HB 212-LOCAL CONTRIBUTIONS BY SCHOOL DISTRICTS  8:25:31 AM CO-CHAIR STORY announced that the next order of business would be HOUSE BILL NO. 212, "An Act relating to the local contribution made by a city or borough school district; and providing for an effective date." 8:25:48 AM REPRESENTATIVE ANDI STORY, Alaska State Legislature, as prime sponsor, presented HB 212 to the committee. She referred the committee to the fiscal note associated with HB 212. 8:26:34 AM HEATHER HEINEKEN, Director, Division of Finance & Support Services, Department of Education & Early Development, explained the fiscal notes associated with HB 212. She explained that the first fiscal note would direct the Department of Education & Early Development (DEED) to change how it currently conducts funding disparity tests with school districts. She detailed how the second fiscal note referenced the proposed funding mechanism by HB 212 and explained that the third fiscal note was related to the Mt. Edgecumbe High School. 8:29:44 AM DR. DEENA BISHOP, Commissioner, Department of Education & Early Development, answered committee questions on HB 212. She explained that the DEED is currently evaluating regulatory changes related to special revenue fund contributions by local governments and their school districts, which would be altered by HB 212 if it were to pass. She said that school districts around Alaska are interpreting current DEED regulations differently and said that the DEED is working on new special revenue fund regulations because of it. She emphasized that current Alaska Statute requirements already embed school impact aid funding within them and said that "all applicable revenues must be included in the disparity test under law". She explained how a local government that might be able to better fund a school within its district would be unfair to other schools around the state that might not have as many financial options to utilize. She suggested that previous comments made to the House Education Standing Committee by Lisa Parody were inaccurate and said that it school districts being funded over the disparity limit "could trigger retroactive consequences." She shared her belief that the proposed regulatory changes being made by the DEED were to bring school districts in Alaska more in accordance with existing Alaska Statute and said that the DEED supported the language that currently existed in SCS CS HB69, which provided "clear" language on funding disparity tests. 8:43:26 AM REPRESENTATIVE ELAM asked if impact aid dollars are allowed to be used outside of education and asked what the maximum allowable local contribution is under the current state education funding formula. DIRECTOR HEINEKEN answered that impact aid dollars are included as part of a school district's general operations budget. COMMISSIONER BISHOP added that the state education funding formula has minimum spending formula that allows for a 25% overspending range with local contributions. She said that a local government with more funding options might lead to an inequitable funding scenario between different school districts in Alaska. DIRECTOR HEINEKEN commented that additional funds could be spent on current expenditures, like administration, instruction, attendance & health services, pupil transportation services, operation maintenance & plans, and fixed charges, which the DEED was attempting to clarify by aligning its regulations with the U.S. Department of Education. 8:54:10 AM CO-CHAIR HIMSCHOOT asked if the state has ever failed a funding disparity test before and asked what the consequence would be if it were to fail it. COMMISSIONER BISHOP said that she was not aware if Alaska had ever failed a funding disparity test and explained that the federal government currently dictates the 25% funding disparity. DIRECTOR HEINEKEN commented that she was unaware of any failure of a disparity test during her time working in Alaska Education. 8:58:15 AM CO-CHAIR STORY said that the state did fail a funding disparity test in 2019 because of transportation funding and explained that the DEED acquired a waiver from the U.S. Department of Education to allow for the higher cost of transportation that exists within Alaska. [HB 59 was held over].