbursements coming April 30 and July 31. She stated,
"they are expending as we go." She explained it had been a
challenge anytime the district received one-time funding.
She elaborated that the source did not really matter, the
school district had to look at the expenditure to ensure it
was not setting itself up for a fiscal cliff. She noted
that COVID funding had that potential. She relayed it had
the same effect as one-time funding from the legislature.
She stressed that the district had to strategically use the
money in the way it was intended, to pull its students
through a pandemic.
2:55:15 PM
Ms. Weiss reviewed JSD's FY 24 landscape on slide 7. She
stated that in order to build a budget for the next school
year, the board anticipated a $430 increase to the BSA. She
emphasized that even with the increase, the district had to
make cuts to its budget to build a balanced budget. She
noted that the school board had to have a balanced budget
to submit to the state. If the $430 BSA increase did not
occur, the board would go back to the table and cut $3.3
million from the budget. To get to the current budget for
the following year the school district had removed $235,000
of classified support at the elementary level and special
education positions. The district built its balanced budget
with cuts and the anticipation of increased revenue. She
stated it was challenging because every district was
somewhat unique. She underscored that the district was very
transparent. The district had audited financials and was
willing to share any number from its books, which it did
annually. She remarked that an ongoing, reliable adequate
fiscal picture for school districts was imminent. She
underscored that districts could not build innovative or
sustaining programming for their students. She emphasized
that grant budgets, which were specifically targeted funds,
had allowed the district to provide mental health
clinicians, Tlingit language support, culturally responsive
teaching, and things the district would never be able to
provide otherwise. The grants were one-time targeted funds
and the district needed to be supported fiscally to be able
to sustain the educational efforts for its students.
Co-Chair Foster remarked that he did not want to rush the
rest of the meeting and wanted to provide time for
questions; therefore, he would move some of the school
districts to another meeting hearing during the week.
Representative Galvin thanked Ms. Weiss for her
presentation. She looked at transportation costs on slide
4. She understood the state budgeted for transportation in
a separate line item in the budget. She believed Ms. Weiss
had stated JSD needed a 30 percent increase to break even
for FY 24 transportation. She referenced Ms. Weiss's
testimony that the district had to provide transportation
even when it was not breaking even. She asked where the
money came from.
Ms. Weiss responded that the district had carried forward a
deficit in its transportation budget for two years hoping
it could find some efficiencies and make it up, but that
had not been possible. The district had asked its local
assembly to help. She stated that the school district
thought it could perhaps catch back up, but the deficit had
continued to increase. Ultimately, in June of 2022, the
district had ended up in the red in its overall budget,
which had been a wake up call. She stressed that the
district could not keep carrying the deficits.
Representative Stapp looked at the 3x increase in JSD's
property liability insurance. He assumed the district was
fully insured. He asked if the district had looked at
commercial risk pooling with the City and Borough of Juneau
(CBJ) or self-insuring.
Ms. Weiss replied that JSD already did so. The district
worked directly with CBJ for its insurance.
3:00:15 PM
Representative Coulombe looked at the $1.6 million in
remaining COVID funding [slide 6]. She asked about the
total COVID funding received by Juneau.
Ms. Weiss responded approximately $12 million.
Co-Chair Edgmon thought he heard DEED tell the committee
earlier in the meeting that it had a pretty good handle on
all of the COVID money out there. He heard Ms. Weiss say
that JSD was reimbursed on quarterly rates including on
April 1 and July 31 and that it had $1.6 million remaining.
He remarked that the two statements clashed.
Ms. Weiss believed the date on DEED's slide was April 15.
The two quarterly upcoming reimbursement dates were April
30 and July 31. She explained that by the time JSD did its
reimbursements at the end of April and end of July, the
anticipated amount remaining for the next and final school
year was $1.6 million.
Co-Chair Edgmon was trying to get to a BSA number that
would work for some school districts but would not be ideal
for others. He stated it was just the way the school
districts were built big, small, medium, and so forth. He
asked if the department knew enough to understand JSD's BSA
needs.
Ms. Weiss answered that the school funding formula was very
complicated. She relayed that running a school district
budget was almost impossible and if most businesses ran the
way they did there would not be many thriving businesses in
Alaska. She stated that the information DEED had access to
was fully transparent through audited records and through
their reimbursement for COVID expenditures based on certain
funding formulas DEED held the lens to. It was all
dependent on the process. Under the particular case it was
a reimbursement. She stated that sometimes JSD received
funds upfront and the school district was able to spend the
funds based on the criteria. She elaborated that COVID
funding was a reimbursable fund where the district spent
money and requested reimbursement from DEED.
Co-Chair Edgmon did not think the department understood the
true needs of the school districts. He understood there
were a lot of moving parts outside of COVID funding and
things that changed quickly such as liability insurance
rates and other. He stated it brought him to the question
about what number to put the BSA at. He believed in some
situations it would be highly acute. He elaborated that
Juneau had gone through its reserves. He stated there were
the Mat-Su, Bristol Bay, Fairbanks, and others to follow.
He believed the issue needed to be explored. He understood
the picture Ms. Weiss was painting and appreciated the
details.
3:04:35 PM
Representative Ortiz appreciated the presentation. He
looked at the third bullet point [on slide 7] specifying
that with a $430 increase to the BSA the district would cut
two special education positions and $235,000 in classified
support at the elementary level. He underscored that $430
was a number that would entail losing two special education
positions and cutting classified support at the elementary
level. He emphasized that it did not speak to the impact on
individual students who would not see the classified
specialists in their classrooms or receive special
education support. He was not criticizing anyone in the
room. He underscored the importance of keeping track of the
end result being delivered to students across the state if
the BSA continued to be flat funded. He emphasized that it
was not possible to make up a year's instruction where a
student did not receive added support. He asked for detail
on the impact of eliminating the two special education
positions and the $235,000 cut to classified support at the
elementary level.
Ms. Weiss replied that she was closing in on her 39th year
in education. She relayed that for at least the past 10
years she had been an advocate for financial support and it
broke her heart. She shared that the job in education was
incredibly different at present than it had been when she
started teaching in 1984. She stated that the fact that she
lived in the amazing state of Alaska and had to appear like
she was begging, pleading, and justifying the work that
needed to be done for children in Alaska broke her heart.
She saw it daily in the school district. She shared there
were students who needed more support in reading, more
adult support and with very significant social and
emotional needs. She underscored there was not any problem
in any of the state's communities that did not live and
breathe inside the schools and classrooms. She stated there
were other items the district had to cut, but she had
selected the two items [shown on slide 7] because they were
directly dedicated to classroom and student support. She
found it shameful that they could not figure out how to
support its educational system in a way that made a
difference for students. She highlighted that students were
"our neighbors" and would be the state's workforce.
Ms. Weiss stressed it was time to step up with an adequate
and routine funding source that was increased incrementally
over time. She emphasized that the current situation was a
result of flat funding over the past seven years. She
stated that the district would not be asking for as much
currently if it had been incrementally increased along the
way as it should have been. She did not have a magic number
[for the BSA]. She explained that the JSD school board had
selected the number [$430] because it was uncomfortable
gambling on anything more, but they could not stomach
figuring out how to build a budget adequately on $30. The
decision had been to land somewhere in the middle where
they could survive building a budget and have some
semblance of order and hope the number ended up being
somewhere in that ballpark.
3:09:10 PM
Representative Hannan asked how many people worked in the
JSD finance section.
Ms. Weiss answered there were three people in the finance
department and three in the payroll department.
Representative Hannan asked how large the section had been
when Ms. Weiss started.
Ms. Weiss responded that when she first came to the
district (nine years ago), there had been one or two
additional positions in the section.
Representative Hannan stated there were 53 school
districts. She had never turned to DEED for what her school
districts needed; she had always turned to the school
districts that had independent boards and finance offices
with the ability to get the information at the drop of a
hat. She could not fathom how large DEED's finance division
would have to be to be able to report to the legislature on
the increase in P&I insurance and the relationship to the
city and when it went up. She turned to her district and
knew the school boards actively engage and look at the
items. She was shocked that some thought DEED should be in
charge because "we've given that authority" (fiduciary and
legal) to boards that were elected to hire and fire people
to make sure there was accurate information. She stated
that DEED was a reporting agency of data from very diverse
districts. She remarked that the numbers were sad. She
stated that programs had been cut to the bone. She
emphasized there were special education students who would
have less services the next year in the budget that the
legislature would be able to produce and protect for them.
She thanked Ms. Weiss for her testimony.
3:11:29 PM
Representative Josephson felt like the department was
perhaps thinking "don't shoot the messenger" and that its
information reflected a moment in time and was all it had.
He was concerned about what someone would think looking at
the DEED school district fund balances updated April 18,
2023 because districts were supposed to have a reserve
balance (the requirement had been waived). Additionally,
there was a capital project fund, which was the reason
there were five-year lapsing requirements because the funds
were not expected to be spent in a year. He found that
column to be unique. He continued that there were total
COVID funds and the deadline was about six months away, but
someone could look at the total by district and say there
was $1.037 billion; however, it was not particularly
relevant to the overall.
Co-Chair Foster moved to the Anchorage School District
(ASD).
ANDY RATLIFF, CHIEF FINANCIAL OFFICER, ANCHORAGE SCHOOL
DISTRICT, testified in support of HB 65 and a BSA increase.
He wanted to address the "elephant in the room," which was
the $351 million reported in the district's available funds
to spend. He remarked there was a wide variety of balances
among all districts; therefore, to hold the entire state to
the Anchorage standard was likely unfair. He referenced the
DEED spreadsheet titled "Handout 4: School District Fund
Balances" discussed earlier in the meeting (copy on file).
The first column represented $71.1 million of ASD's
unreserved fund balance. Of the total, $25.7 million was
restricted for use to preserve the Municipality of
Anchorage bond rating. He elaborated that ASD set aside 10
percent of its tax request to be able help when bonds were
sold in the future. He stated it was restricted and
undesignated and represented a little under one month of
general fund expenditures for ASD.
Mr. Ratliff stated that about $2.5 million of the
district's $3.1 million transportation fund balance was
dedicated to help shore up the FY 24 budget. He relayed in
the past ASD had been 100 percent program funded by the
state and transportation was now funded about 73 percent by
the state. The district had increased driver wages by about
25 percent in the current year to get drivers in the door.
He explained that about two-thirds of its general education
bus routes had not been running at the start of the year
because the district had been unable to hire drivers.
Raising wages had helped get drivers in the door and all of
its buses were running, although it was difficult to find
substitutes and run after school programs.
Mr. Ratliff reported that the $16 million for capital
projects was made up of bond proceeds and was dedicated to
bond programs and could not easily be transferred into the
general fund for other instructional uses. There was $167.7
million in other governmental fund balances. He detailed
that $90.5 million of the total had been in the district's
debt service fund as of FY 22, $4.1 million was the receipt
of property taxes, and $86.4 million was the school bond
debt reimbursement. He stated that Anchorage was the only
school district that received the school bond debt
reimbursement and other districts went through their
municipalities. He noted that school districts did not
necessarily have a say in what to do with the specific
funds. The ASD board had approved the funding to be
transferred to its capital projects fund to be dedicated
for deferred maintenance and safety projects including
secure vestibules to strengthen entrances to the elementary
schools, as well as rooves and other high priority
equipment failures that needed to be addressed. He relayed
that about $40 million of the total had not been dedicated
to a particular project.
3:17:09 PM
Mr. Ratliff continued to review a breakdown of the $167.7
million in other governmental fund balances. He detailed
that about $9.1 million was restricted by the federal
government for food service. In FY 22, the federal
government decided to continue paying higher COVID rates
and the district had been able to save some money. He
elaborated that the district was starting to draw the
funding down in FY 23 and would continue to do so in FY 24
as the rates were not increasing as fast as the food worker
wages and the cost of food were increasing. He relayed that
$5.8 million of the other governmental fund balance was
student activity funds. The funds were raised by student
activity groups and booster clubs and were dedicated for
the sole use by the schools for the clubs raising the
money. He elaborated that $62.6 million was other general
fund balance reservations. He stated that $11.3 million was
for federal impact aid. He explained that the state allowed
the school district to reserve funding for the purpose
because the timing and amount of the federal impact aid was
unknown. The district knew the number of students it would
get federal impact aid for, but it did not know the rate or
if the federal government would fund at 100 percent;
therefore, the state allowed the school district to reserve
money for that purpose.
Mr. Ratliff continued reviewing the school district
funding. He relayed that $18 million was for self-insurance
and workers' compensation reserves. There were outstanding
claims that had not yet been paid and a portion of the
funds had to be reserved for future claims costs. There was
$28.6 million in encumbered funds for ongoing projects and
about $18 million of the total was reserved for charter
schools. The school district allowed charter schools to
carry forward their balances and to use the funds as they
saw fit. The remainder of the $28.6 million went annually
to major maintenance projects including IT software
purchases, curriculum adoptions, and audits. He explained
that $2.8 million and $1.4 million went to prepaid items
and inventory for the next year. He relayed that many
contracts (e.g., software contracts) required advance
payment.
3:19:31 PM
Mr. Ratliff reviewed $92.7 million in COVID relief funding.
He stated the amount should reflect ASD's unspent COVID
funding as of December 31 [2022]; the district had not yet
submitted its third quarter reimbursement. He noted the
fourth quarter would be a much heavier spend due to the way
the district's teachers were paid. He explained that
teachers were paid 12 equal payments from September through
June with two payments in May to help carry teachers
through the summer. The school district anticipated having
$20 million to $25 million at the end of the year. He noted
that $20 million had been dedicated to class size retention
for next year's budget.
Mr. Ratliff addressed why the fund balance was necessary.
The first reason was available cash flow. The COVID relief
funding had to be spent upfront, requiring some cash on
hand in order to do so. The fund balance allowed the
district to have cash on hand in order to pay bills. The
second reason was related to the timing of property tax
payments. He detailed that property tax payments were not
received until beginning in December. He explained that the
cash balance declined until December until the payments
started coming in. The districts had to float the revenues
until the other funding came in.
Mr. Ratliff addressed the school district's capital
construction program, which was based on the timing of the
district's bond sales. He explained that the district could
spend its capital into a deficit, sell a bond, and pay
itself. He elaborated that having the cash on hand to be
able to accommodate capital construction was very
beneficial, which was one of the reasons ASD carried a
fairly high fund balance in cash. He addressed unforeseen
emergencies and highlighted an earthquake as an example. He
explained that the board had immediately allocated $30
million of the school district's fund balance to start
getting schools safely reopened. The effort had taken
substantial funding and the district was still waiting on
FEMA [Federal Emergency Management Agency] reimbursements.
He highlighted that Russian Jack Elementary had burned down
in the early 2000s and the school district had been able to
spend its fund balance to help get the work reimbursed
before insurance proceeds kicked in. He addressed
unanticipated enrollment losses. He explained that if the
district lost 100 students in a year it equated to $1
million. By the time the district knew it had lost 100
students, all of its staff was already on contract and
could not be reduced. Many times, the district would have
to use its fund balance to help float the costs.
Mr. Ratliff stated that ASD had just under $72 million in
undesignated fund balances. Of the total, about $26 million
would be continually reserved to preserve the district's
bond rating, which left about $46 million. The district
expected the amount to increase by the end of 2023. He
explained that the board had saved the $16.2 million
received for use in FY 23 to offset some of the losses in
FY 24.
3:22:56 PM
Mr. Ratliff reported the district had about 450 vacancies
throughout the current year. The district did not want the
vacancies and would rather spend the money and not have the
fund balance, but from a finance perspective it helped pad
the fund balance. The district had a balanced budget for FY
24 including $45 million in one-time fund balance money
plus $20 million in remaining ESSER funding and an increase
of $7.5 million for the PTR [pupil to teacher ratio]
including one additional student per classroom. The
district planned on spending some of its fund balance down,
but the district was lucky it had the money to spend down
because many districts did not have the option.
Co-Chair Foster believed Mr. Ratliff's had stated that some
of the $92 million in COVID federal relief funds was needed
for unforeseen events. He asked how much was obligated
currently and how much was remaining for unforeseen events.
Mr. Ratliff clarified that the COVID funding was not being
used for emergencies. The funding was all dedicated for
staffing for the coming year. The district anticipated
having a little over $20 million at the end of the year.
Representative Stapp referenced DEED's spreadsheet reviewed
earlier in the meeting (copy on file) showing $92.7 million
in remaining COVID funds for the Anchorage School District.
He asked if there was a big difference between the amount
of COVID funding the Anchorage School District had received
compared to the amount received by other districts. He saw
a disparity between the Fairbanks school district and
Anchorage.
Mr. Ratliff replied that the COVID funding had not been
distributed based on the AADM, but on the district's Title
1 or economically disadvantaged status. He believed
Anchorage received about 28 percent of the overall funding
based on the AADM. He believed Anchorage had received 35 to
40 percent of the Title 1 funding. The district had
received a larger percentage of the ESSER money than it
would have if it had been one-time funding from the state.
Co-Chair Foster noted that the meeting time was almost
over. He asked Mr. Ratliff to provide any closing comments.
Mr. Ratliff relayed that he would provide his talking
points to the committee. He thanked the committee for
working on education. He stated that if nothing was added
to the BSA in the current year, FY 25 would be rough. He
explained that ASD would spend its entire fund balance down
to a board minimum and all of its ESSER funding. The
district would be left with a structural deficit of $85
million to $90 million, which equated to 900 to 1,000
positions. He underscored the importance of a BSA increase
in the current session to enable the school district to
plan for FY 25. He added that the district constructed its
budget in January/February but it would not know how much
funding it would receive until May or June. He stressed
that the district could not plan if it did not know how
much funding it would receive ahead of time.
Co-Chair Foster thanked Mr. Ratliff for his presentation.
He indicated the possibility of adding the remaining
presenters to the Friday meeting. He reviewed the schedule
for the following day.
HB 65 was HEARD and HELD in committee for further
consideration.
ADJOURNMENT
3:28:39 PM
The meeting was adjourned at 3:28 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB 65 PPT DEED School Fund Balance and COVID Funds 4.23.2023 Edited.pdf |
HFIN 4/24/2023 1:30:00 PM |
HB 65 |
| HB 65 Handout #1 - 9.1.2021 COVID Relief Funds - School District Allocations (1).pdf |
HFIN 4/24/2023 1:30:00 PM |
HB 65 |
| HB 65 Handout #3 School District Fund Balances PDF 4.17.2023.pdf |
HFIN 4/24/2023 1:30:00 PM |
HB 65 |
| HB 65 Handout #4 - School District Fund Balances Excel 4.18.2023.pdf |
HFIN 4/24/2023 1:30:00 PM |
HB 65 |
| HB 65 LFD HFIN Fiscal Scenarios 4-24-23.pdf |
HFIN 4/24/2023 1:30:00 PM |
HB 65 |
| HB 65 JSD FUND BALANCE PP 042423.pdf |
HFIN 4/24/2023 1:30:00 PM |
HB 65 |
| HB 65 MSBSD Slides HFIN 042423.pdf |
HFIN 4/24/2023 1:30:00 PM |
HB 65 |
| HB 65 FNSB FY24 House Finance 04.24.23.pdf |
HFIN 4/24/2023 1:30:00 PM |
HB 65 |
| HB 65 Bristol Bay Borough School District 042423.pdf |
HFIN 4/24/2023 1:30:00 PM |
HB 65 |
| HB 65 Handout #2 - DEED HFIN District COVID Relief Expend as of 1.23.2023 final - UPDATED.pdf |
HFIN 4/24/2023 1:30:00 PM |
HB 65 |