Legislature(2007 - 2008)BUTROVICH 205
01/31/2007 08:00 AM Senate SPECIAL COMMITTEE ON EDUCATION
| Audio | Topic |
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| Start | |
| Alaska Public School Funding Formula Overview | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
ALASKA STATE LEGISLATURE
SENATE SPECIAL COMMITTEE ON EDUCATION
January 31, 2007
8:01 a.m.
MEMBERS PRESENT
Senator Gary Stevens, Chair
Senator Charlie Huggins, Vice Chair
Senator Gary Wilken
Senator Bettye Davis
MEMBERS ABSENT
Senator Donny Olson
OTHER LEGISLATORS PRESENT
Senator Joe Thomas
COMMITTEE CALENDAR
Alaska Public School Funding Formula Overview
PREVIOUS COMMITTEE ACTION
No action to consider
WITNESS REGISTER
Eddy Jeans, School Finance Manager
Department of Education &
Early Development
th
801 W 10 St.
Juneau, AK 99801-1894
POSITION STATEMENT: Presented overview
ACTION NARRATIVE
CHAIR GARY STEVENS called the meeting to order at 8:01:26 AM.
Present at the call to order were Senators Davis, Wilken,
Huggins, Thomas, and Chair Stevens.
^ALASKA PUBLIC SCHOOL FUNDING FORMULA OVERVIEW
CHAIR STEVENS announced that the first order of business would
be an overview from Mr. Eddy Jeans, School Finance Manager for
the Department of Education and Early Development (DEED), on the
DEED's public school funding formula.
8:01:41 AM
MR. JEANS explained that he would be presenting the public
school funding program. The two documents presented to the
committee were a foundation overview updated in 2007 and the
foundation overview PowerPoint printout. He added that during
the presentation there would be references to page and column
numbers, which referred to the two-page spreadsheet at the back
of the overview.
8:03:36 AM
MR. JEANS said that the current school funding formula was
adopted under SB 147 in 1998 and was implemented in 1999. Mr.
Jeans explained that he would provide an overview of the
calculations for the adjusted Average Daily Membership (ADM),
the calculation of basic need, or entitlement, and who pays for
basic need as well as additional funding and state aid.
He explained that ADM is the count of the students enrolled in
the annual 20-day count period in the month of October. The
reports are due to the DEED within two weeks of the count
period. The Projected Student Reports are also due to the DEED
at the same time.
8:05:02 AM
SENATOR HUGGINS asked if another date was ever used for the
count system, and if Mr. Jeans thought the current date was
effective.
8:05:29 AM
MR. JEANS replied that prior to SB 36 there was an optional
count period in February, but it was only used if districts'
enrollment increased during that time frame. He felt that the
October count period was appropriate because it allows districts
to budget and staff in a timely manner.
8:06:26 AM
MR. JEANS explained that eligibility for state funding requires
that a student be at least 6 years of age prior to September
first of that school year, and under the age of 20 and not have
met the credit requirements for graduation nor have passed the
high school qualifying exam. The district provides services to
these students and claims them for foundation funding. Students
over the age of 20 may still take the qualifying exam but the
district no longer receives state funding for those students.
8:07:21 AM
CHAIR STEVENS asked if a student under the age of 20 who has not
passed the qualifying exam could keep receiving funding as long
as they worked towards passing the exam.
MR. JEANS responded that this was true, but funding would be
based on the number of courses in which the student was
enrolled.
8:07:51 AM
CHAIR STEVENS asked if students over the age of 20 could still
take the test.
MR. JEANS replied that they could.
8:08:02 AM
MR. JEANS explained that a child who is five years of age before
September 1 of the school year may enter kindergarten. Children
with disabilities and those with active Individual Education
Programs may enter school at the age of three, and may receive
services and funding through the age of 22. There are five
steps in calculating the AADM: first the AADM is adjusted by the
school size factor; then the result is multiplied by the
district cost factor. The third step is increasing the
resulting number by 20 percent for the special needs students,
the fourth is adding the adjustment for intensive students, and
finally the adjustment for correspondence students is added.
This provides the district's AADM.
8:09:14 AM
MR. JEANS said that the first step in adjusting the AADM is
looking at how many students the community is serving. A
community with 10-100 students is funded as if there is one
school in the community. For a population of 101-425 students,
the community is funded as if there are two schools. The student
population is divided into kindergarten-sixth and seventh-
twelfth grades. In communities with more than 425 students, each
separately-administered school is funded separately. The two
exceptions are alternative schools with less than 200 students
and charter schools with an AADM of less than 150, both of which
would be counted as part of the largest school in the district.
8:10:40 AM
SENATOR HUGGINS asked if schools of choice (alternative and
charter schools) have a different population threshold.
8:11:09 AM
MR. JEANS replied that the threshold of 200 was put into statute
because a community with more than 425 students needs to have an
efficient operation. The threshold discourages districts from
creating smaller entities for funding purposes.
8:11:48 AM
CHAIR STEVENS asked how many alternative and charter schools
exist in the state.
MR. JEANS replied that he did not know. He added that the school
size adjustment does not provide for an adjustment below 10
students, so the population is added to the next smallest
population within the district.
8:12:32 AM
SENATOR HUGGINS asked for the definition of "community" for
education purposes.
8:12:43 AM
MR. JEANS replied that he did not have the definition with him,
but that it would be what Senator Huggins would expect a
community to be, i.e. a unified municipality or first-class
city.
8:13:06 AM
SENATOR HUGGINS asked if the Matanuska Susitna Valley as a whole
was considered a community.
MR. JEANS replied that yes, the Mat-Su Valley was considered one
community under the foundation program.
8:13:18 AM
SENATOR WILKEN asked for an example of communities with under
ten students.
8:13:33 AM
MR. JEANS replied that some communities, Prince of Whales for
example, fluctuate from year to year, so it is up to the
district whether or not to keep the schools open. If a community
has nine students and the next-smallest has twenty, the two
would be funded as one school of twenty-nine students. However,
once any school falls below ten students it is difficult for a
school to remain open.
8:14:12 AM
MR. JEANS announced that he would be using the Nome public
schools as an example for how the AADM is calculated. Nome
currently has four schools. Youth detention facilities are not
considered under the foundation formula. The Nome charter
school has fewer than 150 students so it is added to the largest
school in the district for funding purposes.
8:15:46 AM
MR. JEANS presented a PowerPoint school-size adjustment table.
In range 1 are schools with 10 to 20 students, whose funding is
determined by a factor of 39.6. For student populations of 20-
29, a factor of 1.63 is added. For student populations of 30-
75, the base factor is 55.8 plus an added factor of 1.49. The
sliding scale continues up through school populations of over
750. Larger schools are expected to be more efficient and thus
need proportionately less revenue.
8:17:04 AM
MR. JEANS explained the AADM formula for the K-6 program in an
example school: 444 - 400 which equaled 44, which was multiplied
by .92 which equaled 40.48 which was added to 471.6 which
equaled an AADM of 512 for the example school. He then gave
another example of the equation for a high school and a youth
facility, and explained that the three would then be added
together for a total district budget.
8:18:39 AM
MR. JEANS said that the next adjustment in the foundation
program was the Area Cost Differential. SB 36 required the DEED
to monitor and recommend adjustments to the cost factors every
other year, which they tried to do with the McDowell
methodology. The DEED decided that the methodology was not
effective, and asked the legislature for funding to do its own
cost study. The legislature appropriated money from the
legislative budget to do the study itself. Two separate studies
have been done since 2001, one by the American Institute for
Research (AIR) and the other being the legislature's study
contracted with the ISER group with the University of Alaska.
The ISER group determined that the data used by AIR wasn't used
properly. ISER was contracted to modify the data and re-
determine the cost differentials. In 2006 the legislature did
pass funding for a one-quarter increase in the cost
differentials as recommended by ISER. That legislation was
intended for only the fiscal year 2007; the differentials will
revert to the former level unless new legislation is passed.
8:20:25 AM
CHAIR STEVENS asked to be reminded what the governor has in the
budget for this topic.
MR. JEANS replied that the governor did include $24 million
earmarked for cost differentials, but that she didn't propose
legislation to reinstate the expired increase. Instead
districts will receive a grant in fiscal year 2008 equal to the
amount generated by the cost differential of fiscal year 2007.
This will not take into account any changes in student
population.
8:21:20 AM
SENATOR WILKEN said he thought it was incorrect to state that
two separate studies were done. There has been only one study,
by AIR, and an analysis of the original study by ISER. ISER
applied a different theory of school funding, but that was a
revision and not a new study. Last year the legislature tried to
blend the AIR and ISER studies, but was unsuccessful and so
agreed to take a one-quarter percentage of the ISER study
findings to use in the AADM formula, with a one-year limit. The
action was not a validation of ISER's study, but a proxy with
the goal of increasing funding for education.
8:23:59 AM
SENATOR STEVENS asked Senator Wilken to explain why a one-
quarter percentage was chosen.
8:24:08 AM
SENATOR WILKEN explained that the legislature knew what it could
afford.
8:24:23 AM
SENATOR HUGGINS asked whether the one-quarter tabulation was to
be continued by the governor in the form of a grant.
MR. JEANS said that Senator Huggins was correct.
8:25:29 AM
MR. JEANS said that the district cost factors are applied to
each school district, and currently range from 1.00 (Anchorage)
to 1.736 (Aleutian region). The calculation is the school size
AADM multiplied by the district cost factor. The next step is
increasing the product by 20 percent for special needs students.
School districts must submit a plan for special needs services
in order to receive funding.
8:27:25 AM
MR. JEANS explained that school districts receive funding for
intensive service students. The number of students being
claimed for intensive services is multiplied by five and the
resulting number is the adjustment for funding. The DEED has
been doing audits of this funding in recent years, but because
of a lack of funding could only do random samples. The
districts were only held accountable for the cases of funding
misuse that were found. Recently funding was granted for 100
percent audits and many more cases of funding misuse were
found.# claimed for inten times 5 dept ex\ngaged in dist wide
audits of inten claims limited staff random sample 5/20 not
qualified recenty did 100% audits students don't meet def
8:29:23 AM
CHAIR STEVENS asked for an estimation of the percentage of
students statewide in the intensive needs category.
8:29:35 AM
MR. JEANS responded that of 130,000 students statewide, 1,800
are intensive needs.
8:30:04 AM
CHAIR STEVENS asked for a definition of intensive need.
8:30:07 AM
MR. JEANS responded that such a student would be severely multi-
handicapped and require a full-time aide.
8:30:17 AM
SENATOR HUGGINS asked if the Matanuska-Susitna district was
audited and was shown to be a problem area.
8:31:21 AM
MR. JEANS responded that Senator Huggins was correct.
SENATOR HUGGINS asked if the problem was the interpretation of
the definition of intensive needs.
MR. JEANS replied that the problem was due to insufficient
auditing and misinterpretation of the definition of intensive
need.
8:31:28 AM
SENATOR HUGGINS asked if the state had recently changed the
definition of intensive need.
8:31:46 AM
MR. JEANS replied that the definition has not been changed, only
the review process.
8:32:20 AM
CHAIR STEVENS asked if the issue could be solved by more
intensive review of the program.
MR. JEANS replied that the DEED would continue with the reviews
on a 100 percent basis, and that he believed there would be less
disparity between claims and eligibility. Another possibility
would be setting a fixed percent for funding.
8:33:34 AM
SENATOR WILKEN remarked that Intensive Needs students tend to be
concentrated in certain areas of the state. He asked Mr. Jeans
how state and the federal funding intersect.
8:34:06 AM
MR. JEANS said that the Mat-Su claim numbers have been lowered.
8:34:42 AM
SENATOR HUGGINS remarked that the school districts need to be
conscientious but not over-costly.
8:35:13 AM
CHAIR STEVENS asked why there would be a concentration of
intensive needs students in certain areas.
8:35:29 AM
MR. JEANS replied that the larger communities have better
services available.
CHAIR STEVENS said that across-the-board two percent funding
would perhaps not be equitable.
MR. JEANS replied that there is a varying level of percentage
funding. A truly intensive student might cost in excess of
$75,000 annually to educate. Currently such students are funded
at $26,900 annually.
8:37:05 AM
SENATOR HUGGINS asked if Juneau was the only aberration in terms
of having low numbers of intensive need students.
MR. JEANS said that Sitka was an anomaly as well. He added that
a number of preschool students who were claimed for intensive
service funding were later dropping out of the program, and thus
probably should not have been classified as intensive needs in
the first place.
8:39:13 AM
SENATOR WILKEN asked how federal funding and its definition of
intensive needs factor in.
MR. JEANS replied that the federal government does not define
intensive needs. The state legislature determined that the
category needed additional support.
8:39:56 AM
SENATOR WILKEN asked if the federal government tied its money to
certain actions on the state's part, and how the gap between its
funding and desires was met.
MR. JEANS replied that the gap can't be completely filled, and
even if spending was doubled it would still be short of what
districts say they need. Funding is available in other
categories that helps offset the difference.
8:41:20 AM
SENATOR DAVIS asked if it was true that the Individuals with
Disabilities Education Act (IDEA) was only paying 40 percent of
the intensive needs funding.
MR. JEANS replied that more funding from the IDEA would help
alleviate some issues. He then returned to the funding formula
calculations, explaining that correspondence programs are funded
at 80 percent. Each such student generates $4,300 in funding.
8:44:12 AM
MR. JEANS explained that school funding comes from a required
local contribution in the state, federal impact aid, and state
aid. SB 174 changed the way that required local effort is
calculated. The Education Full Value Determination, depending on
the value of the real and taxable property in a community, is
set by the state assessor. Individual communities may have
property tax exemptions, but the assessor considers all
property.
He then offered an example of how the FVD works: different
districts must pay different percentages of their communal
property value. Increasing or decreasing property values and
local economies in certain areas of the state may mean
disproportionate payments to school funding.
8:50:53 AM
MR. MORSE explained that Federal Impact Aid is calculated by the
amount of money received by school districts from March through
the last day of February. State aid is calculated by the dates
of the funding vouchers sent by the Feds. Impact aid is paid to
school districts because they have lands that are non-taxable at
the local level. School districts receive $120 million in impact
aid per year.
8:52:04 AM
SENATOR HUGGINS asked if there was an impact aid provision for
the families of commercial fisherman.
MR. JEANS replied that there was not. He added that people who
live on national forest land also generate impact aid.
8:53:08 AM
SENATOR WILKEN asked for a table with the total impact aid for
the state.
8:53:32 AM
MR. JEANS said that the statewide amount of impact aid is $120
million, adjusted to $80 million after subtracting special
education and Indian lands money.
8:54:36 AM
MR. JEANS explained that for municipalities, impact aid may only
be considered in an amount equal to the ratio of required local
contribution to total local contribution. The required local
contribution is divided by the budgeted local contribution which
equals a percentage, which is then applied to the impact aid
before the statutory deduction of 90 percent.
8:55:43 AM
MR. JEANS restated the steps for determining state aid for the
Nome public school example. Other funds include additional local
contributions that the municipalities may contribute, quality
school grants, and supplemental equalization.
8:56:49 AM
MR. JEANS explained that Quality Schools Grants equal $16 per
AADM, and all school districts qualify for these grants. The
Supplemental Funding Floor (SFF) is a transition provision to
help districts move between the old and current formulas.
Schools may receive the difference between old and current
funding for one year to aid in transition.
8:57:50 AM
SENATOR HUGGINS asked how cyber schools fit into the funding
factoring.
MR. JEANS replied that such schools are categorized as
correspondence schools.
9:00:14 AM
MR. JEANS explained that the SFF cannot be increased, but may be
reduced by an increase in basic need or a decrease in student
population. He then gave an example of how the funding floor is
reduced depending on schools' basic need.
9:01:53 AM
SENATOR WILKEN asked how many school districts currently have
transition funding.
MR. JEANS replied that nine districts currently receive
transition funding. The floor is currently at $1 million, down
from $17 million at the beginning of the program.
SENATOR WILKEN asked if these were primarily smaller districts.
MR. JEANS responded that they were.
9:02:40 AM
MR. JEANS said that the Funding Formula could be prorated if the
legislature did not provide sufficient funding for all
components of the formula. He then concluded his presentation
and offered to take questions.
9:03:14 AM
CHAIR STEVENS thanked Mr. Jeans for his thorough presentation.
SENATOR WILKEN asked if there were school districts paying less
than 2.8 percent for the required local contribution.
MR. JEANS replied that regional education attendance areas were
not required to make a contribution. Some communities provide
less than 2.8 percent because of a floor set in the statute that
guarantees state funding.
9:04:19 AM
SENATOR WILKEN asked to review a flow chart about the funding
formula with Mr. Jeans to then present to the committee.
CHAIR STEVENS thanked Mr. Jeans again and, seeing no further
business, adjourned the Special Committee on Education meeting
at 9:05:05 AM.
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