HB 259-PERMANENT FUND DIVIDEND; 25/75 POMV SPLIT  11:37:48 AM CHAIR SPOHNHOLZ announced that the first order of business would be HOUSE BILL NO. 259, "An Act relating to use of income of the Alaska permanent fund; relating to the amount of the permanent fund dividend; relating to the duties of the commissioner of revenue; relating to funding for state aid for school districts, the state boarding school, centralized correspondence study, and transportation of pupils; and providing for an effective date." CHAIR SPOHNHOLZ, as prime sponsor, sought final comment on HB 259. 11:38:09 AM REPRESENTATIVE JOSEPHSON referred to slide 12 of the PowerPoint presentation, titled "HB 259 Update Permanent Fund Funding for Dividends, Education and other Essential State Services" [hard copy included in the committee packet]. He pointed out that by fiscal year 2026, additional funding beyond the base student allocation (BSA) would amount to $218 million, which he deemed "too much excess revenue." He suggested that the bill would be more attractive if the revenue would be targeted formulaically to a defined benefit for teachers, a pre-kindergarten ("pre-K") fund, or an extended school year. REPRESENTATIVE WOOL echoed the sentiments expressed by Representative Josephson. He expressed his support for fully funding education and increasing BSA, adding that more support for education is needed in his district. He expressed his support for the permanent fund dividend (PFD) formula in the bill, noting that he maintained some reservations about the proposed legislation. 11:41:58 AM REPRESENTATIVE STORY saw the bill as prioritizing public education in the state by signaling that the legislature would be serious about economic development and training its workforce. She acknowledged the "umbrella needs" referenced by Representative Josephson and Representative Wool, such as teacher retirement, and welcomed future discussions on the matter. Further, she highlighted the $26 million in lost revenue due to downward inflationary pressure on schools, noting that she was sponsoring a bill to address that issue. REPRESENTATIVE EASTMAN expressed his skepticism toward the effectiveness of the proposed legislation. He opined that increased test scores and performance metrics would be the best signal to send to parents, as opposed to more funding. Additionally, he shared his belief that increasing the funding while maintaining the status quo, which he characterized as "terrible" in Alaska, would place downward pressure on performance. 11:44:59 AM CHAIR SPOHNHOLZ reminded the committee that the statutory PFD formula would create a $1.5 billion fiscal gap next year. She opined that Alaskans deserved transparency in regard to the annual dividend amount, adding that the bill would also resolve a political problem for the legislature. She expressed a desire to create fiscal stability for the future of Alaska and agreed that the bill could intersect with other policy proposals seeking to address some of the education challenges in the state. She reported that today, Alaska spends $500 less per child for public education when adjusted for inflation compared to FY 08. She expounded on several policy proposals before the legislature intended to restructure the BSA. She posited that Alaska's educational outcomes weren't worsening; instead, other states made strategic investments in education and implemented evidence-based strategies to jump past Alaska in performance metrics. She added that it was her intention to allow local jurisdictions to determine how the additional dollars would be spent; nonetheless, she said she would be happy to amend the proposed legislation in the House Finance Committee. In closing, she reiterated her belief that the state needed to make investments in public education and could not afford an unsustainable dividend formula, hence her introduction of HB 259. 11:49:21 AM REPRESENTATIVE WOOL moved to report HB 259 out of committee with individual recommendations and the accompanying fiscal notes. There being no objection, HB 259 was reported out of the House Special Committee on Ways and Means.