Legislature(2025 - 2026)BELTZ 105 (TSBldg)
01/27/2025 03:30 PM Senate EDUCATION
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| Audio | Topic |
|---|---|
| Start | |
| Presentation(s): K-12 Funding History | |
| Presentation(s): Effects of Public Education Funding in Alaska | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
ALASKA STATE LEGISLATURE
SENATE EDUCATION STANDING COMMITTEE
January 27, 2025
3:30 p.m.
MEMBERS PRESENT
Senator Löki Tobin, Chair
Senator Gary Stevens, Vice Chair
Senator Jesse Bjorkman
Senator Jesse Kiehl
Senator Mike Cronk
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
PRESENTATION(S): K-12 FUNDING HISTORY
- HEARD
PRESENTATION(S): EFFECTS OF PUBLIC EDUCATION FUNDING IN ALASKA
- HEARD
PREVIOUS COMMITTEE ACTION
No previous action to record
WITNESS REGISTER
ALEXEI PAINTER, Director
Legislative Finance Division
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Co-presented K-12 Funding History.
CONOR BELL, Fiscal Analyst
Legislative Finance Division
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Co-presented K-12 Funding History.
CLAYTON HOLLAND, Superintendent
Kenai Peninsula Borough School District
Soldotna, Alaska
POSITION STATEMENT: Offered the presentation Effects of Public
Education Funding in Alaska.
DAVID KINGSLAND, representing self
Juneau, Alaska
POSITION STATEMENT: Testified on the state of public education
in Alaska.
BEN SPIESS, representing self
Anchorage, Alaska
POSITION STATEMENT: Testified in support of increasing school
funding.
KELLY LESSENS, representing self
Anchorage, Alaska
POSITION STATEMENT: Testified in support of increasing school
funding.
ANDY HOLLEMAN, representing self
Anchorage, Alaska
POSITION STATEMENT: Testified in support of increasing school
funding.
JOSHUA GIRARD, representing self
Seward, Alaska
POSITION STATEMENT: Testified in support of increased school
funding.
ACTION NARRATIVE
3:30:45 PM
SENATOR TOBIN called the Senate Education Standing Committee
meeting to order at 3:30 p.m. Present at the call to order were
Senators Cronk, Bjorkman, Stevens, Kiehl and Chair Tobin.
CHAIR TOBIN invited members to introduce themselves.
SENATOR KIEHL said he is happy to be on the Senate Education
Standing Committee, there is a lot of work to do for the
students and families of Alaska.
SENATOR CRONK said he is excited to sit on the Senate Education
Standing Committee as a retired teacher and hopes to ensure the
issue of school funding is resolved so everyone has what they
need.
SENATOR BJORKMAN stated he is excited to be here.
SENATOR STEVENS mentioned his claim to fame was the bill he
sponsored creating the Senate and House Education Standing
Committees. He has served on the education committee since its
creation.
^PRESENTATION(S): K-12 FUNDING HISTORY
PRESENTATION(S): K-12 FUNDING HISTORY
3:34:23 PM
SENATOR TOBIN announced the presentation K-12 Funding History.
3:34:42 PM
ALEXEI PAINTER, Director, Legislative Finance Division, Alaska
State Legislature, Juneau, Alaska, Co-presented K-12 Funding
History, introduced himself.
3:34:45 PM
CONOR BELL, Fiscal Analyst, Legislative Finance Division, Alaska
State Legislature, Juneau, Alaska, Co-presented K-12 Funding
History, introduced himself.
3:34:50 PM
MR. PAINTER moved to slide 2 and said the presentation would
discuss the following:
[Original punctuation provided.]
Outline
• Funding Sources for School Districts
State, federal, and local sources
Direct versus indirect sources
Comparison to other states
• Basics of State Foundation Formula
• State Formula Funding History
Impact of factors in the foundation formula
Changes over time
• Funding Levers for the Legislature
3:35:15 PM
MR. PAINTER moved to slide 3, FY 25 School District Budgeted
Revenues by Payor. He said the pie graph shows the budgeted
revenue by payor for FY 25:
State $1,375.2 billion 62 percent of total revenue
Local $544.9 billion 25 percent
Federal $240.8 billion 11 percent
Other $49.1 billion 2 percent
3:35:53 PM
SENATOR STEVENS requested Mr. Painter display local contribution
in two categories, required and optional.
MR. PAINTER replied he would do so in the future.
MR. PAINTER moved to slide 4, FY 25 Sources of Funding for
School Districts and mentioned the graph shows both required and
additional local contribution amounts. He explained the pie
graph is a more detailed breakdown of revenue sources for school
district funding. The state portion of the foundation formula is
the largest and the presentation would focus primarily on it:
Foundation Formula
Foundation Formula $1,166,581.2
Pupil Transportation $77,900.4
Deductible Federal Impact Aid $89,123.9
Required Local Contribution $314,042.8
Other funding
Additional Local Contribution $229,429.3 (optional)
Federal and Other Funding $120,673.7
TRS/PERS Payments on Behalf of School Districts (Indirect
Funding) $134,656.3
Additional Formula Funding $174.7 (General fund and PFD Raffle
program)
School Debt Reimbursement $57,517.7
REAA Fund $26,978.0 (rural school construction and major
maintenance)
3:37:54 PM
MR. PAINTER moved to slide 5, and said direct versus indirect
sources is relevant when making national comparisons:
[Original punctuation provided.]
Direct versus Indirect Sources
• School districts receive direct funding through the
State foundation and pupil transportation formulas,
federal impact aid and title programs, municipal
contributions, and E-Rate funding.
• They also receive indirect funding that does not
show up in their revenue reports but is spent by the
State on their behalf. This includes PERS and TRS
funding above the employer caps, school debt
reimbursement, school construction and major
maintenance funding.
• The Census Bureau's school finance data (used for
cross-state comparisons) includes PERS and TRS
funding but not other indirect sources.
• Most of this presentation will focus on the
foundation and pupil transportation formulas, as
well as municipal contributions.
3:39:39 PM
CHAIR TOBIN asked whether E-Rate funding falls under the
"federal and other" category and how much of the category it
comprises.
MR. PAINTER replied that E-Rate funding flows directly through
districts not the state, so it was not included.
3:40:07 PM
MR. BELL replied that federal E-rate funding flows directly to
districts, with a few minor exceptions. The amount is roughly
$100 million.
CHAIR TOBIN asked for the exact amount of E-Rate funding and
noted conjecture about the program's possible elimination.
SENATOR STEVENS asked whether the presentation would discuss
school construction.
MR. PAINTER replied no, but he could answer questions.
SENATOR STEVENS asked for information and a timeline regarding
when the state stopped building new schools.
MR. PAINTER replied that since 2015, a moratorium has been in
place on new school debt through the School Debt Reimbursement
Program. He said the state continues to reimburse prior debt,
and districts may still incur new debt, but without state
reimbursement during the moratorium. The moratorium was extended
once and is scheduled to sunset on July 1, 2025. After that
date, districts will again be eligible for reimbursement, but at
a reduced rate of 40 to 50 percent, compared to the previous 60
to 70 percent. He added that new debt contracted after July 1,
2025, will qualify for reimbursement, with state payments
expected to begin the following year.
3:41:59 PM
SENATOR STEVENS asked for confirmation that once the moratorium
ends on July 1, districts will be free to proceed with new debt
and the state will be obligated to reimburse under the updated
program.
MR. PAINTER replied yes.
SENATOR STEVENS responded that the state is tight on funds and
may need to consider extending the moratorium for a few more
years.
SENATOR KIEHL asked whether having qualified programs that are
bonded and eligible for reimbursement is, in effect, a way to
bypass the challenges created by vetoes of major maintenance
funding.
MR. PAINTER replied that the statement is accurate to some
extent, although the governor has previously vetoed
reimbursements, which are subject to annual appropriation. He
explained that under the School Bond Debt Reimbursement Program,
the state does not veto projects upfront; if the projects
qualify and local voters approve them, they move forward.
However, reimbursement to municipalities is subject to annual
appropriation. He noted that in the past, some appropriations
were vetoed, though the legislature later repaid them when
revenues were higher. There were also years when districts
received no reimbursement or reduced reimbursement.
3:43:28 PM
SENATOR KIEHL asked for an explanation of the connection to
rural school maintenance where bonding is not available.
MR. PAINTER explained that the Regional Education Attendance
Area (REAA) fund is capitalized based on the prior year's School
Bond Debt Reimbursement amount and adjusted for student counts
across urban versus rural (REAA), and small versus large
municipal districts. He stated that because the fund is tied in
statute to the prior year's reimbursement, the moratorium has
caused a decline in the REAA fund's capitalization. Although the
decline lags slightly, the amount has dropped significantlyfrom
$3435 million in past years to $27 million this year, with
further decreases expected in FY 26. He added that if the
moratorium is extended, the REAA fund amount will continue to
decline over time.
3:44:39 PM
MR. PAINTER moved to slide 6, All States Education Funding FY22
Sorted by State Funding. He said that Alaska is compared to
other states using U.S. Census Bureau data, with FY 22 being the
most recent full year available. He noted that slide 6 ranks
states based only on state funding, not total funding sources,
and shows Alaska as the sixth highest, down from fourth two
years ago. He explained that federal funding was relatively
higher across all states in FY 22 due to COVID-19 relief funds
received by school districts. He stated his belief that most of
the COVID-19 funds have now been expended, so a graph for FY 25
or FY 26 would likely show different results.
3:46:19 PM
MR. PAINTER moved to slides 7 - 8, All States Education Funding
FY 22 Sorted by Total Funding. He said the graph shows that
Alaska drops to 14th place among all states when total funding
sources are compared. He explained that Alaska relies heavily on
state funding relative to other states. He noted that on the
graph, blue bars represent state sources, red bars represent
local sources, and green bars represent federal sources. He said
Alaska also relies heavily on federal funding while contributing
relatively little in municipal funding. He explained that when
only state sources are compared, as some research has done,
Alaska ranks higher because many districts lack taxing
authority, resulting in minimal local funding. He noted that the
funding amounts are unadjusted for Alaska's cost of living,
which may be higher than in other states. He added that the
Institute of Social and Economic Research (ISER) has conducted
cost-of-living comparisons.
3:47:18 PM
MR. BELL moved to slide 9, Basics of Foundation Formula and
discussed the following points:
[Original punctuation provided.]
Amounts for the Foundation Formula and Pupil
Transportation Formula are appropriated to the Public
Education Fund (PEF)
• Funding flows to districts from the PEF according to
the statutory formula without further appropriation
• Funding is typically appropriated as a language item
for the amount necessary to fund the formula rather
than a fixed dollar amount
• Formula funding is subject to appropriation
3:49:05 PM
MR. BELL moved to slide 10, and continued discussing the basics
of the Foundation Formula:
[Original punctuation provided.]
Average Daily Membership (ADM) student count taken
in 20-day period ending in the last Friday in October
• Adjusted Average Daily Membership (AADM) student
count as modified by factors:
Correspondence students are not multiplied by
other factors, but count as 0.9 ADM
Non-correspondence student count is multiplied by:
• School size factor, providing more funds per
student for smaller schools. District values
range from 1.13 (Anchorage) to 3.30 (Aleutian
Region)
• District cost factor, adjusting for cost
differentials between districts. Values range
from 1.000 (Anchorage) to 2.116 (Yukon Flats)
• Special Needs Factor, a block grant multiplying
every district's ADM by 1.20
• Career and Technical Education (CTE) Factor, a
block grant multiplying every district's ADM by
1.015
• Special Education (SPED) Intensive factor,
providing 13x ADM for special education students
in a high need category
• The AADM is then multiplied by the Base Student
Allocation (BSA) to get Basic Need
• Basic Need is paid by a combination of the required
local contribution, deductible federal impact aid,
and state aid.
3:52:30 PM
CHAIR TOBIN asked whether funding follows a student with
intensive needs who is counted under the Average Daily
Membership (ADM) during the 20-day count period in one school
district but then transfers to a new district at the semester.
She asked if the funding goes to the new school.
MR. BELL stated his belief that the funding stays in the
original school
MR. PAINTER agreed that funding is tied to the October student
count. He noted there was discussion about implementing a
secondary student count and adjusting, but that change is not
currently in statute.
3:53:20 PM
MR. BELL moved to slide 11, Foundation Formula - Adjustment
Factors and provided an example showing calculations and
explanations of how the factors affect the Fairbanks North Star
Borough projections for FY 26. The factors were:
ADM
Non-Correspondence ADM
School Size Factor
District Cost Factor
Special Needs Factor
CTE Factor
SPED Intensive
Correspondence
3:55:35 PM
MR. BELL moved to slide 12, and provided a list of other
provisions that can have an impact on the adjusted ADM
calculation:
[Original punctuation provided.]
Foundation Formula Other
Provisions
• Hold Harmless
For school districts with a reduction in ADM of at
least 5 percent from the prior year, the reduction
is phased in over three years
• Consolidation of Schools
For districts that consolidate one or more
schools, leading to reduced school size factors
Funding reduction phased in over four years
3:56:47 PM
SENATOR STEVENS asked where the area cost differential appears
in the funding formula.
MR. BELL replied that on slide 11 it appears as the district
cost factor, 1.07, which is basically the cost of living or how
much more expensive it is to provide services in Fairbanks
compared to Anchorage.
3:57:18 PM
MR. PAINTER moved to slide 13, Foundation Formula History:
[Original punctuation provided.]
Foundation Formula History
• Since the current formula was established in 1998,
the legislature has modified the factors several
times. This means that $1 in the BSA in FY99 is not
equivalent to $1 in the BSA in FY25.
• District Cost Factors: Original factors were
modified in 2008 to implement a study conducted in
2005, based on FY00-03 data. The new factors were
phased in from FY09-13.
MR. PAINTER stated district cost factors have not been updated since
FY 13 even though there is a statute that says the Department of
Education shall come forward with new cost differentials every two
years. It was done once but the Legislature did not like it and told
DEED to stop. There has not been a new study since 2005.
• The Intensive Special Education factor was increased
from 5x to 9x in FY10, to 11x in FY11, and to 13x in
FY12.
MR. BELL added that prior legislative debate centered on the
true cost of services. In FY 12 the Legislature was attempting
to adjust the cost to what districts experienced on average.
• The Career and Technical Education (CTE) factor was
added in FY10 at 1.01 (or 1 percent).
• In FY15, the Career and Technical Education Factor
was increased to 1.015, and the Correspondence
Multiplier increased from 0.8 to 0.9.
3:59:34 PM
SENATOR CRONK expressed that the multiplier 13 for intensive
special education students was unclear and asked if 13 is
multiplied by $5,960.
MR. PAINTER stated that the calculation for intensive special
education occurs at the end of the funding formula to avoid
other factors. He explained that each intensive special
education student is counted at 13 times the Base Student
Allocation (BSA). For the Fairbanks district, he said this
equals 5,044 students multiplied by the BSA of $5,960.
4:00:35 PM
MR. PAINTER moved to slide [14], and said changes to state and
local contributions have changed overtime:
[Original punctuation provided.]
Changes in State and Local Contributions
• 34 of Alaska's 53 school districts are in organized
areas, meaning that their boundaries correspond to
municipal boundaries. The remaining 19 districts are
Regional Educational Attendance Areas (REAAs), with no
municipal government and no taxing power.
• Municipal school districts have a required local
contribution and a maximum local contribution.
• Until FY01, the required local contribution is the
lesser of 4 mills (0.4 percent of property value) or
45 percent of Basic Need. From FY02 to FY11, only 50
percent of the increase in property values could be
added to the local contribution each year, resulting
in many districts paying less than 4 mills. From FY12
on, the contribution has been fixed at 2.65 mills or
45 percent of Basic Need.
• The maximum optional local contribution for most
districts is 23 percent of Basic Need, allowing Alaska
to pass the federal disparity test (which requires no
more than 25 percent difference in funding per AADM
and allows Alaska to deduct $81 million of federal
impact aid from the State share of funding).
MR. PAINTER added that the cap also helps meet constitutional
requirements for equalized education across the state,
preventing funding disparities between urban districts and
Regional Educational Attendance Areas (REAAs), which lack taxing
authority.
4:03:12 PM
CHAIR TOBIN asked for the current difference in Alaska's federal
disparity calculation. She inquired whether the state is at the
25 percent cap or operating below it.
MR. PAINTER replied that Alaska is currently slightly below the
25 percent federal disparity threshold. He explained this is due
to how outside-the-formula funding has been treated in recent
submissions by the Department of Education. Unlike formula
funding, which is adjusted based on adjusted average daily
membership (AADM), the outside-the-formula funding has been
adjusted using only average daily membership (ADM). Since rural
districts have higher multipliers, this method results in a
higher per-ADM funding appearance for those districts, which
narrows the disparity. He stated this approach has been accepted
by the federal government and benefits the state in the
disparity calculation, though a reversal in the method could
return the state closer to the 25 percent cap.
4:05:05 PM
SENATOR STEVENS asked what the state requires as the minimum
local contribution for school funding.
MR. PAINTER stated that the minimum local contribution is 2.65
mills and is not calculated based on basic need. He explained
that most districts follow this mill rate. However, districts
with high property values relative to their populationsuch as
the North Slope Borough, Valdez, and Skagwayare subject to an
alternative cap of 45 percent of basic need. He clarified that
these districts use the alternative calculation due to their
high property tax base.
4:05:59 PM
SENATOR CRONK asked whether it is possible to obtain a breakdown
of the federal impact aid received by each district.
MR. PAINTER confirmed that the information is available in the
"four-pager" prepared by the Department of Education and he
could provide members with a copy. He added that the amount of
federal impact aid received by districts varies significantly.
He stated that for some districts, impact aid could account for
up to 26 percent of their budget if fully received, while other
districts receive none. He noted that if Alaska failed the
federal disparity test, some districts would experience a
financial windfall, while others would see no change. He
suggested it is useful to examine which districts would benefit
and which would not in that scenario.
CHAIR TOBIN said there has been confusion about how federal
impact aid is distributed to districts. She asked whether there
is information available on the process or if more detail could
be provided, noting there are beliefs that DEED withholds the
aid and then redistributes it.
4:07:04 PM
MR. PAINTER clarified that federal impact aid is sent directly
to the districts and does not flow through the state's budget,
except for limited amounts for military schools. Instead, the
state deducts its portion of aid based on what the districts
receive. It does not redistribute the funds.
4:07:34 PM
MR. PAINTER moved to slide [15], Statewide Average Daily
Membership and Adjusted Average Daily Membership History, and
noted the first graph compares average daily membership (ADM)
shown in blue bars with adjusted average daily membership (AADM)
in red bars from FY05 through FY26. He explained that actual
student enrollment peaked in FY06 at around 131,000 and is
projected to decline to just under 125,000 students in FY26,
based on Department of Labor demographic data. He said the
declining trend is expected to continue due to fewer children in
the 05 age range compared to the 618 age range. He also noted
a shift from brick-and-mortar enrollment to correspondence
programs, which reduces funding due to a lower multiplier. While
ADM has declined, AADM has increased over time due to formula
changes, particularly new district cost factors phased in
between FY09 and FY13. He emphasized that since the Base Student
Allocation (BSA) is multiplied by AADM, comparisons over time
must account for changes in AADM rather than just looking at BSA
alone.
CHAIR TOBIN asked for clarification on the role of
correspondence programs versus natural decline. She referenced
the FY26 overview, noting that approximately 900 additional
students enrolled in correspondence programs, while total
enrollment dropped by about 3,700 students. She questioned
whether natural attrition is the primary factor behind the
decline in brick-and-mortar enrollment.
MR. PAINTER explained that two factors are influencing the
decline in brick-and-mortar enrollment: a shift toward
correspondence programs and a larger overall drop in student
population. He stated the greater impact comes from demographic
trends, which are expected to continue for at least the next
five years.
4:10:36 PM
MR. PAINTER moved to slide [16], Impact of Factors per Non-
Correspondence ADM, FY 05-06, and described it as a more
technical view that isolates changes in multipliers by dividing
adjusted average daily membership (AADM) by average daily
membership (ADM). This calculation shows the effective average
multiplier over time, independent of student count. He
highlighted that the increase in multipliers reflects the phase-
in of new cost and intensive needs factors, particularly between
FY09 and FY13. He described the color-coded bars representing
various multiplierssuch as the school size hold harmless, cost
factor, special needs, career and technical education (CTE), and
intensive servicespointing out the growing orange slice for
intensive needs as the multiplier rose from 5 to 13. He also
discussed an anomaly in FY21 during the COVID-19 pandemic. Many
students shifted from brick-and-mortar to correspondence
programs, triggering the hold harmless provision for districts
that lost more than 5 percent of brick-and-mortar enrollment.
Those same districts received full funding for the corresponding
increase in correspondence students, effectively being funded
for the same students twice. He said this led to a one-year
spike in funding and multipliers, followed by a partial return
to pre-pandemic levels. He noted that this spike triggered the
federal maintenance of equity provision, which indicated a
funding drop from FY21 to FY22though it was largely a formula
artifact rather than an actual cut.
CHAIR TOBIN asked whether the true cost of serving intensive
needs students has been evaluated and whether such evaluations
are ongoing. She referenced earlier comments that district cost
factors were intended to be updated every two years, primarily
by the Legislative Budget and Audit Committee, and asked if that
or any other entity has assessed the current costs of intensive
needs students.
4:14:04 PM
MR. PAINTER responded that he has not seen any analysis of the
cost of serving intensive needs students since the formula
change in FY12. He noted that at the time, multiple districts
and DEED conducted such evaluations, but there has been no
updated analysis since.
4:14:24 PM
MR. PAINTER moved to slide [17], Base Student Allocation History
(Formula Only), and emphasized that while this slide is often
highlighted, it does not provide a complete picture due to the
impact of multipliers. He explained that $1 in BSA in FY06 is
not equivalent to $1 in FY26, as it's multiplied by different
adjusted values. The slide shows blue bars for the statutory BSA
and an orange line for the BSA in current dollars, adjusted
using a 2.5 percent inflation assumption for FY25 and FY26. He
pointed out that BSA peaked in FY07 and declined since then,
especially during years when multiplier funding increased
instead of the BSA. Inflation-driven declines were especially
visible from FY21 through FY23. The trend was more gradual in
years when inflation was lower, and the legislature was
increasing the BSA. The BSA stayed at $5930 for several years.
4:16:07 PM
MR. PAINTER moved to slide [18], Base Student Allocation History
(Including Outside the Formula Funding), which adds green bars
showing the BSA-equivalent value of outside-the-formula funding.
He said the Legislature has often provided additional
appropriations to districts outside the statutory formula, which
must be considered to understand total funding. This outside
funding raises recent year values, particularly in FY25, though
still not reaching FY21 or earlier levels.
4:16:50 PM
MR. PAINTER moved to slide [19], Basic Need, FY05-FY26
projection (Nominal dollars), which shows basic need funding in
nominal (non-inflation adjusted) dollars from the three funding
sources: the state, required local contribution, and deductible
impact aid. He said this slide reflects the effects of both
student multipliers and changes in BSA, with a peak in FY21 due
to hold harmless provisions during the pandemic.
MR. PAINTER moved to slide [20], Basic Need FY05 - FY26
Projection (FY24 Dollars), and said it shows the same basic need
data adjusted for FY24 dollars. He explained that the inflation-
adjusted peak year for total formula funding was FY11, with a
near-peak again in FY17 when the BSA increased. He noted a
significant decline since FY21 due to a minimal BSA increase of
$30 and high inflation.
4:18:03 PM
CHAIR TOBIN asked whether any efforts have been made since 2015
to review or revise the education funding formula to ensure it
meets current needs. She referenced previous comments about
changes to the formula over time and questioned whether there
have been any provisions or discussions aimed at aligning
funding with desired educational outcomes.
MR. PAINTER stated that the last formal review commissioned by
the Legislature was part of the 2014 education bill, which led
to a 2015 study. That study focused on whether the funding
formula was based on the correct elements and calculated
properly, rather than evaluating the appropriateness of the
multipliers themselves. He noted that while individual school
districts may have conducted their own analyses, the Legislature
has not commissioned any further studies since then.
4:19:06 PM
MR. PAINTER moved to slide [21], Foundation Funding Plus
Additional Formula Funding and Pupil Transportation, FY05-26
(Nominal Dollars), and said the graph builds on basic need by
adding green bars for additional formula funding and red bars
for pupil transportation formula funding. He explained that this
graph includes all funding provided to districts through the
state formulas. In nominal dollars, he noted that the peak year
for total formula-based funding to districts was FY25.
4:19:39 PM
MR. PAINTER moved to slide [22], Foundation Funding Plus
Additional Formula Funding and Pupil Transportation, and
explained that this graph adjusts total formula funding for
inflation using FY24 dollars. In this version, the peak funding
year shifts to FY12 due to a significant amount of outside-the-
formula funding. He noted that funding levels were generally
close between FY11, FY12, FY13, and FY15 when there was outside-
the-formula funding. He added that when the Legislature passed
the 2014 education bill, it included outside-the-formula funding
intended for FY15, FY16, and FY17. However, following the 2014
oil price crash, the Legislature removed the FY16 and FY17
appropriations through a supplemental budget, leaving only FY15
funding intact. As a result, what was designed to be flat
funding over three years was cut short. He concluded that peak
funding years are roughly FY12, FY13, or FY15, and that the
inflation-adjusted FY25 amount still falls short of those
earlier levels.
4:20:51 PM
MR. PAINTER moved to slide [23], Foundation Funding plus
Additional Formula Funding and Pupil Transportation and
Additional Local Contribution, FY05-26 (Nominal dollars). He
explained this graph includes additional local contributions to
show not only state funding but also what local governments
provide to school districts. He explained that these
contributions have increased over time due to the cap being tied
to basic need, which has risen, and because more districts have
opted to fund closer to the cap as state aid has remained flat
or declined. He noted that while more districts are now funding
near the cap, they are still limited by it and cannot exceed the
maximum contribution. He added that some districts do not
currently fund to the cap and could potentially increase their
local contributions if needed. For example, Anchorage, Juneau,
and Kodiak fund to the cap, while the Matanuska-Susitna (Mat-Su)
Borough and Fairbanks do not, leaving room for possible
increases at the municipal level.
4:22:02 PM
MR. PAINTER moved to slide [24], Foundation Funding Plus
Additional Formula Funding, Pupil Transportation, and Additional
Local Contribution, FY05-26 (FY24 Dollars), and said the graph
adjusts the previous version for inflation, showing total
funding including local contributions in FY24 dollars. He noted
that funding levels remained relatively flat from FY11 through
FY18, except for a noticeable dip in FY14, which helped prompt
the passage of the 2014 education bill. He pointed out a slight
decline beginning in FY19, followed by a significant decline in
recent years due to the lack of increases to the Base Student
Allocation (BSA) and an increase in inflation.
4:22:42 PM
MR. PAINTER moved to slide [25], and said the BSA is not the
only lever available to the legislature:
[Original punctuation provided.]
Funding Levers for the Legislature
The Legislature has several levers to impact school funding,
each with different impacts to districts:
• Base Student Allocation provides across-the-board
funding to all school districts on an equal per-
adjusted-student basis
• Outside-the-formula funding same as above on a one-
time basis
• Formula factors targeted changes that would affect
districts differently
• TRS on-behalf payment cap provides equal amounts of
funding to districts on a per-employee basis (rather
than per-student)
• Required local contribution shift who pays between
State and local governments
• Local contribution cap allow greater contributions
by some municipalities, but likely lose equalized
formula (increasing State costs but providing more
funding to some districts)
4:26:02 PM
CHAIR TOBIN withheld further questions in the interest of time
and thanked the presenters.
^PRESENTATION(S): EFFECTS OF PUBLIC EDUCATION FUNDING IN ALASKA
PRESENTATION(S):
EFFECTS OF PUBLIC EDUCATION FUNDING IN ALASKA
4:26:22 PM
SENATOR TOBIN announced the presentation Effects of Public
Education Funding in Alaska.
4:26:46 PM
CLAYTON HOLLAND, Superintendent, Kenai Peninsula Borough School
District, Soldotna, Alaska, offered the presentation Effects of
Public Education Funding in Alaska. He said he would talk about
the Kenai Peninsula Borough School District (KPBSD) but noted
that his comments reflect statewide conditions. KPBSD is the
size of West Virginia, with 42 schools, 8,500 students, 1,200
employees, and a unique range of school types. He said funding
for KPBSD is similar to that of the Matanuska-Susitna Borough
School District (Mat-Su).
4:27:47 PM
MR. HOLLAND moved to slide 2, Funding for Public Education
[Original punctuation provided.]
Funding for Public Education
• Early and predictable funding is crucial
• Flat funding & inflation = unsustainable loss of
purchasing power
• Since FY17 - $30 (>1%) BSA Increase in FY24 to
implement the Alaska Reads Act
MR. HOLLAND said that since FY17, the only increase to the
Base Student Allocation (BSA) has been a one-time $30 bump.
He emphasized that early and predictable funding is
effective, referencing prior comments. While districts are
always grateful for one-time funding, he noted it typically
arrives latelast year, for example, the budget was
transmitted on June 28, just two days before the new fiscal
year began. He explained that this delay impacts the
district's ability to plan budgets, offer contracts, and
hire staff. He urged that if any funding action is taken
this year, it be done early to allow districts and
communities to move forward with planning.
4:28:49 PM
MR. HOLLAND moved to slide 3, How BSA Flat Funding is Affecting
Our Schools, and stated that the graph shows the FY25 Base
Student Allocation (BSA) of $5,960 has an inflation-adjusted
value equivalent to $4,551 in FY12 dollars. He said this
illustrates how inflation has eroded the purchasing power of
education funding, a reality often overlooked in public
education discussions despite its obvious impact in daily life.
4:29:32 PM
MR. HOLLAND moved to slide 4, School Transportation Funding, and
said the graph shows revenue received over time and actual or
projected expenditures. For KPBSD and other districts, this gap
has required transfers from the general fund. Two years ago, the
district transferred $500,000, and it expects to transfer the
same amount next year. Although no transfer was made this year,
it was only possible by cutting bus routes. He explained that
one-time funding did not cover the district's deficit, resulting
in route eliminations and changessuch as moving student pick-up
points to highways instead of loop roads or more remote areas.
He noted that while brick-and-mortar enrollment and bus
ridership have declined, districts must still run buses
regardless of the number of students. For KPBSD, that means
driving 7,000 miles daily to provide transportation. He
emphasized that transportation contracts and fuel costs have
increased over time, but revenue from the state transportation
formula has not kept pace.
4:30:48 PM
MR. HOLLAND moved to slide 5, How BSA Flat Funding is Affecting
Our Schools, and said fixed costs have continued to rise while
the Base Student Allocation (BSA) has not. He highlighted
insurance costs as a significant examplerising 22 percent in
just one year for the district. He reiterated that rising costs,
such as transportation and utilities, are eroding available
revenue. He shared a recent example in which the district had to
purchase 500 gallons of fuel from the village corporation due to
unplanned power outages, illustrating how unforeseen expenses
strain the budget. He concluded that districts are increasingly
forced to choose between maintaining safe operations and
supporting classroom instruction:
[Original punctuation provided.]
How BSA Flat Funding is Affecting Our Schools
? Fixed Cost Increases
? Utilities - i.e, energy ? Insurance costs (health,
liability, ect.)
? Transportation
? Classroom materials
? Cuts have been made in schools to continue safe
operations
4:31:42 PM
MR. HOLLAND moved to slide 6:
Fiscal Outlook For KPBSD Without a BSA Increase
? Without a funding increase, KPBSD is facing a $16.9
million deficit
? KPBSD Fund balance is currently less than $300,000
? All Special education grant funding has been spend down
? Cuts to programs, staffing and school closures are
being considered to balance our budget
MR. HOLLAND said the Kenai Peninsula Borough School District
(KPBSD) is facing a dire financial situation, describing the
current picture as grim. He reported a projected $17 million
deficit for this year alone, with less than $300,000 in
unrestricted fund balanceless than one day's operating costs. He
said the district has exhausted its special education grant funds
to the point of enacting a hiring freeze on all new and temporary
staff, including paraeducators, and has restricted overtime.
4:32:53 PM
MR. HOLLAND moved to slide 7:
KPBSD Proposed Cuts
? Certificated staff - 85.5 teachers
? Would increase pupil teacher ratio (PTR) by 10 or
more in all schools and grades ($9.8 million
budget reduction)
? Cut Pool/Theaters ($1.4 million budget reduction)
? Cut all extra-curricular activities, includes all
sports ($1.2 million budget reduction)
? District office staff ? Certified/support salaries
reduced by 10 percent
? Operating Accounts reduced by 10 percent
? Cuts to Middle College and Curriculum
? Increase PTR to 1:200 for Connections Homeschool
Total Reductions = $16.3 million
4:33:44 PM
MR. HOLLAND said other reductions not listed on the slide
include cuts to gifted and talented programs and distance
education. Despite these steps, the district still faces a
deficit, prompting consideration of school closures in every
region of the district. He added that negotiations with staff
are also underway, and salary increaseswhile clearly needed
have not been factored into the budget. He shared concerns about
the sustainability of operations, citing that district staff are
stretched too thin. He gave an example of two directors being
pulled to respond to crises, leaving him as the only
instructional leader available across the entire district, which
spans an area the size of West Virginia. He questioned whether
this level of oversight is viable, noting that in other
industries, the supervision ratio is typically one to seven
employees, a standard far exceeded in KPBSD.
4:34:31 PM
MR. HOLLAND reflected on the past decade, stating that the
district has experienced a steady decline in what it can offer
students. While he praised the work of students and staff, he
emphasized that their achievements represent only a fraction of
what could be done with adequate resources. He closed by urging
lawmakers to understand the missed opportunities caused by
chronic underfunding. He said even a $1,000 increase to the BSA
would only serve to "fill a pothole" rather than restore the
systemaddressing immediate gaps but not creating long-term
stability. He thanked the committee and welcomed any questions.
4:36:49 PM
SENATOR CRONK asked about the $1.4 million expense KPBSD listed
for pools and theaters, suggesting it appears to be an added
cost that most school districts in Alaska do not have
MR. HOLLAND explained that the $1.4 million expense for pools
and theaters is a local issue unique to the Kenai Peninsula
Borough School District (KPBSD). Unlike many municipalitiessuch
as Juneau, where the city operates pools and theatersKPBSD is
responsible for running and funding these facilities. He
emphasized that while this may not be a common cost across the
state, it is a significant cost incurred by KPBSD.
MR. HOLLAND acknowledged that discussing cuts to sports, pools,
and theaters is difficult and often met with skepticism, as the
public hears these threats on a yearly basis and has dismissed
them as scare tactics. However, he stressed that with a deficit
of this magnitude, the district must consider all options,
particularly those furthest from direct classroom instruction.
He said these items are on the table not by choice, but out of
necessity, and without additional funding, all facilities will
close, not just pools and theaters.
4:38:51 PM
CHAIR TOBIN said she appreciated the comments regarding
community pools, sharing that she learned to swim in the Nome-
Beltz Pool, which is operated by the school district. She said
that experience led her to become a lifeguard, which in turn
helped her pay for university and flight classes at the
University of Alaska Anchorage (UAA).
4:39:26 PM
CHAIR TOBIN opened public testimony on the state of public
education in Alaska.
4:39:53 PM
DAVID KINGSLAND, representing self, Juneau, Alaska, testified on
the state of public education in Alaska. He shared a 60-year
personal and family history in Alaska education, including roles
as a teacher, principal, and member of state committees. He
described the difficulties faced by administrators when staffing
decisions are made in January without knowing the following
year's budget. He said this often results in staffing reductions
and delayed contract offers, creating uncertainty for both
school planning and teachers' livelihoods. He recommended
providing districts with early funding information and tying the
Base Student Allocation (BSA) to inflation to improve budget
stability.
4:43:00 PM
BEN SPIESS, representing self, Anchorage, Alaska, testified in
support of increasing school funding. He said he came to testify
because he cares deeply about education in Alaska. He expressed
strong support for increased education funding and rejected the
idea that the state cannot afford it. He shared that he knows of
families that have left Alaska due to concerns about schools,
and an Anchorage principal he spoke with is considering leaving
because of noncompetitive retirement benefits. He urged the
Legislature to increase funding to avoid further erosion of
state services and long-term harm to Alaska.
4:46:23 PM
KELLY LESSENS, representing self, Anchorage, Alaska, testified
in support of increasing school funding. She said she is a
parent and Anchorage School Board treasurer. She urged immediate
legislative action to address Alaska's education funding crisis.
She said ASD faces a $111 million deficit and will likely
propose spending down its fund balance to 5 percent, risking
financial stability in emergencies. Even with this spend-down,
the district still faces $64 million in cuts, likely requiring
larger class sizes and the elimination of services and programs.
She stressed the urgency of legislative action to give districts
a fighting chance to support students.
4:49:27 PM
ANDY HOLLEMAN, representing self, Anchorage, Alaska, testified
in support of increasing school funding. He said he is a retired
educator and current Anchorage School Board president. He stated
that school districts across Alaska, including Anchorage, are in
a dire situation. He stated his belief that flat funding while
inflation erodes purchasing power has been a deliberate
strategy, gradually dismantling programs over time. It has
created a slow but severe impact. He said underfunding erodes
morale and discourages innovation, as educators are forced to
cut effective programs just to maintain basic operations. He
urged lawmakers to recognize the long-term harm caused by
underfunding.
4:51:49 PM
JOSHUA GIRARD, representing self, Seward, Alaska, testified in
support of increased school funding. He said he is a
paraprofessional at Seward Middle School and has worked in
special education (SPED) for six years across various roles and
grade levels. He shared that declining state funding has
severely impacted student support. This year, due to staffing
shortages, he taught five classes without a certified SPED
teacher, leading to extreme stress. A recent hiring freeze
further reduced staff, leaving him as the only full-time SPED
educator onsite, with minimal support. He said the school is now
out of compliance due to the staffing crisis.
4:53:43 PM
CHAIR TOBIN left public testimony on the state of public
education in Alaska open.
4:54:41 PM
There being no further business to come before the committee,
Chair Tobin adjourned the Senate Education Standing Committee
meeting at 4:54 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| Legislative Finance Education Funding Presentation 1.27.2025.pdf |
SEDC 1/27/2025 3:30:00 PM |
Education Funding |
| KPBSD Public Education Funding Presentation 01.27.2025.pdf |
SEDC 1/27/2025 3:30:00 PM |
Education Funding |