Legislature(2013 - 2014)CAPITOL 106
01/21/2013 08:00 AM Senate EDUCATION
| Audio | Topic |
|---|---|
| Start | |
| Overview: Alaska Department of Education & Early Development on the Foundation Funding Formula | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
ALASKA STATE LEGISLATURE
JOINT MEETING
HOUSE EDUCATION STANDING COMMITTEE
SENATE EDUCATION STANDING COMMITTEE
January 21, 2013
8:01 a.m.
MEMBERS PRESENT
HOUSE EDUCATION STANDING COMMITTEE
Representative Lynn Gattis, Chair
Representative Gabrielle LeDoux
Representative Lora Reinbold
Representative Paul Seaton
Representative Peggy Wilson
Representative Harriet Drummond
SENATE EDUCATION STANDING COMMITTEE
Senator Gary Stevens, Chair
Senator Mike Dunleavy, Vice Chair
Senator Charlie Huggins
Senator Berta Gardner
MEMBERS ABSENT
HOUSE EDUCATION STANDING COMMITTEE
Representative Benjamin Nageak
SENATE EDUCATION STANDING COMMITTEE
Senator Bert Stedman
OTHER LEGISLATIVE MEMBERS PRESENT
Representative Tammy Wilson
COMMITTEE CALENDAR
OVERVIEW: ALASKA DEPARTMENT OF EDUCATION & EARLY DEVELOPMENT ON
THE FOUNDATION FUNDING FORMULA
- HEARD
PREVIOUS COMMITTEE ACTION
No previous action to record
WITNESS REGISTER
ELIZABETH NUDELMAN, Director
School Finance and Facilities Section
Department of Education and Early Development (EED)
Juneau, Alaska
POSITION STATEMENT: Provided an overview of the Alaska Public
School Funding Formula, on behalf of the department.
ACTION NARRATIVE
8:01:38 AM
CHAIR GARY STEVENS called the joint meeting of the House and
Senate Education Standing Committees to order at 8:01 a.m.
Present at the call to order from the House Education Standing
Committee were Representatives Gattis, Seaton, P. Wilson,
Drummond, Reinbold, and LeDoux. Present from the Senate
Education Standing Committee were Senators Stevens, Huggins,
Gardner, and Dunleavy.
^ OVERVIEW: ALASKA DEPARTMENT OF EDUCATION & EARLY DEVELOPMENT
ON THE FOUNDATION FUNDING FORMULA
OVERVIEW: ALASKA DEPARTMENT OF EDUCATION & EARLY DEVELOPMENT ON
THE FOUNDATION FUNDING FORMULA
8:03:10 AM
CHAIR STEVENS announced that the only order of business would be
an overview of the Alaska Public Schools Funding Formula as
provided by the Department of Education and Early Development
(EED).
8:04:52 AM
ELIZABETH NUDELMAN, Director, School Finance and Facilities
Section, Department of Education and Early Development (EED),
stated that the public school funding formula was adopted under
SB 36 in 1998, implemented in 1999, and is defined in AS 14.17.
Changes have been made in the formula since its adoption but the
methodology has remained the same. She explained that average
daily membership (ADM) is the number of enrolled students during
the 20 school-day count period ending on the fourth Friday of
October; also referred to as the October count period. The
count is reported to the department within two weeks following
the 20 school-day count period. An additional report is due on
November 5, projecting the student count for the following year.
The projected numbers are what EED uses to build the subsequent
years budget; a component of the governor's budget each year.
8:06:29 AM
REPRESENTATIVE LEDOUX asked whether adjustments are allowed
outside of the count period.
MS. NUDELMAN responded, no, and added that the count period
establishes the total funds to be provided for the school year.
8:07:24 AM
MS. NUDELMAN reviewed the eligibility points to be considered as
a student for counting purposes, which are: a child who is 6
years of age before September 1, and under the age of 20, who
has not completed the 12th grade; a child who is 5 years of age
before September 1, may enter kindergarten; or a child with a
disability who has an active Individualized Education Program
(IEP) may attend school at the age of 3 or if under the age of
22.
8:08:05 AM
MS. NUDELMAN explained that the aforementioned criteria
establish the ADM count, which is further adjusted to arrive at
a district adjusted average daily membership (AADM). The six
components used in this step are: 1) adjust the ADM for school
size; 2) apply the district cost factor; 3) apply any special
needs factor; 4) apply any vocational and technical factor; 5)
add intensive services counts; and 6) add correspondence student
counts. The base student allocation (BSA) is applied to the
outcome of the AADM in order to arrive at a figure that
represents a district's basic entitlement need.
8:09:15 AM
SENATOR DUNLEAVY questioned how the correspondence student count
is reflected in the ADM, as well as the funding level factor.
MS. NUDELMAN replied that a correspondence student is funded at
a level of .80 of the BSA. The lower funding percentage is
established considering specific elements such as the fact that
a correspondent student does not require a brick and mortar
school, with the associated operational costs, and the student
to teacher ratio difference. To a follow-up question, Ms.
Nudelman confirmed that the correspondence figure is established
under law not by departmental regulation.
8:12:08 AM
MS. NUDELMAN drew attention to the table indicating school size,
contained in the presentation packet titled Alaska Public School
Funding Formula Overview, and began to explain the first of the
six component adjustment steps. A school with a 10-20 ADM is
adjusted to 39.60. The BSA of $5,680 will be factored into this
figure she said and pointed out that the resultant funding total
is significantly different when applied to an ADM of 10-20
versus the adjusted count of 39.60. Representative LeDoux
stated her understanding that a school might be faced with
closure if the ADM is below 10, and Ms. Nudelman assured the
committee that the topic would be addressed within the
parameters of the presentation. Continuing, she stressed that
that all of the October ADM counts are adjusted upward in
arriving at a school's AADM to which the BSA is subsequently
applied.
8:15:11 AM
REPRESENTATIVE REINBOLD asked what the basis is for using 39.60
in the formula.
MS. NUDELMAN said it was established under law with the passage
of SB 36. She then returned to Representative LeDoux's earlier
question regarding a school with an ADM count of less than 10
and explained that these schools are not considered singularly
but have their counts added into the district's next smallest
school count.
REPRESENTATIVE LEDOUX concluded that a school would not have to
close due to an October count of less than 10.
MS. NUDELMAN underscored that school closure is not a given
under state law, but rather a decision that involves the entire
effected community. Additionally, she pointed out that a hold
harmless provision is built into the foundation formula, which
provides support to a community with low enrollment issues to
allow alternative actions to be considered and operational
decisions made.
CHAIR STEVENS stressed that a school closure decision is under
the purview of the local school board, working in conjunction
with community members. A district must redirect funds from
larger schools in order to maintain any with a low ADM. He then
established that five of the current committee members have
served on school boards.
8:18:56 AM
MS. NUDELMAN continued by explaining how a community with an ADM
of 10-100 will have the K-12 ADMs combined and adjusted as one
school, while a community with an ADM of 101-425 will have the
grades K-6 and 7-12 adjusted separately as two schools. She
pointed out that these ADM brackets are important because a
school size formula exists which increases funding for smaller
schools, as well as there being a constraint placed on the
number of schools allowed in a community. Thus, a community
would not be able to configure a district into 25 schools of 10
students each. Finally, a community with an ADM greater than
425 will have each facility, that is administered separately,
adjusted as a school.
8:20:06 AM
SENATOR GARDNER inquired about the impact of these combined and
separate adjustments, as well as the rational; what do these
measures actually accomplish.
MS. NUDELMAN replied that the formula funds a single school at a
slightly lower level than it does two schools; a policy which
may encourage a community to combine school services.
REPRESENTATIVE P. WILSON shared that Wrangell operates three
schools while being funded for only two, due to the ADM counts
and the combined adjustment, as described.
8:22:56 AM
MS. NUDELMAN moved on to considerations for alternative schools
and said that an alternative school with an ADM of 175 or
greater is administered as a separate facility. Two exceptions
exist, which are: the school is in its first year of service
with an ADM of 120-175; the adjustment being 1.33. This action
allows support for alternative schools that are being
established and still gaining enrollment. An alternative school
which has had an ADM of 175 or greater, in the prior year, but
drops below 175 in the current fiscal year (FY), will also
receive an adjustment of 1.33 to allow for stability in the
funding mechanism. If neither of these two exceptions applies
and an alternative school has an ADM of less than 175, it is
added to that of school in the district with the highest ADM. A
charter school with an ADM of 150 or greater is adjusted as one
facility. The exceptions to this are similar to those of the
alternative school: a charter school in its first year of
service with an ADM of 120-150, will receive an adjustment of
1.38; if it had an ADM of 150 or greater in the prior year but
drops below that number in the current FY, it will still receive
an adjustment of 1.38. However, if it is an established charter
school with an ADM that continues to stay below 150, the
adjustment will be calculated at the 1.18 level.
8:24:51 AM
REPRESENTATIVE LEDOUX asked whether the adjustments for
alternative and charter schools represent a greater or lesser
amount that the adjustment for standard state schools.
CHAIR STEVENS requested that a definition of alternative and
charter schools be provided to the committee and Ms. Nudelman
said she would make them available for distribution. Then in
response to Representative LeDoux's question, said that the
adjustments fall midway in the size table, and directed
attention to the funding formula overview page previously
addressed titled Step 1. Adjust the ADM for School Size, and
the chart indicating adjustment values ranging from 1.62 to
0.84., according to the school ADM.
8:26:45 AM
REPRESENTATIVE P. WILSON opined that the formula provides an
advantage to urban schools inherent to having a larger
population from which to draw alternative and charter school
membership. Smaller, rural schools may still struggle under the
formula and questioned why [the alternative school] membership
is 175 while [the charter school] is adjusted at the 150 level.
She indicated that the alternative high schools, in the area
that she represents, support a membership of about 30 of the
population. She said it would be unforeseeable that the
minimums indicated would ever be reached by similarly rural
districts.
SENATOR DUNLEAVY stated his understanding that, as a school
grows in scale, less money is received for the larger school.
He reported discussions from his district regarding capping the
size of a school to take advantage of that aspect of the
formula. The rural schools, of a certain size, may receive as
much or more money than a school of 1,200-1,500, he opined.
REPRESENTATIVE P. WILSON pointed out that, as the formula
figures adjusted further in the process, the numbers will change
that scenario.
SENATOR DUNLEAVY maintained that capping correspondence and
charter schools at a certain size could garner more funds,
through the formula, for some districts.
8:29:46 AM
MS. NUDELMAN directed attention to the committee handout titled,
Public School Funding Program Overview, September 2012, and
directed members to the spread sheets provided on pages eight
and nine. She said that this chart is a good reference guide to
view how the adjustments affect the individual school districts.
8:30:34 AM
MS. NUDELMAN used the Nome Public School District to provide an
example of how each adjustment is applied to a district's ADM in
order to arrive at the AADM. The total ADM for the four Nome
schools is 715, as represented by the following count totals:
Nome Elementary School - 384, Nome-Beltz Jr./Sr. High School -
273, Anvil City Science Academy 44, and the Nome Youth Facility
- 14. Applying each facilities October count to the school size
chart and making the allowed adjustments, as illustrated in the
example, the resulting AADM for Nome is 896.01.
8:33:01 AM
MS. NUDELMAN addressed the hold harmless provision to explain
how it is implemented. Each district's AADM is compared to the
previous year's AADM to determine if the area is experiencing an
enrollment reduction of five percent or more, which would
activate this provision to allow a district to receive up to
three years of continued funding despite maintaining a school
with an ADM that drops below 10. The first year that it is
realized, the district would receive 75 percent of the base year
AADM; the second year 50 percent; and the third year 25 percent.
She explained that the hold harmless provision provides extends
stability and certainty to a district when the October count
indicates a drop in enrollment. A school whose ADM falls from
10 to 8 will not certainly, but does usually, trigger the five
percent indicator, she said.
8:34:54 AM
REPRESENTATIVE REINBOLD asked what the annual cost of the hold
harmless provision is to the state.
MS. NUDELMAN agreed, on request of Chair Stevens, to provide
that information to the committee and said that it could also be
calculated utilizing the formula. She explained that the
previously referenced pages 8 and 9, in the handout titled
Public School Funding Program Overview, September 2012, could be
used to understand the cost of each component. The total of
each column, when divided by the $5,680 BSA figure will result
in the component cost. However, she cautioned, the formula
works as a whole and limitations may result from isolating
specific aspects. In response to Representative P. Wilson, she
said the hold harmless provision element is located on page 8,
column "O" of the referenced handout. Returning to the
presentation, she referred to the Nome example to test the hold
harmless provision, indicating that the Nome School Districts FY
12 AADM was 871.63 and the FY 13 AADM is 896.01, for an increase
in the AADM of 24.38. There was not a drop in enrollment, thus
the hold harmless provision does not apply.
8:37:30 AM
MS. NUDELMAN addressed Step 2: the District Cost Factors,
which, she explained, are specific to each school district and
span a range from 1.000 to 2.116. Utilizing the Nome example,
she indicated that the AADM of 896.01 is multiplied by the
district's cost factor of 1.450 to arrive at a new AADM of
1,299.21.
8:38:07 AM
CHAIR STEVENS recalled the area cost differentials being
established and inquired when it is expected that these figures
will be reviewed or updated.
MS. NUDELMAN returning to the "Public School Funding Program
Overview," September 2012, she drew attention to page 10 and
said that under House Bill 273 [25th Alaska State Legislature]
the formula was adjusted and the cost differentials were
studied. The ISER consults recommended the levels of cost
differential and these were implemented over a five year span,
the final year being FY 13.
CHAIR STEVENS asked whether the area increment adjustments
appear to be appropriate or if they require further attention.
MS. NUDELMAN opined that the cost factors appear to be working
well and may serve the districts for a few years to come.
8:40:15 AM
SENATOR GARDNER noted that the handout does not indicate that
all of the ISER recommendations have been fully implemented.
MS. NUDELMAN explained that the ISER recommendations adopted
under House Bill 273 included the area cost differential
increments, which were to be implemented over five years, as
well as increases to the intensive special education student
services and the BSA. The latter two elements came as a
package and were implemented over a period of three years.
These increases are indicated on page 10 and reflected in the
totals under the BSA column for FY 2009-2011, she pointed out.
41:37 AM
SENATOR GARDNER asked whether a recommendation was made by the
Education Funding Task Force to ensure that the BSA would be
inflation proofed.
MS. NUDELMAN said that the task force report included a number
of recommendations for changes and priority areas for future
review. However, she said that she could not accurately state
whether the report included a specific recommendation for
inflation proofing the BSA.
CHAIR STEVENS recalled being a member on the task force and said
the report would be distributed to the joint committee members.
REPRESENTATIVE SEATON pointed out that one outcome of the task
force was to create the legislative standing education
committees as currently convened.
8:43:28 AM
MS. NUDELMAN continued with the next step of the public school
funding formula: "Step 3: Special Needs Funding." This step
adjusts her special education, save for intensive students,
vocational education, gifted/talented, and bilingual/bicultural.
The funding factor is a 1.20 multiplier, which, when applied to
the Nome example AADM of 1,299.21 results in a new AADM total of
1,559.05.
8:44:16 AM
REPRESENTATIVE LEDOUX inquired about the parameters
distinguishing special education from the intensive status noted
as an exception to this funding.
MS. NUDELMAN indicated that the intensive student is identified
as one with very high needs, thus requiring a higher level of
resources and services. Intensive students are funded at a
higher level and will be addressed further along in the formula
overview, she said.
8:44:44 AM
MS. NUDELMAN moved to the next component to be added to the
funding formula, which is the career and technical education
(CTE) factor of 1.015. It is intended to assist districts in
providing career and technical education services to grades 7-
12. The factor applied to the Nome example AADM of 1,559.05
results in a new AADM of 1,582.44.
8:45:27 AM
SENATOR GARDNER referred to the last two components, special
education and CTE funding, and asked whether districts are
mandated to spend the allocated funds on these specific
services.
MS. NUDELMAN responded that there are no laws for categorical
funding in the foundation formula. The factors are intended to
estimate what districts will need to serve their students. When
funds are dispersed to districts, actual expenditures are under
the purview of the local school authorities; however, language
is included in statute that specifically directs districts not
to spend CTE funding on costs associated with administrative
expenses, general instruction, mathematics, or job readiness
skills.
8:46:57 AM
MS. NUDELMAN continued on to "Step 5: Intensive Services
Funding," which applies to identified students enrolled on the
last day of the 20 school-day count period. The criteria for
being eligible are at AS 14.30, as well as in EED regulation.
Intensive students are those who require significantly more
complex, frequent services. An example would include a
medically fragile student that requires a 1:1 aid throughout the
school day. The adjustment is the one day count multiplied by a
factor of 13. Returning to the Nome example, a count of 6 times
the 13 results in a product of 78 which, when added to the AADM
of 1,582.44 raises the AADM to 1,660.44.
8:48:37 AM
CHAIR STEVENS recalled an Education Task Force hearing, held in
Anchorage, during which a school principal testified to a
scenario of an intensive student who required a teacher, two
aids, and a designated classroom. Although the district cost
for educating this student was not disclosed at the hearing, he
noted that consideration should be given to a school suddenly
having a child with these types of requirements arriving out-
side of the count date. He asked and whether funding could be
attached to the student to alleviate such concerns.
MS. NUDELMAN responded that the current system does not allow
for a good means to transfer funding through the formula, and
added that neither law nor regulation would prohibit a district
from coordinating and working internally to address such an
issue.
CHAIR STEVENS opined that this is a question worthy of
consideration, considering the damaging financial effect of an
unexpected intensive student transfer.
REPRESENTATIVE P. WILSON questioned how a school handles
employees under contract to work as intensive aids or teachers,
if the student transfers from the district.
MS. NUDELMAN said that she is not familiar with the specifics
for how this situation would be addressed. Each district would
have independent oversight regarding resources.
CHAIR STEVENS requested a response from the department.
SENATOR HUGGINS offered that contractual agreements are observed
and a school district has local control of resources. He said
this control would include relocating staff if necessary, should
the task and mission change.
CHAIR STEVENS concurred that changes of this nature within a
district would be handled differently than the situation arising
between districts.
8:52:26 AM
REPRESENTATIVE REINBOLD reviewed the step 5 multipliers and
asked where the actual intensive services ADM cost of $73,840 is
inserted. Further, she requested the bottom line cost that
would be attached to the six intensive students identified in
the Nome example.
MS. NUDELMAN restated that the AADM of 1,582.44 is the result of
adjusting the original ADM through the first four steps. The
count of 6 intensive students is then multiplied by 13 and the
product, 78, is added to 1,582.44, thus arriving at the new AADM
of 1,660.44. The approximate actual cost of the intensive
funding results when 13 is multiplied by the BSA, $5,680.00.
She relayed that each time a new AADM is calculated through the
steps, it is re-multiplied by the BSA to compute the actual
costs.
REPRESENTATIVE REINBOLD asked for the actual cost of the 6
example students.
MS. NUDELMAN answered that it is approximately $74,000 times 6.
CHAIR STEVENS reminded the committee that the state must comply
with federal laws, as well as moral obligations, that may or may
not be backed by federal funding.
MS. NUDELMAN concurred and said that many federal laws have no
funds attached but must be upheld by the state.
8:53:23 AM
REPRESENTATIVE DRUMMOND recalled that Medicaid has been a source
for funding of intensive student medical needs and asked whether
this still occurs.
MS. NUDELMAN said it is an optional program that allows
districts to join a school based reimbursement program, to cover
some of the services provided to intensive students. Because it
is a Medicaid program, she added, appropriate infrastructure
must be in place in order to participate. Additionally,
specific criteria and involvement of licensed oversight
professionals is required. Although it is an option, she said
that it does not play a large part of funding in Alaska's
schools.
REPRESENTATIVE DRUMMOND asked whether the department or the
schools would be in charge of tracking these funding receipts.
MS. NUDELMAN responded that it is up to the school district to
work jointly with the Department of Health and Social Services
(DHSS) to obtain a Medicaid program and reflect any revenues in
the district's year end audit. However, EED does not track this
on a detailed level.
REPRESENTATIVE P. WILSON recounted her experience as a school's
Registered Nurse, overseeing intensive student aids and ensuring
that standards were maintained.
8:58:51 AM
MS. NUDELMAN said the final component is step 6 which adjusts
for the correspondence programs based on 80 percent of the ADM.
Utilizing the Nome example, she pointed out that there are 12
students, which when multiplied by the .80 factor, results in a
product of 9.60. The AADM is increased by the 9.60 giving Nome
a final AADM of 1,670.04.
8:59:47 AM
CHAIR STEVENS asked about eligibility for inclusion in the
correspondence student count. Specifically, is it required that
the students study via correspondence on a full-time basis.
MS. NUDELMAN responded that the ADM accounts for part-time
students. If a student is enrolled in a district half-time a
factor of .50 ADM would be included in the equation. Thus, the
Nome example could represent 12 full-time or 24 half-time
students.
REPRESENTATIVE LEDOUX asked how a part-time student who is also
participating in a correspondence course would be counted; is
there a possibility of counting the student twice.
MS. NUDELMAN answered that an identification system is in place
at the department level which ensures that each Alaskan student
is counted only once in the ADM. The student may be enrolled at
more than one school requiring that the count be split between
the participant's schools.
9:01:51 AM
MS. NUDELMAN said the final AADM of 1,670.04, is multiplied by
the BSA, currently set at $5,680, establishing that the annual
basic need, or entitlement, for Nome is $9,485,827. She then
drew attention to the handout page summarizing the example from
Nome and reviewed the adjustments and final calculation as
presented.
9:03:20 AM
REPRESENTATIVE P. WILSON referred to her comment earlier in the
presentation regarding the possibility for bias towards rural v.
urban schools to point out that seeming inequities are fairly
resolved when the formula is considered as a whole.
9:04:35 AM
MS. NUDELMAN continued with the Nome example to identify the
three funding sources that are drawn upon to meet the district's
basic need of $9.5 million, which are: required local
contributions, federal impact aid, and state aid. Not every
district has access to all three of these sources, some may rely
on only one or two, but, she said, at the end of the day the
basic need is provided for. She explained that the required
local contribution is calculated on the current year property
value, as provided by the state assessor, and multiplied by 2.65
mills, a rate that applies only to cities and boroughs.
Allowable local contribution will be the greater of 2.65 mills
or 45 percent of the basic need. Three districts in the state
pay the local contribution based on 45 percent of the basic need
calculation rather than using the mill rate multiplier; having
an effective rate that is somewhat less than 2.65 mills. She
then invoked the Nome example to illustrate how an area
comparing the 2.65 mill rate to the 45 percent of the prior year
basic need calculates the local contribution. The mill rate is
factored with the full and true value of taxable real and
personal property, as received from the Department of Commerce,
Community & Economic Development (DCCED) Office of the State
Assessor. The Nome assessment is $326,939,700 and equates to a
product of $866,390. Factoring the prior year basic need for
Nome, of [$9,262,206], with .45 the resulting product is
$4,167,993. Thus, the mill rate figure is used as the local
contribution.
9:08:18 AM
REPRESENTATIVE DRUMMOND recalled that the Anchorage School
District local effort was reduced in the current school year,
and asked whether the amended mill rate caused that change.
MS. NUDELMAN responded yes, and explained that the previous
legislature passed policy which altered the mill rate component
of the formula. The action removed the nominal 4 mill rate that
was being imposed statewide in order to provide latitude for
community growth. Any associated transition adjustment costs
were assumed by the state. However, she pointed out that
because the formula deals with the basic need plus 23 percent,
this action did not increase or decrease funding to districts
but merely caused a cost shift for the component funding sources
of the basic need.
REPRESENTATIVE DRUMMOND clarified that the cities contributed
less and the state more, during that period of adjustment.
9:10:54 AM
SENATOR GARDNER described a scenario of a basic needs cost
increasing by 5 percent and asked that, if a district is not
allowed to exceed .45 percent of the prior year basic need, how
is the cost difference covered.
MS. NUDELMAN said that the state would assume the cost
difference.
REPRESENTATIVE LEDOUX noted that, being an equalized formula,
the law doesn't allow wealthy communities to prioritize the
local schools and provide additional funding.
MS. NUDELMAN concurred and said that the equalized formula
provides that each district will receive basic need and no
district will receive more than basic need plus 23 percent. She
added that there is less than a 25 percent funding differential
between the lowest and highest AADM funding to any district. To
a follow-up question, she concurred that these parameters are
specified under statute, not departmental regulation, and it
allows the state to take advantage of federal impact aid as a
piece of the basic need funding.
CHAIR STEVENS interjected that there is a required local
contribution, which is capped at a certain level, and asked
whether the cap falls outside of the formula.
MS. NUDELMAN indicated that the cap falls within the formula,
and responding to a committee member, said that not following
the cap guidelines would interrupt the federal impact aid
funding.
9:14:06 AM
REPRESENTATIVE P. WILSON requested the names of the three
districts which contribute the required local amount based on
.45 percent of the prior year basic need rather than the mill
rate.
MS. NUDELMAN recalled and named two: the North Slope and
Skagway. She pointed out that in a district with a high
assessed value, the 2.65 percentage product may equate to the
area paying the total basic need and the state not contributing
any funds. Hence, the .45 percent cap is imposed to ensure
state contributions.
9:15:40 AM
MS. NUDELMAN continued to the handout page titled, Title VIII
Federal Impact Aid Payments, and said funds are received from
March 1 through the last day of February and are a component in
calculating the state aid. The funds are received for land that
is in federal status, such as the military bases and Indian land
holdings. The federal government restricts certain components
from being included in the basic need calculation: the 25
percent special education add-on, the 25 percent Indian lands
add-on, and some construction funds. An eligible amount of the
impact aid may be considered for deduction and in the example of
Nome, that amount is $44,300. To determine the impact aid
percentage the required local contribution is divided by the
budgeted local contribution. The local contributions are
defined as appropriations, investment earnings, in-kind services
and other local effort. For the Nome example, she established
that the required local amount of $866,390 is divided by the
actual amount contributed, $2,049.811, resulting in a quotient
of 42.27 percent. She pointed out that districts are allowed to
provide funding above the required amount, in accordance with
formula parameters.
9:18:15 AM
MS. NUDELMAN continued to explain the calculation for
determining the amount of impact aid that a district is allowed
to deduct. The equation is the eligible impact aid times the
Title VIII percentage times 90 percent. In the Nome example the
figures are $44,300 times 42.47 percent times 90 percent for a
product of $16,853. She reminded the committee that the impact
aid calculation relates to the cities and boroughs of Alaska,
not to the regional education attendance areas (REAAs). By
using this ratio calculation the state is able to distribute the
annual federal funds received, approximately $140 million, while
retaining about $70 million in the foundation formula to offset
basic need obligations. In order to continue with this
arrangement it is necessary for the state to continue to meet
the criteria set forth by the federal government to maintain an
equalized formula. In response to a committee request, Ms.
Nudelman restated the explanation for clarity.
[A brief discussion of the points ensued to provide a better
understanding of the equation.]
9:26:29 AM
REPRESENTATIVE LEDOUX confirmed that districts are incentivized
to make contributions but only to a point.
MS. NUDELMAN agreed with the representative's summation.
9:27:27 AM
REPRESENTATIVE DRUMMOND returned to the point made which
indicated that Alaska receives roughly $140 million in education
funds from the federal government but only distributes $70
million through the framework of the foundation formula, to
inquire about the remaining funds.
MS. NUDELMAN indicated that schools apply directly to the
federal government for the funding and are allowed to retain
what is not distributed through the foundation formula.
REPRESENTATIVE DRUMMOND recalled that, prior to passage of the
applicable statute, some districts made requests to contribute
above the required local effort but were not permitted to do so,
and suggested that a historical account might prove interesting
for the committee.
CHAIR STEVENS interjected that there is a rational for providing
equal educational opportunities throughout the state. It would
be unfair to allow a wealthy community to overshadow the
possibilities of a less fortunate district.
REPRESENTATIVE LEDOUX questioned the rational to impose a cap.
She agreed that an equalized budget for a baseline education is
imperative, and opined that placing a cap on a community that
would like to provide its area schools with more opportunities
is not appropriate.
REPRESENTATIVE SEATON offered that equality of educational
funding is required by federal law and if discrimination in
state allocations exceeds 25 percent, between any two students,
the federal funding to the state will be reduced or curtailed.
Thus, the practice of funding to the 23 percent level provides a
cushion for error and helps to preserve federal receipts.
9:30:16 AM
MS. NUDELMAN reviewed the Nome example to arrive at the state
aid provided after the consideration of the required local and
impact aid assessments: basic need of $9,485,827, less the
required local contribution of $866,390, less the federal impact
aid of $16,853, arriving at the total state aid contribution of
$8,602.584.
9:31:24 AM
MS. NUDELMAN said that the two additional funding sources
allowed are additional local contributions and the quality
schools grant. School districts are allowed to provide the
greater of 2 mills of the assessed value tax base or 23 percent
of the district's current year basic need as an additional local
contribution. In the Nome example .002 factored with the
assessed value of $326,939,700 provides $653,879. A comparison
is drawn by factoring .23 percent with the basic need of
$9,485,827 for a value of $2,181,740. Thus, in addition to the
$866,000 required contribution, Nome may also contribute
$2,181.740, putting the total allowed local contribution for
Nome at $3,048,130.
SENATOR GARDNER concluded that, given this scenario, there is
limited room for inequities.
MS. NUDELMAN agreed, and said it is limited to 23 percent.
9:33:53 AM
REPRESENTATIVE P. WILSON asked how many schools can afford to
provide the additional local contribution.
MS. NUDELMAN responded that many districts are near the cap but
that there is a continuum.
REPRESENTATIVE P. WILSON asked whether the Anchorage School
District, changing from the 4 mill rate to the 2.65, had to
adjust the amount of the allowed additional local contribution
as well.
MS. NUDELMAN replied, yes.
REPRESENTATIVE LEDOUX asked whether the allowed percentage is
dictated by the federal government.
MS. NUDELMAN responded that the federal constraint imposed is
the 25 percent figure, and is a requirement for receipt of
impact aid funding. Hence, the state has set the level at 23 to
insure compliance; a strategy which has worked well and
withstood the test of time.
REPRESENTATIVE LEDOUX acknowledged that it has worked well for
the state but questioned whether it has worked well from the
point of view of the districts.
MS. NUDELMAN offered to consider all of the elements of the
question to provide an accurate response.
REPRESENTATIVE LEDOUX inquired whether non-profit organizations
can contribute funding to a district for specific purposes
outside of the federal constraints.
MS. NUDELMAN explained that funds received by a district are
aggregated and provided to the federal government for subjection
to what is termed a disparity test. Any non-profit organization
contributions are included in the aggregate of receipts, and it
is the reason that the state has restricted the contribution
level to 23 rather than 25 percent. It would be possible to be
found non-compliant in the disparity test if the 2 percent
leeway were not implemented to accommodate any differences. She
stressed that if Alaska failed the disparity test, the loss
would leave a $70 million dollar gap in the foundation program,
due to the loss of the federal money.
9:39:07 AM
CHAIR STEVENS asked about accounting for in-kind services within
the formula.
MS. NUDELMAN pointed out that in-kind services are captured as
part of the local effort and spending to the local cap.
CHAIR STEVENS inquired how a jointly used civic swimming
facility might be considered.
MS. NUDELMAN offered that school use of a community run pool or
auditorium would not be subject to the school district formula.
9:41:01 AM
REPRESENTATIVE P. WILSON questioned whether the 25 percent limit
applies to individual districts or to the state as a whole, for
reporting and eligibility purposes.
MS. NUDELMAN responded that if one school fails the federal
disparity test, the state would lose all federal impact aid
receipts.
REPRESENTATIVE REINBOLD commented that it appears that Nome is
required to contribute less than 10 percent of the basic need
leaving the state to provide about 90 percent. She suggested
that the usefulness of the formula is subjective and may not be
viable over a sustained period of time or produce the desired
affects.
9:43:24 AM
MS. NUDELMAN continued with the quality schools grant; the final
adjustment allowed under AS 14.17.480. A districts AADM is
factored by $16, which in Nome means 1,670.04 times $16.00 for a
product of $26,721; added to Nome's state aid results in a total
state entitlement of $8,629,305. Finally, she summarized from
AS 14.17.400(b), which states that if the amount appropriated by
the legislature is insufficient to meet the total of the amounts
authorized then all districts will be reduced pro rata under the
foundation formula.
9:44:46 AM
REPRESENTATIVE P. WILSON noted that the calculated state aid had
the quality grant amount added, which raises the total that the
state pays.
MS. NUDELMAN concurred.
REPRESENTATIVE P. WILSON asked whether some districts receive
less than the calculated state aid and some more.
MS. NUDELMAN answered that once the final number for basic need
is calculated each district receives the funds in twelve
installments throughout the year.
REPRESENTATIVE P. WILSON asked if a calculated total is ever a
negative number.
MS. NUDELMAN assured the committee that the figure is always
positive and every school receives the state aid component.
9:46:54 AM
REPRESENTATIVE SEATON stressed that the formula is calculated in
a specific and essential sequence. He stressed that it is
important to consider it in the whole rather than parsed into
isolated components.
9:48:08 AM
CHAIR STEVENS commented that the governor has expressed concern
for the state drop-out rate and established specific graduation
goals.
REPRESENTATIVE DRUMMOND added that the Anchorage United Way has
prioritized these same goals and, as a result, a marked
difference in graduation numbers is being realized. A
consolidated effort is essential and should include partnerships
with community based organizations, she opined.
9:50:48 AM
CHAIR STEVENS thanked the participants and announced the topic
for a future joint session of the education committees.
ADJOURNMENT
There being no further business before the committee, the joint
meeting of the House and Senate Education Standing Committees
was adjourned at 9:50 a.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| 011713_Foundation_Formula_ENudelman.pdf |
SEDC 1/21/2013 8:00:00 AM |
Foundation Formula Overview |
| 011713_Funding Program Overview 2013.pdf |
SEDC 1/21/2013 8:00:00 AM |
Foundation Formula Overview |