Legislature(2025 - 2026)BELTZ 105 (TSBldg)
05/14/2025 03:30 PM Senate EDUCATION
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| Audio | Topic |
|---|---|
| Start | |
| HJR25 | |
| Presentation(s): Deed Local Contribution Update | |
| Presentation(s): Local Contribution | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
| *+ | HJR 25 | TELECONFERENCED | |
ALASKA STATE LEGISLATURE
SENATE EDUCATION STANDING COMMITTEE
May 14, 2025
3:55 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
HOUSE JOINT RESOLUTION NO. 25 AM
Supporting and encouraging the continued recruitment and
retention of international educators on J-1 and H-1B visas in
the state.
- MOVED HJR 25 AM OUT OF COMMITTEE
PRESENTATION(S): DEED LOCAL CONTRIBUTION UPDATE
- HEARD
PRESENTATION(S): LOCAL CONTRIBUTION
- HEARD
PREVIOUS COMMITTEE ACTION
BILL: HJR 25
SHORT TITLE: INTERNATIONAL TEACHER VISAS
SPONSOR(s): REPRESENTATIVE(s) MINA
05/07/25 (H) READ THE FIRST TIME - REFERRALS
05/07/25 (H) EDC
05/07/25 (H) EDC AT 8:00 AM DAVIS 106
05/07/25 (H) Scheduled but Not Heard
05/09/25 (H) EDC AT 8:00 AM DAVIS 106
05/09/25 (H) Heard & Held
05/09/25 (H) MINUTE(EDC)
05/12/25 (H) EDC RPT 6DP
05/12/25 (H) DP: UNDERWOOD, SCHWANKE, DIBERT,
EISCHEID, HIMSCHOOT, STORY
05/12/25 (H) EDC AT 8:00 AM DAVIS 106
05/12/25 (H) Moved HJR 25 Out of Committee
05/12/25 (H) MINUTE(EDC)
05/13/25 (H) TRANSMITTED TO (S)
05/13/25 (H) VERSION: HJR 25 AM
05/14/25 (S) EDC AT 3:30 PM BELTZ 105 (TSBldg)
WITNESS REGISTER
MICHAEL MASON, Staff
Senator Löki Tobin
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Introduced HJR 25.
DEENA BISHOP, Commissioner
Department of Education and Early Development (DEED)
Juneau, Alaska
POSITION STATEMENT: Gave a DEED update on Local Contribution.
LORI WEED, School Finance Manager
Finance and Support Services
Department of Education and Early Development (DEED)
Juneau, Alaska
POSITION STATEMENT: Answered questions concerning Local
Contribution.
FRANK HAUSER
Superintendent
Juneau School District
Juneau, Alaska
POSITION STATEMENT: Offered a presentation on Local
Contribution.
DEENA BISHOP, Commissioner
Department of Education and Early Development (DEED)
Juneau, Alaska
POSITION STATEMENT: Answered questions on Local Contribution.
LORI WEED, School Finance Manager
Finance and Support Services
Department of Education and Early Development (DEED)
Juneau, Alaska
POSITION STATEMENT: Answered questions concerning Local
Contribution.
ACTION NARRATIVE
3:55:06 PM
CHAIR TOBIN called the Senate Education Standing Committee
meeting to order at 3:55 p.m. Present at the call to order were
Senators Kiehl, Stevens, Cronk, and Chair Tobin. Senator
Bjorkman arrived thereafter.
HJR 25-INTERNATIONAL TEACHER VISAS
3:56:54 PM
CHAIR TOBIN announced the consideration of HOUSE JOINT
RESOLUTION NO. 25 am Supporting and encouraging the continued
recruitment and retention of international educators on J-1 and
H-1B visas in the state.
3:57:14 PM
At ease.
3:57:42 PM
CHAIR TOBIN reconvened the meeting.
3:57:54 PM
MICHAEL MASON, Staff, Senator Löki Tobin, Alaska State
Legislature, Juneau, Alaska, introduced HJR 25 stating it is
identical legislation to SJR 21, that the committee has heard.
[Passing] the resolution would put on record that the Alaska
Legislature supports the J-1 and H-1B visa programs and
international teachers. International teachers have become a
vital resource to Alaska's schools. He mentioned there are many
areas across the state that rely on the J-1 and H-1B visa
programs to fill vacant teaching positions for the benefit of
student education.
3:59:05 PM
CHAIR TOBIN opened public testimony on HJR 25; finding none, she
closed public testimony.
3:59:31 PM
SENATOR STEVENS stated that someone had expressed concern about
students having difficulty understanding teachers from the
Philippines. He responded by sharing that his two granddaughters
praised their Filipino teachers and found them effective and
well-liked. He emphasized the shortage of American teachers and
supported hiring qualified teachers from the Philippines. He
voiced strong support for the bill.
4:00:03 PM
CHAIR TOBIN solicited the will of the committee.
4:00:05 PM
SENATOR STEVENS moved to report HJR 25 am, work order 34-
LS0947\A.A, from committee with individual recommendations and
attached fiscal note(s).
4:00:20 PM
CHAIR TOBIN found no objection and HJR 25 am was reported from
the Senate Education Standing Committee.
4:00:36 PM
At ease.
^PRESENTATION(S): DEED LOCAL CONTRIBUTION UPDATE
PRESENTATION(S): DEED LOCAL CONTRIBUTION UPDATE
4:01:36 PM
CHAIR TOBIN reconvened the meeting and announced an update by
the Department of Education and Early Development (DEED) on
local contribution.
CHAIR TOBIN stated there was a proposed regulatory change to
local contributions for public education and staff from DEED
would discuss the proposed change.
4:02:22 PM
DEENA BISHOP, Commissioner, Department of Education and Early
Development (DEED), Juneau, Alaska, gave the following update on
local contribution:
We do want to provide clarification today for the
record regarding some omitted context from the
superintendent of Juneau's presentation on HB 212 in
the other body last week. DEED's work surrounding
impact aid and the interest in it is to clarify
present statute. Admittedly, the impact aid program is
a highly complex program. My statements are addressed
to the information, again, that was already provided,
which you may receive again today, but our team is
online as well to assist. So, I'll just start with a
backdrop.
4:03:37 PM
COMMISSIONER BISHOP continued her presentation:
While it is truly appropriate for districts to
advocate for funding and resources for their specific
context, such as a superintendent of a particular
school district, please know that DEED's role is to
implement state law in a manner that serves all school
districts across Alaska, and at this time, DEED is not
supportive of the proposed language in HB 212.
Again, here's some grounding for this. We are
currently evaluating potential regulatory changes to 4
AAC 09.900(b), and the changes are related to the
local contribution to ensure ongoing compliance with
AS 14.17.990, as it relates to the federal
requirements under the impact aid program,
specifically the disparity test outlined in Section
7009 of the Elementary and Secondary Education Act
(ESEA).
Our goal is simply to clarify for Alaska school
districts what funds should be included in the
disparity test, as the State of Alaska's school
funding formulaour bipartisan, legislatively approved
formulaincludes this impact aid in its basic need for
local contribution for incorporated and non-
incorporated boroughs. So, our funding statute
actually includes a provision for that impact aid.
I'll explain a little more.
4:05:22 PM
COMMISSIONER BISHOP continued her presentation:
I suspect when the formula was designed, the creators
desired for local tax, whether that be from direct
taxation or impact aid for payments made by the
federal government in lieu of taxes, to be considered.
And I do want to note that I am near positive that
districts who receive impact aid would most likely
like to be able to receive that in lieu of tax and
keep it the full amount rather than provide some as
their basic need. However, again, the statutory
requirement at this time calls for its inclusion in
our funding calculations.
Again, although there have been no recent changes to
the federal Impact Aid Program itself, as we shared on
record in the House the other day, we have received
feedback indicating that districts interpret Alaska
school funding statute differently, particularly due
to the vague language in the regulation, which has led
to inconsistent applications of Alaska funding formula
law.
4:06:31 PM
COMMISSIONER BISHOP continued her presentation:
Recently, DEED became aware of the previously
unaccounted-for technical issue in our disparity
analysis more specifically, the treatment of revenues
in the special revenue fund for transportation. With
technical assistance from the U.S. Department of
Education's Impact Aid Program, it was clarified that
federal regulations require the consideration of all
revenues available for current expenditures, not only
those in a district's operating fund. That is how we
previously had defined it. While this was not new in
the federal interpretation, it absolutely was new and
significant information for DEED and the impact[ed]
districts for a funding formula.
In a follow-up communication dated April 19, 2024, the
Impact Aid staff reiterated that, while they have no
authority over state regulations or funding formulas
and have not requested any changes to our state laws,
their guidance affirms that all applicable revenues
must be included in the disparity test under federal
law. This highlights the importance of ensuring
Alaska's regulations fully reflect the scope of
required revenues in order to maintain program
eligibility, which again is part of the state's
bipartisan statutory school funding formula.
It is also important to address information that was
omitted from the Juneau superintendent's presentation,
which could have confirmed DEED's actions. A letter
from Mr. Mohammed to Scott Kendall regarding the issue
stated, "After learning of the existence of the
special revenue fund for transportation, we, the
federal Impact Aid Program staff, applied the IAP
statutes and regulations, which contain no reference
to revenues in an operating fund and affirm that all
revenue for current expenditures must be considered in
the disparity test." So, characterizing this technical
issue or this technical assistance that we received as
a change in interpretation is not correct, in our
view.
4:08:38 PM
COMMISSIONER BISHOP continued her presentation:
It was new information to DEED. Further, the DEED's
memo statement that "the federal Impact Aid Program
does not limit funds subject to the disparity test to
only a district's operating fund," which the memo
explains is the impetus for DEED's concern about the
state's current regulations, IAP said, "that is
completely correct." To reiterate, the Impact Aid
Program has never requested nor recommended that DEED
change its regulations. As noted in their April 19
correspondence, state-level decisions fall outside of
their jurisdiction. The initiative to pursue
regulatory clarification is solely DEED's, driven by
our obligation to ensure compliance with federal law
and Alaska law, which includes Impact Aid as a
critical component of the state's funding formula.
Also quoted last week in the testimony on HB 212 on
the record, the superintendent shared Dr. Lisa
Parady's, the Executive Director of the Alaska Council
of School Administrators, concerns that she described
as a sudden reinterpretation of the intent behind
Alaska's funding formula. Absolutely, we value
stakeholder input, and we want to acknowledge that the
state's intent has remained the same and consistent.
We are not reinterpreting Impact Aid as it is in
accordance with state law. This is strictly a response
to new information regarding federal law and how the
disparity test must be applied to all current revenue
expenditures in a district, including those outside
the operating fund, such as the transportation fund.
4:10:30 PM
COMMISSIONER BISHOP continued her presentation:
It was also suggested that the proposed regulatory
change may have a minimal impact on the state's
ability to pass the disparity test, and while DEED
appreciates that analysis, it is important to
recognize that even marginal discrepancies can place
compliance at risk. This year, four districts funded
over the maximum limit, and our disparity range was
over 24 percent in our calculation this year, audited
by the federal government. Mind you, Alaska's funding
formula calls for only a 25 percent disparity between,
for lack of a better word, the richest school
districts and the poorest. And because federal reviews
are retrospective, those discrepancies, no matter how
small, could trigger retroactive consequencesjust
like the IRS we're familiar with.
4:11:25 PM
COMMISSIONER BISHOP continued her presentation:
DEED's objective is to take preventative and
responsible action by aligning state regulations with
federal expectations before any issues arise. I do
want to note that DEED did support and appreciated the
language in SCS for the CS on HB 69, and Senator
Kiehl, for your leadership in advancing the
clarification. The revised bill provided a clear and
effective solution by specifying that all relevant
revenues, regardless of fund classification, must be
included in the disparity calculation. That language
is aligned with the federal Impact Aid language; that
too was our purpose for the regulation. This approach
actually supports predictable funding while ensuring
Alaska remains in compliance with federal law.
Specifically, the proposal amends AS 14.17.410 to
include a new subsection (g), which was: "A city or
borough district may exceed"you may exceedthe
voluntary local contribution limit established in (c)
of the section only if the contribution made in excess
of the limit is not for current expenditures, as
defined again by the U.S. Impact Aid Program, which is
20 U.S.C. 7713(4), or 34 C.F.R. 222.161(c).
4:12:59 PM
COMMISSIONER BISHOP continued her presentation:
Again, while participation in the disparity test is
totally voluntaryand I believe we are the last state
that utilizes the Impact Aid Program in our state's
formulaour state has incorporated it, in its
structure, into our state funding program, as it does
provide substantial financial and administrative
benefits to the state.
4:13:21 PM
COMMISSIONER BISHOP continued her presentation:
It does keep our formula in line with the richest and,
well, the most funded and the least funded, if you
will, with only a 25 percent disparity, but it
accounts for over $80 million of in lieu of tax
payments. So, it is a substantial amount of money. The
provisions presented by the Senate represent a
thoughtful and proactive legislative solution, and
DEED is grateful for the legislators' engagement and
leadership in ensuring Alaska remains in good standing
under federal requirements for a program that we chose
to place inside of our overall state statutorily
mandated funding formula, as it does benefit our state
financially.
DEED's fiscal team is on with me today and can answer
specific questions about the Impact Aid as needed. And
I hope this clarification provides some additional
information about the why behind looking at new
regulationsor rather clarifying the regulationsto
ensure that they meet the intent of the law, both in
our statute as well as in federal law.
4:14:36 PM
SENATOR KIEHL acknowledged the commissioner's reference to
provisions in the education funding bill and stated they were
not well written. He explained the provisions did not prevent
the department's efforts, which led him to apologize to the
finance co-chairs and request their removal from the bill. He
asked the commissioner to clarify the fiscal year related to the
approximately 24 percent disparity identified by the federal
government.
4:15:22 PM
LORI WEED, School Finance Manager, Finance and Support Services,
Department of Education and Early Development (DEED), Juneau,
Alaska, answered questions concerning local contribution. She
clarified that the current disparity test submitted in FY 25
will apply to FY 26 using audited data from FY 24.
4:15:36 PM
SENATOR KIEHL restated the actual answer FY 24, noting it was
helpful to have the facts. He acknowledged the commissioner's
explanation regarding correspondence with the federal Department
of Education and said it was valuable to understand DEED's new
realization that funds beyond the operating fund must be
considered. He then asked if there were any other new
interpretations resulting from that exchange and whether
anything previously included in submissions had since been
excluded.
4:16:30 PM
MS. WEED requested Senator Kiehl provide more specifics.
SENATOR KIEHL stated he did not recall all the letters he read
in January but believed that, historically, Alaska had included
certain categories of public education expenditures as countable
toward the disparity test. He noted that, following recent
correspondence with the U.S. Department of Education over the
past few years, those categories were no longer included. He
asked if his recollection was correct or if he was mistaken.
4:17:17 PM
MS. WEED responded that he might have the situation slightly
reversed. She referred to the appeal process that occurred after
the Impact Aid Office directed DEED to include the special
revenue for pupil transportation. She explained that DEED
appealed that inclusion, which took a couple of years to
resolve. The resolution allowed DEED to treat the revenue as a
geographic cost differential, permitting its inclusion initially
but allowing it to be removed when conducting the disparity
test. She asked if that was the situation he was trying to
recall.
4:17:51 PM
SENATOR KIEHL replied that the net result then is it is
excluded. He asked whether there were any other categories, in
addition to pupil transportation, that are no longer counted.
4:18:15 PM
MS. WEED replied no, but there are additional revenues now
counted, including revenues that come to food service from
capital accounts or other accounts that were not previously
recognized as part of the general operational funds,
particularly those identified by the Impact Aid definition of
current expenditures.
4:18:58 PM
CHAIR TOBIN stated that, based on her review of U.S. Code
regarding the accounting of special cost differentials, the
department currently uses the exclusion method but also includes
certain types of special cost differentials. She asked whether
her understanding was correct.
4:19:28 PM
MS. WEED replied that the department is trying to follow federal
regulations by including all revenue that should be counted
toward current expenditures. She explained that the department
excludes items it has been permitted to exclude, such as pupil
transportation. She said the department also excludes costs
associated with correspondence [programs] due to a special 90
percent differential, and that Career and Technical Education
(CTE) and special needs factors are excluded as well. She stated
these exclusions are allowed until the per Average Daily
Membership (ADM) cost is reached, using the revenue exclusion
method.
4:20:31 PM
CHAIR TOBIN said the U.S. Department of Education (DoED)
indicated in December that staff had reached out to the DEED to
better understand some of its new interpretations. She said DoEd
offered to work with the state to avoid removing funding from
schools. She asked the commissioner to describe ongoing
conversations with DoEd regarding how to best serve Alaska,
noting Alaska is the only state currently using the federal
disparity test. She said her understanding was that the
department does not want actions that negatively impact school
districts.
4:21:16 PM
COMMISSIONER BISHOP said the department continues to work with
the DoEd to keep the disparity test within 25 percent by
identifying allowable flexibility between the poorest and
richest districts. She said the law aims to limit the funding
gap and that the department also works with individual districts
to understand how local funding interacts with community
contributions. She stated the law requires inclusion of 100
percent of the local contribution and provides a method to
calculate funding at basic need plus up to 25 percent above
basic need. She said these efforts address differences in how
districts classify expenditures inside or outside the cap,
citing Ketchikan as an example. She said these issues arise
regularly, and the department remains in contact with DoEd to
balance state funding formula requirements with Impact Aid
provisions and identify available flexibility.
4:23:27 PM
CHAIR TOBIN said she would like to review DEED communications
with the DoEd that advocate for public schools and request
exclusions for community supports such as community schools. She
cited Anchorage examples, including the Mountain View Boys and
Girls Clubs providing before-school care and transportation for
Government Hill Elementary students, and asked whether the
department sought exclusion of those funds from the federal
disparity test because they do not directly impact classroom
instruction. She asked the commissioner to describe engagement
with stakeholders, including the Alaska Association of School
Business Officials (ALASBO) and the Alaska Council of School
Administrators (ACSA). She said members of the education
community reported that the department has not been responsive
to their concerns.
4:24:37 PM
COMMISSIONER BISHOP said an article was published stating Juneau
exceeded the funding cap, which is not allowable. She stated her
belief that the department sent three letters over three years
to the Juneau school district explaining the state funding
formula and the 25 percent disparity limit. She said when she
became the commissioner, in the third year, she addressed the
issue by working with Juneau School District's new
superintendent to align spending and revenue with state law.
COMMISSIONER BISHOP said feedback from districts showed
differing interpretations of what expenditures were allowable,
noting statute language was clear but regulations were vague.
She stated the department requested a legal review, which
recommended strengthening regulations to provide clearer
guidance. She said the department met with the state's School
Finance Director and the President of the Alaska Council of
School Administrators (ACSA), to understand district impacts
before finalizing language, but draft language went public
prematurely.
4:26:58 PM
COMMISSIONER BISHOP said she has since met multiple times with
ACSA, answered superintendent questions, and received calls from
several superintendents, as well as input from the Southeast
Regional Resource Center (SERRC). She stated some districts
oppose allowing funding over the cap, particularly those without
capacity to raise additional local revenue, citing fairness
concerns. She said districts with the ability to fund above the
cap show strong interest in the regulation because they want to
contribute additional local funding.
COMMISSIONER BISHOP stated the funding formula changed in 2012,
when only one district had authority to collect 2.65 mills
toward basic need. She explained boroughs may levy up to four
mills, creating capacity to raise additional local revenue
beyond basic need without counting toward the cap. She said
district positions vary, making the issue complex, and
emphasized the department must administer the funding formula
with districts.
4:29:38 PM
SENATOR KIEHL said the federal government's disparity test uses
the 5th and 95th percentiles. He explained that, among 17 Alaska
school districts above the high cutoff in the most recent
disparity test, five districts operated as Regional Educational
Attendance Areas (REAAs). He emphasized that five of the
Alaska's districts in the top five percent of per-student
funding were REAAs. He said he wanted to add this perspective to
prevent misunderstanding.
CHAIR TOBIN said she also shares concern about some of the
language used. She asked Commissioner Bishop to provide an
update on the status of the regulations as there is currently an
administrative freeze on new regulations.
4:30:41 PM
COMMISSIONER BISHOP stated that the department anticipated
presenting the regulations for public comment at the July school
board meeting.
CHAIR TOBIN asked whether the department planned to request a
special exemption from the executive branch, given the current
administrative freeze on all new regulations.
COMMISSIONER BISHOP replied yes.
CHAIR TOBIN expressed appreciation and stated that she looks
forward to DEED pursuing additional needed education
regulations. She noted interest in including pre-K regulations
and national board standards as part of the exemption request.
^PRESENTATION(S): LOCAL CONTRIBUTION
PRESENTATION(S): LOCAL CONTRIBUTION
4:31:14 PM
CHAIR TOBIN announced the presentation Local Contribution by
Superintendent Frank Hauser from the Juneau School District.
4:31:38 PM
FRANK HAUSER, Superintendent, Juneau School District, Juneau,
Alaska, offered a presentation on Local Contribution. He moved
to slide 2-3, Local Contribution, and emphasized that the
discussion would focus on local funding rather than state money
for instructional programs. He explained that local communities
appropriated this funding for non-instructional items outside
the established curriculum. He listed examples and provided the
funding amounts of his district:
[Original punctuation provided.]
Food Service $ 125,000
Student Transportation $ 200,000
Community Schools $ 200,000
Learn to Swim $ 50,000
High School Student Activities $1,200,000
Middle School Student Activities $ 90,000
Pre-K Programming $ 250,000
Total: $2,115,000
4:32:36 PM
MR. HAUSER moved to slide 4, an image of Alaska, and stated that
students statewide, from Sitka to Bristol Bay, Unalaska to
Anchorage, St. Mary's to Valdez, and Petersburg, benefited from
dedicated local funds for non-instructional items. He reiterated
that local communities appropriated these local dollars for non-
instructional programs that met local needs. He warned that
local communities' ability to offer these non-instructional
programs without negatively affecting instructional programs and
offerings faced jeopardy.
4:33:05 PM
MR. HAUSER moved to slide 5 and stated that the Department of
Education and Early Development (DEED) had proposed a regulation
change to local contribution that some [Bradner's Alaska
Legislative Digest Nov. 1, 2024] described as a "stealth raid on
school district budgets." He explained that the change would cut
off local assemblies' and local governments' authority to decide
how to use local dollars for non-instructional priorities in
their communities, including early childcare programs outside
DEED's mission and free public education. He said some alleged
that funding for non-instructional items affected the federal
disparity test. He added that he planned to provide facts
regarding DEED's proposed regulation change and the relevant
federal regulation.
4:33:36 PM
MR. HAUSER moved to slide 6, DEED Proposed Regulation Change to
Local Contribution (Sept. 2024), and said he is glad to bring
the proposal to light. He stated that despite many recent
general statements from the state and DEED about "empowering
parents and local control," only a small group from the Alaska
Association of School Business Officials had been allowed to
weigh in on DEED's proposed regulation change language before
finalization. He noted that the group opposed the proposed
language:
[Original punctuation provided.]
DEED Prosed Regulation Change to
Local Contribution (Sept. 2024)
4 AAC 09.990(b) is amended to read:
(b) In the definition of "local contribution" in
AS 14.17.990,
(1) "appropriations" means money
appropriated to a district [DISTRICT'S SCHOOL
OPERSTING FUND] by the city or borough, but does not
include money appropriated for community services,
capital outlay, or debt service;
(2) "value of in-kind services" means the documented
fair market value of insurance, utilities, energy,
audits, and maintenance of facilities provided at no
charge to a district by the city or borough, but does
not include value of in-kind services for community
services or teacher housing [AS REPORTED IN THE
DISTRICTS'S SCHOOL OPERATING FUND].
4:33:52 PM
SENATOR BJORKMAN arrived at the meeting.
4:34:01 PM
MR. HAUSER moved to slide 7, Three Reasons:
[Original punctuation provided.]
Three Reasons
DEED Gave Three Reasons for Its Proposed Regulation
Change:
1) "to better align with the original intent of the
Alaska public education funding formula,"
2) to "ensure compliance with the federal Impact Aid
Program (IAP) disparity test,"
3) to "maintain equity in funding between municipal
school districts and REAAs."
MR. HAUSER DEED gave three reasons for the proposed regulation
change, and said he would briefly discuss each reason, look at
how the sweeping proposed regulation change misses the mark, and
then end by looking at federal regulation, including language on
disparity test exclusions that DEED already benefits from but is
not proposing to extend to districts.
4:34:21 PM
MR. HAUSER moved to slide 8:
[Original punctuation provided.]
Alaska school districts could take financial hit as
education department considers tighter limits on local
funding
By Sean Maguire
Published: November 2, 2024
"Parady, executive director of the Alaska Council of
School Administrators, said she did not understand why
the state was 'suddenly reinterpreting' the 'original
intent' of Alaska's funding formula.
She said her organization had analyzed the latest
state data and found the proposed regulation change
would 'not significantly' affect Alaska's chances of
passing the disparity test."
MR. HAUSER stated that DEED said the proposed regulation change
was necessary to "better align with the original intent of the
Alaska Public Education Funding Formula." He countered, citing
Ms. Parady, that the proposal was a sudden reinterpretation of
the formula's original intent. He added that the
reinterpretation directly conflicted with DEED's past guidance
to school districts.
4:34:45 PM
MR. HAUSER moved to slide 9, and said DEED's second reason for
the proposed regulation change is to "ensure compliance with the
federal Impact Aid Program (IAP) disparity test."
4:34:54 PM
MR. HAUSER moved to slide 10, a letter from DEED dated December
1, 2023:
[Original punctuation provided.]
In order to align with the statutes and recent
guidance and orders from the federal Impact Aid
Program, DEED intends to propose a regulation
amendment to 4 AAC 09.990 to make clear that "local
contribution," as used in AS 14.17.410, is not limited
to funds appropriated to or reported in a district's
school operating fund. In consideration of the
budgeting process already underway for the FY2025
budget cycle, and the procedures required before a
regulation can take effect under the Administrative
Procedures Act, DEED would request that any regulation
amendment take effect for the FY2026 budget cycle. Of
course, any proposed regulation project must go
through the required procedures under state law,
including a mandatory time period for public comment,
and it would ultimately be up to the State Board of
Education and Early Development to consider public
comment and vote on whether they would adopt any
regulation change.
MR. HAUSER noted that DEED reasons for proposing a regulation
amendment was to align with "recent guidance and orders from the
federal Impact Aid Program in the federal Department of
Education."
4:35:07 PM
MR. HAUSER moved to slide 11, a memo dated April 19, 2024, from
the United Stated Department of Education:
[Original punctuation provided.]
In response to your questions concerning the memo's
reference to a potential, upcoming proposal to clarify
the State's regulations, Impact Aid Program staff did
not ask, or recommend, that DEED change its State
regulations. State regulations are not within the
Impact Aid Program's interest or purview.
MR. HAUSER stated that the issue held too much importance to
avoid speaking freely and said the claimed events did not occur.
He reported that Alaska superintendents asked the federal
Department of Education (DoEd) whether it had called for the
regulation change or issued new guidance. He said staff in
Washington, DC responded negatively and indicated that the
Impact Aid Program (IAP) neither asked for nor recommended the
change. He added that IAP staff stated that state regulations
fell outside the program's interest or purview.
MR. HAUSER reiterated that the federal Department of Education
(DoEd) said it did not ask for or recommend that Alaska make a
regulation change. He noted that the DoEd, for whom the state
purportedly proposed the change, faced closure. He asserted that
the Department of Education and Early Development (DEED)
proposed a sweeping statewide regulation change on behalf of a
federal agency that never requested it and now faced being
shuttered.
4:36:00 PM
MR. HAUSER moved to slide 12:
[Original punctuation provided.]
DEED's Proposed Regulation Change Conflicts with
Federal Guidance
federal Impact Aid Program to DEED: "Transportation
revenue is also excluded as it reflects the additional
cost of providing free public education in 'particular
types of LEAs such as those affected by geographical
isolation' per 34 C.F.R. § 222.162(c)(2)(ii)."
Although the state will continue to benefit from a
federal exception for transportation in its disparity
test calculation, it will not allow that benefit for
districts in its proposed regulation: "DEED is not
proposing to include currently known exceptions like
pupil transportation."
MR. HAUSER stated that the Department of Education and Early
Development's (DEED) proposed regulation conflicted with federal
guidance on transportation. He said the federal Impact Aid
Program (IAP) excluded transportation revenue from the disparity
test calculation. He explained that although the state would
continue to benefit from the federal exclusion for
transportation, he quoted DEED as denying the benefit to school
districts, "DEED is not proposing to include currently known
exceptions such as pupil transportation."
4:36:34 PM
SENATOR KIEHL asked for clarification on whether DEED asked DoEd
to exclude the state's transportation contribution from the
disparity test.
4:36:47 PM
MR. HAUSER stated that in 2021 DEED received notice that two
calculations for transportation calculations. There was some
discrepancy on what was put online. He said the state failed the
disparity test at that time. He said the state worked with the
department to switch to the revenue exclusion model for the
disparity test calculation. He explained that the change allowed
exclusion of pupil transportation and brought the state into
compliance with the disparity test.
4:37:24 PM
SENATOR KIEHL asked if DEED also asked DoED to exclude local
contribution to pupil transportation and was denied, or did DEED
not ask.
4:37:42 PM
MR. HAUSER stated that he could not speak to what the department
asked at the time and had no knowledge of the department asking
the Impact Aid Program (IAP) those questions. However, the
letter DEED sent out referencing the proposed regulation change
did say DEED was not proposing to include current exceptions,
such as pupil transportation, even though the state receives
that exclusion in the disparity test.
SENATOR KIEHL stated that DEED did not propose to the federal
government that [districts receive the exceptions].
4:38:14 PM
CHAIR TOBIN stated that the Anchorage School District operates a
[before and after] school program at the Mountain View Boys and
Girls Club and provides transportation for those students to
Government Hill Elementary. She explained that the proposed
interpretation would not exclude this transportation. She added
that the Nenana School District provides transportation vouchers
because the district can only operate a school bus only within
one mile of the school. She said this transportation also does
not qualify for exclusion under the proposed interpretation.
4:38:48 PM
MR. HAUSER moved to slide 13 and said the third reason the DEED
gave for the proposed regulation change aimed to "maintain
equity and funding between municipal school districts and
REAAs." He noted the irony that DEED declared a victory over the
DoEd in a maintenance of equity dispute during the same period.
He added that DEED described Alaska's current funding system as
"the most equitable in the nation."
4:39:29 PM
MR. HAUSER moved to slide 14, DEED's Proposed Regulation Change
Will Not achieve "Equitable Outcome" Sought, and said despite
many recent statements about empowering parents and local
control, ALASBO was the only group allowed to weigh in before
regulation was finalized. ALASBO opposed it:
[Original punctuation provided.]
DEED's Proposed Regulation Change Will Not Achieve
"Equitable Outcome" Sought
DEED solicited feedback on the proposed regulation
change only from the Alaska Association of School
Business Officials (ALASBO) Education Policy
Workgroup, which opposed the proposed regulation.
Executive Director of ALASBO Darcy Carter "said the
organization 'opposes the proposed regulation change'
as presented": "'Based on our knowledge of Alaska's
school districts, we do not believe the proposed
regulations will achieve the equitable outcome that is
being sought by (the Alaska Department of Education
and Early Development) with these changes.'"
4:39:53 PM
MR. HAUSER moved to slide 15 and stated it is worth noting that
in recent years both an REAA and organized borough school
district not funded to the cap requested a pre-determination
hearing with the federal Impact Aid Program arguing they were
adversely affected by the disparity test:
[Original punctuation provided.]
Alaska Department of Education and Early Development
FY2024 Disparity Test for FY2025--Revenue Exclusion
Compiled from Fiscal Year 2023 Audits
Prepared for IAP 03/03/2025
SCHOOL FY2024
DISTRICT REVENUE
PER ADM
_____________________________________
NORTH SLOPE 21,340
BRISTOL BAY 18,514
VALDEZ 14,086
SKAGWAY 11,975
YUKON-KOYUKUK 11,577
YUKON FLATS 11,260
SOUTHEAST ISLAND 11,213
LAKE AND PENINSULA 10,785
SAINT MARY'S 10,768
ALEUTIAN REGION 10,500
CHUGACH 10,407
YAKUTAT 10,058
DENALI 9,961
PRIBILOF 9,673
CHATHAM 9,168
PELICAN 9,035
UNALASKA 8,920
NORTHWEST ARCTIC 8,685
4:40:09 PM
MR. HAUSER said Alaska remains the only state still using the
disparity test and uses it to receive a benefit and reduce state
aid to districts. He stated the March table of top revenues per
average daily membership (ADM) in FY 24 showed districts at the
95th percentile and above, with nearly 40 percent consisting of
Regional Educational Attendance Areas (REAAs), while Juneau,
Anchorage, Kenai, and other large districts did not appear in
that data. He explained that cutting transportation funding in
Anchorage or Juneau, which the disparity test excludes, only
reduces funding in those districts and does not affect the
disparity calculation.
MR. HAUSER stated he has worked as an educator in Alaska for
almost 28 years and supports students in all districts, rural
and urban. He expressed concern that the proposed regulation
attempts to create a false narrative between urban and rural
districts and questioned the timing, future impacts on local
control for districts and REAAs, and the lack of transparency.
He said determination reports for Impact Aid from fiscal year
(FY) 21 through FY 25 showed REAAs at the 95th percentile of
revenues per ADM three out of five years and at the fifth
percentile four out of five years. He concluded that the data
suggests state funding for REAAs needs attention and pointed to
the Base Student Allocation (BSA).
4:41:57 PM
MR. HAUSER moved to slide 16, DEED Proposed Regulation Change
Conflicts with DEED's Testimony on Diverse Needs Across State,
and provided a quote from Elwin Blackwell, former DEED finance
Manager regarding a predetermination hearing with Impact Aid,
2021:
[Original punctuation provided.]
"Like I said, some districts, we have one that has
approximately 12 students in it and they have no
transportation need. It's a very compact community
where the children can easily walk to and from school.
And then you have a lot of rural school districts
where you have multiple villages within the school
district where they have a similar situation where
kids might come to school on four wheelers or a snow
machine in the winter and there really is no
transportation in those communities. And so typically,
their costs are going to be pretty low, too."
MR. HAUSER said the disparity test limits its scope to free
public education and emphasized that point as the key takeaway
from his presentation. He stated the DEED proposed regulation
change extends beyond that scope and threatens to cut funding
for community programs operated by districts and extracurricular
activities that do not fall within free public education. He
argued the regulation change sweeps so broadly that it removes
local funding authority for programs outside the disparity
test's scope. He added the proposal does not help Alaska's
disparity percentage, nor does denying DoEd exceptions to
districts.
4:43:10 PM
At ease.
4:44:23 PM
CHAIR TOBIN reconvened the meeting.
4:44:29 PM
MR. HAUSER moved to slide 17, a picture of boats on the water,
and said an increase to the Base Student Allocation (BSA) would
benefit every district in Alaska and largely alleviate the
state's concerns about local contribution.
4:44:43 PM
MR. HAUSER moved to slide 18, and discussed the limited scope of
the disparity test.
[Original punctuation provided.]
Title 34 - Education
Subtitle B - Regulations of the Offices of the
Department of Education
Chapter II - Impact Aid Programs
Subpart K - Determinations Under Section 8009 of the
Act
Authority: 20 U.S.C. 7701-7714; Pub. L. 111-256,
124 Stat. 2643; unless otherwise
noted.
Source: 60 FR 50778, Sept. 29, 1995, unless
otherwise noted.
Section 222.162 What disparity standard must a State
meet in order to be certified and how are disparities
in current expenditures or revenues per pupil
measured?
(a) Percentage disparity limitation. The Secretary
considers that a State aid program equalizes
expenditures if the disparity in the amount of
current expenditures or revenues per pupil for free
public education among LEAs in the State is no more
than 25 percent. In determining the disparity
percentage, the Secretary disregards LEAs with per
pupil expenditures or revenues above the 95th or
below the 5th percentile of those expenditures or
revenues in the State. The method for calculating
the percentage of disparity in a State is in the
appendix to this subpart.
4:45:19 PM
MR. HAUSER moved to slide 19 and said a more productive approach
to lowering the disparity percentage would involve DEED
requesting additional exclusions similar to the current
exclusion for transportation revenue. He urged members to read
the federal regulation and stated the language appears to
reference Alaska when identifying areas for exclusions,
particularly local educational agencies (LEAs) affected by
geographic isolation, sparsity or density of population, high
cost of living, or unique socioeconomic characteristics. He
noted DEED previously secured a transportation exclusion. He
questioned why DEED has not pursued other special cost
differential exclusions if reducing the disparity percentage
remains the goal:
[Original punctuation provided.]
34 CFR 222.162(c)(2)(ii)
34 CFR 222.162 9 (up to date as of 5/01/2025)
What disparity standard must a State meet in order to
be certified and...
(3) The exclusion method on a revenue basis. The State
subtracts revenues associated with the special cost
differentials from total revenues, and divides this
net amount by an unweighted pupil count.
"The two allowable categories of special cost
differentials are -"
(i) Those associated with pupils having special
educational needs, such as children with disabilities,
economically disadvantaged children, non-English
speaking children, and gifted and talented children;
and
(ii) Those associated with particular types of LEAs
such as those affected by geographical isolation,
sparsity or density of population, high cost of
living, or special socioeconomic characteristics
within the area served by an LEA.
4:46:08 PM
MR. HAUSER concluded by asking members to consider several
questions. He questioned the urgency to advance a sweeping
statewide regulation amid uncertainty surrounding the potential
closure of the United States Department of Education (DoEd). He
asked what cost the state incurs by allowing districts the same
current and future disparity test exclusions it receives. Under
the state's current proposal, it would continue to benefit
federally while denying the same exclusion to districts.
MR. HAUSER further questioned the cost to the state if the
Department of Education and Early Development (DEED) must
collaborate with districts to identify and request new
exclusions in the disparity test calculation, including those
provided under federal regulations for local educational
agencies (LEAs) affected by geographic isolation, population
sparsity or density, high cost of living, or unique
socioeconomic characteristics. He also asked the cost of
requiring DEED regulations to remain within federal law and not
exceed federal requirements, noting Impact Aid has stated state
regulations fall outside the program's interest or authority. He
asserted DEED holds no obligation to impose rules more
restrictive than federal regulation.
4:47:32 PM
MR. HAUSER moved to slide 18, thanked the committee for the
opportunity to testify and said individuals seeking additional
information can review testimony presented in the House
Education Committee by colleagues from other districts regarding
the effects of the proposed regulation change on their
communities. He noted the Executive Director of the Alaska
Municipal League also provided public testimony addressing local
control. He stated his district may not face the greatest impact
from the regulation change. He emphasized estimates indicate
more than half of Alaska's students would experience effects
from the proposed regulation.
4:48:14 PM
SENATOR KIEHL referenced Mr. Hauser saying the BSA is the way to
"float all boats" and said FY 24 was the year the state came
close to exceeding the disparity test threshold. He recalled
that year the BSA received one-time funding above the static BSA
of about $340, so last year it was $680. He asked whether the
additional one-time funding creates more or less room for local
contributions without violating the disparity test.
4:49:05 PM
MR. HAUSER replied municipalities, organized boroughs, cities,
and districts must adopt budgets in advance, which limits their
ability to adjust to late-session funding changes.
4:49:49 PM
SENATOR KIEHL clarified his question and noted the complexity of
federal requirements. He referenced Mr. Hauser's testimony that
increasing the Base Student Allocation (BSA) benefits all
districts by enlarging the overall funding base and suggested
that increase reduces urgency for regulatory changes by creating
more flexibility under the disparity test. He asked whether the
same effect applies to one-time funding and mentioned again the
one-time funding approved in 2024 for use in 2025 that prompted
concern from Commissioner Bishop.
4:50:16 PM
MR. HAUSER stated his belief that one-time funding does help
alleviate financial pressures and cited the Juneau School
District as an example. He reported that, prior to the
announcement of one-time funding last year, the City and Borough
of Juneau reached the maximum local contribution and, for the
first time, received more local funding than funding from the
State of Alaska, with Juneau contributing approximately 51
percent. He said the state puts pressure on the districts by
saying it must have access and utilize Impact Aid funds to make
sure all schools across the state are supported. Yet, the
state's broad sweeping regulation would impact local
contribution for non-instructional, non-curricular items. He
said one-time funding and the BSA is not keeping up with
inflation costs and negatively impacts classroom instruction.
CHAIR TOBIN noted that one of the activities the broad sweeping
regulation would cut from the Juneau School District is the
Learn to Swim Program.
4:52:09 PM
SENATOR BJORKMAN expressed appreciation to the Juneau School
District for organizing beach day field trips and said his
children enjoyed the events. He asked whether, under the
proposed regulation, funds raised by sports booster clubs or
other activities for travel or coach stipends would count toward
the local contribution cap.
4:52:53 PM
MR. HAUSER stated that the draft regulation impacts only funds
appropriated from a municipality or borough to a school
district. He explained that money raised through a nonprofit or
booster club falls outside the scope of the regulation because
those organizations maintain separate accounts and manage those
funds independently.
4:53:33 PM
SENATOR BJORKMAN stated that funds are appropriated to pay for
pools, theaters, and subsidized hot lunch programs. He asked
whether, in the case of pools and theaters that are occasionally
used for educational purposes but primarily serve other
functions, those appropriations would count against the local
contribution cap.
4:54:08 PM
MR. HAUSER stated that he would need to review specific examples
before giving a definitive answer. He said he raised a question
with the DEED regarding student nutrition and whether a local
community could contribute funds to address food insecurity by
providing breakfast and lunch. He explained that the concern
centered on whether the funding comes through a local
municipality or borough appropriation, as the regulation applies
to additional local government funding. He added that
clarification is needed on what qualifies as free public
education, what exclusions apply, and whether those exclusions
extend to school districts.
4:55:21 PM
SENATOR STEVENS asked for additional details regarding Mr.
Hauser's comment that the department was attempting to create a
false narrative between urban and rural school districts.
4:55:38 PM
MR. HAUSER said that he did not necessarily want to accuse the
department but expressed concern about a perceived divide
between urban and rural districts. He stated that, as a longtime
Alaska educator and superintendent, he remains committed to
serving all students statewide and values public education
across Alaska. He emphasized that increasing the Base Student
Allocation (BSA) would address funding pressures affecting all
districts. He stressed that his testimony aimed to support
equitable access to public education and non-instructional
opportunities statewide outside the disparity test for rural and
urban schools.
4:57:24 PM
SENATOR CRONK requested that Commissioner Bishop receive the
opportunity to offer rebuttal.
4:57:48 PM
COMMISSIONER BISHOP stated that she would provide specific
information, including details from the DoEd Impact Aid Program,
to address the questions and concerns raised by Mr. Hauser. She
said the department received information that differed from his
presentation and noted that experienced experts were available
online for questions. She explained that the DEED aims to
implement the state's funding formula equitably and not create
division among districts, although several districts have
expressed concern about funding disparities regardless of
whether Impact Aid is included. She added that DEED held
multiple meetings with Mr. Hauser to support his district by
incorporating several of the community service items he
identified.
4:59:10 PM
LORI WEED, School Finance Manager, Finance and Support Services,
Department of Education and Early Development (DEED), Juneau,
Alaska, answered questions concerning local contribution. She
stated for the legislative record that community services, such
as before- and after-school programs, community schools, and
additional gym use, are specifically excluded in the proposed
draft language. She clarified that DEED does not intend to
include those services within free public education but instead
seeks to meet the requirements of the disparity test, which
promotes statewide equity. She referenced Mr. Hauser's prior
comments ALASBO supporting equality across the state and
explained that only about five districts routinely fund to the
cap and they also contribute additional special revenues. She
acknowledged the impact on Juneau but emphasized that allowing
only a few districts to access additional funding opportunities
creates inequity for other districts statewide.
5:00:51 PM
CHAIR TOBIN requested that the department provide the draft
regulatory language so members of the committee can review it
before the regulatory package moves forward. She expressed
appreciation for the comments regarding legislative intent and
the state funding formula. She noted that Senator Hoffman serves
as a valuable resource and suggested consulting him for further
clarification on legislative intent at the time of enactment.
5:01:14 PM
SENATOR KIEHL stated that he worked in the legislature when
Senate Bill 36 passed in 1998 and has monitored education
budgets for decades. He said the primary sponsor of the current
funding formula understood that some districts funded items
outside the cap, never sought changes as finance co-chair, and
never raised concerns during Board of Education and Early
Development testimony, which suggests the proposed regulation
does not reflect the original intent of Senate Bill 36. He noted
that several REAAs and rural districts approach or exceed the
disparity test cut line but argued that the current system does
not systematically discriminate against rural Alaska. He stated
that Juneau remains approximately $500 per student below the
disparity limit, equating to about $2 million in headroom, and
asserted that the proposed regulation does not address an urgent
problem, federal noncompliance, or an emerging need.
5:04:13 PM
CHAIR TOBIN stated that she agreed and questioned the
prioritization of the proposed regulation over addressing major
maintenance and school construction needs in rural Alaska, which
she believed would have a greater impact on equity. She invited
representatives from the districts the commissioner mentioned to
provide public testimony to the committee so members can better
understand their perspectives. She emphasized the importance of
transparency and gathering information to understand what is
occurring in schools statewide.
5:05:07 PM
There being no further business to come before the committee,
Chair Tobin adjourned the Senate Education Standing Committee
meeting at 5:05 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| Juneau School District Local Contributions Presentation 05.13.2025.pdf |
SEDC 5/14/2025 3:30:00 PM |
Education |
| SJR 21 Version A 05.07.2025.pdf |
SEDC 5/12/2025 3:30:00 PM SEDC 5/14/2025 3:30:00 PM |
SJR 21 |
| SJR 21 Sponsor Statement 05.12.2025.pdf |
SEDC 5/12/2025 3:30:00 PM SEDC 5/14/2025 3:30:00 PM |
SJR 21 |
| SJR 21 Fiscal Note LEG-SESS 05.11.2025.pdf |
SEDC 5/12/2025 3:30:00 PM SEDC 5/14/2025 3:30:00 PM |
SJR 21 |
| SJR 21 Research - ADN Article 05.10.2025.pdf |
SEDC 5/12/2025 3:30:00 PM SEDC 5/14/2025 3:30:00 PM |
SJR 21 |
| SJR 21 Research - KYUK Article 05.12.2025.pdf |
SEDC 5/12/2025 3:30:00 PM SEDC 5/14/2025 3:30:00 PM |
SJR 21 |
| HJR 25 v.A.pdf |
HEDC 5/9/2025 8:00:00 AM HEDC 5/12/2025 8:00:00 AM SEDC 5/14/2025 3:30:00 PM |
HJR 25 |
| HJR 25 Sponsor Statement v.A.pdf |
HEDC 5/12/2025 8:00:00 AM SEDC 5/14/2025 3:30:00 PM |
HJR 25 |
| HJR 25 FN 5-07-25.pdf |
HEDC 5/9/2025 8:00:00 AM HEDC 5/12/2025 8:00:00 AM SEDC 5/14/2025 3:30:00 PM |
HJR 25 |
| HJR 25 Article APM 5.28.24.pdf |
HEDC 5/9/2025 8:00:00 AM HEDC 5/12/2025 8:00:00 AM SEDC 5/14/2025 3:30:00 PM |
HJR 25 |
| HJR 25 Written Testimony 5.7.25.pdf |
HEDC 5/12/2025 8:00:00 AM SEDC 5/14/2025 3:30:00 PM |
HJR 25 |
| HJR 25 Testimony ACSA, Kuspuk SD 5.25.pdf |
HEDC 5/9/2025 8:00:00 AM SEDC 5/14/2025 3:30:00 PM |
HJR 25 |