Historical Review of Public School Funding in Alaska

Public School Funding

A Historical Review

Prepared by Senator Gary Wilken's Office

Some critics of Senate Bill 36 focus attention on the impact the legislation has on several rural school districts, specifically the loss of state revenue in comparision to the dollar amount previously received. In order to fully understand this argument, it is necessary to put the current funding formula in a historical perspective.

1985 A one year stop-gap funding scheme was adopted	1985 marked the second year of a three year study to determine a "resource cost model" to fund schools. California consultants were asked to assess the costs involved in educating Alaskan students in three differently sizes, hypothetical classrooms. During this lengthy review, school districts were anxious for a change and pressure on the Legislature mounted. For a variety of reasons, the "resource cost model" was never implimented. Unable to decide upon the funding level, the Legislature approved a stop-gap measure. An Alaska Geographic Differential Study was conducted in 1985 by Homan-McDowell. The study was based solely on the household cost of living and provided differential data for 19 election districts.
1986 A re-write proved impossible; another one year solution	Still under pressure to adopt a new formula, the Legislature approved SB 408, sponsored by Sen. Frank Ferguson, for one year. "[The ACD] has always been a tool used to ... bring a number up or down, depending upon what a legislator was interested in." Mike Scott, staff to Sen. Ferguson " ... most districts generate more special ed. money than they need." " ... most the increased need for consolidation of school districts." Bob Green, School Boards' Assoc. " ... real equity between urban and rural disticts cannot be achieved." LeRoy Owens, Aleutian Schools
1987 After two years of different stop-gap measures, a new proposal was considered As a result of several years of turmoil, the proposal was adopted even though the legislation "would be a further setback for railbelt taxpayers and students." Sen. Joe Josephson (5/19/87)	The Legislature convened and found itself still in a tenuous position. The funding formula was under attack by the Southwest Region School District and the federal government. (Subsequently, the federal government required $11 million to be repaid by the State to several school districts.) Governor Cowper proposed a funding formula based on "instructional units" and the cost of living study conducted in 1985 by Homan-McDowell. City and borough school districts were required to contribute 4 mills of their assessed property value or 35% of their district's basic need. A district's allocation was determined, in part, by the number of "funding communities" within the district. In the House Finance Committee under the direction of Rep. Al Adams, Chair, 29 area cost differentials were increased. "[The new area cost differentials] are not based on the benefit of specific supporting data. For this reason, I do not feel these numbers should be included in the Foundation Formula." Rep. Steve Rieger (4/16/87) "[The new area cost differentials] presented are not based on a solid basis of school costs. I do not have confidence in their accuracy." Rep. Pat Pourchot (4/16/87) "[The House HESS Committee] urges that the issue of taxation in the unorganized areas be given serious consideration." Rep. Johnny Ellis (3/19/87) " ... would like a survey of the [unorganized] areas to know the potential of the people being able to pay a percentage of the cost of education in their own areas." Rep. Dave Donley (3/18/87) "[I] express concern that surplus funding would be siphoned off by central offices and used to increase administative hierarchy." Sen. Paul Fischer (5/19/87) " ... in the rush to adjournment, the Senate Finance CS was reported out of committee without an opportunity for public testimony. [I] prevailed upon the Senate to return the bill to committee for a public hearing." Sen. Johne Binkley (5/19/87) " ... if the 4 mill rate was in place ... North Slope and Valdez would be paying an unrealistic amount in relationship to [their need]." Marshal Lind, DOE Commissioner " ... noted that [House Finance] had proposed twenty-nine [new ACDs] totaling approximately $4.2 million for all REAAs." Sen. Paul Fischer (5/19/87) "I believe it is dangerous for the Legislature to adjourn without enacting a new formula. [U]rban members of the Senate HESS Committee acquiesced in a measure that includes area differentials less favorable to urban areas. Sen. Joe Josephson (5/19/87) " ... there appears to be no objective definition of funding communities." Bill Berrier, small district's lobby
1998 SB 36 proposes a funding formula that is based on actual school costs.	During the past ten years, the Foundation Formula has remained relatively stable. However, the current distribution scheme, developed under pressure with very limited cost data, has proven to be an experiment that has failed. Issues raised in 1987 - special education spending, administrative overhead, "funding communities", local contribution inequities, inflated area cost differentials - are still areas of concern and are addressed in SB 36. Senate Bill 36 is based on a school operating cost study that treats all Alaskan schools equally and fairly. This is the first review of actual school costs in the thirty-nine years of Alaskan statehood. It is important to remember the historical perspective of the current formula when comparing SB 36 to the existing formula.

1985

A one year stop-gap funding scheme was adopted

1985 marked the second year of a three year study to determine a "resource cost model" to fund schools. California consultants were asked to assess the costs involved in educating Alaskan students in three differently sizes, hypothetical classrooms. During this lengthy review, school districts were anxious for a change and pressure on the Legislature mounted. For a variety of reasons, the "resource cost model" was never implimented. Unable to decide upon the funding level, the Legislature approved a stop-gap measure.

An Alaska Geographic Differential Study was conducted in 1985 by Homan-McDowell. The study was based solely on the household cost of living and provided differential data for 19 election districts.

1986

A re-write proved impossible; another one year solution

Still under pressure to adopt a new formula, the Legislature approved SB 408, sponsored by Sen. Frank Ferguson, for one year.

"[The ACD] has always been a tool used to ... bring a number up or down, depending upon what a legislator was interested in."

Mike Scott, staff to Sen. Ferguson
" ... most districts generate more special ed. money than they need."
" ... most the increased need for consolidation of school districts."

Bob Green, School Boards' Assoc.
" ... real equity between urban and rural disticts cannot be achieved."

LeRoy Owens, Aleutian Schools

1987

After two years of different stop-gap measures, a new proposal was considered

As a result of several years of turmoil, the proposal was adopted even though the legislation "would be a further setback for railbelt taxpayers and students."

Sen. Joe Josephson (5/19/87)

The Legislature convened and found itself still in a tenuous position. The funding formula was under attack by the Southwest Region School District and the federal government. (Subsequently, the federal government required $11 million to be repaid by the State to several school districts.)

Governor Cowper proposed a funding formula based on "instructional units" and the cost of living study conducted in 1985 by Homan-McDowell. City and borough school districts were required to contribute 4 mills of their assessed property value or 35% of their district's basic need. A district's allocation was determined, in part, by the number of "funding communities" within the district.

In the House Finance Committee under the direction of Rep. Al Adams, Chair, 29 area cost differentials were increased.

"[The new area cost differentials] are not based on the benefit of specific supporting data. For this reason, I do not feel these numbers should be included in the Foundation Formula."

Rep. Steve Rieger (4/16/87)
"[The new area cost differentials] presented are not based on a solid basis of school costs. I do not have confidence in their accuracy."

Rep. Pat Pourchot (4/16/87)
"[The House HESS Committee] urges that the issue of taxation in the unorganized areas be given serious consideration."

Rep. Johnny Ellis (3/19/87)
" ... would like a survey of the [unorganized] areas to know the potential of the people being able to pay a percentage of the cost of education in their own areas."

Rep. Dave Donley (3/18/87)
"[I] express concern that surplus funding would be siphoned off by central offices and used to increase administative hierarchy."

Sen. Paul Fischer (5/19/87)
" ... in the rush to adjournment, the Senate Finance CS was reported out of committee without an opportunity for public testimony. [I] prevailed upon the Senate to return the bill to committee for a public hearing."

Sen. Johne Binkley (5/19/87)
" ... if the 4 mill rate was in place ... North Slope and Valdez would be paying an unrealistic amount in relationship to [their need]."

Marshal Lind, DOE Commissioner
" ... noted that [House Finance] had proposed twenty-nine [new ACDs] totaling approximately $4.2 million for all REAAs."

Sen. Paul Fischer (5/19/87)
"I believe it is dangerous for the Legislature to adjourn without enacting a new formula. [U]rban members of the Senate HESS Committee acquiesced in a measure that includes area differentials less favorable to urban areas.

Sen. Joe Josephson (5/19/87)
" ... there appears to be no objective definition of funding communities."

Bill Berrier, small district's lobby

1998

SB 36 proposes a funding formula that is based on actual school costs.

During the past ten years, the Foundation Formula has remained relatively stable. However, the current distribution scheme, developed under pressure with very limited cost data, has proven to be an experiment that has failed.

Issues raised in 1987 - special education spending, administrative overhead, "funding communities", local contribution inequities, inflated area cost differentials - are still areas of concern and are addressed in SB 36.

Senate Bill 36 is based on a school operating cost study that treats all Alaskan schools equally and fairly. This is the first review of actual school costs in the thirty-nine years of Alaskan statehood.

It is important to remember the historical perspective of the current formula when comparing SB 36 to the existing formula.

School Funding Analysis

Comparison of SB 85 and SB 36

Senate Bill 85 Introduced by the Governor 2/12/97	Governor's Transmittal Letter Several Excerpts 2/12/97	Senate Bill 36 Passed by the Senate 3/11/98
Allocations are distributed on a per student basis, and then weighted according to the cost of opperating schools.	[recommend] a per pupil basis instead of the complicated instructional unit method now in use.	Allocations are distributed on a per student basis, and then weighted according to the cost of operating schools.
Special needs students are classified as 20% of total students enrolled in schools. An across the board allocation is made to each school district for its special needs students, to be spent as each local district deems appropriate. Categorical funding is abolished.	Eliminating the need to unnecessarily label children as "special needs students" [allows] districts to receive a block entitlement of 20 percent above their base fuding for students currently labeled as gifted and talented, vocational, bilingual, and most catagories of special education.	Special needs students are classified as 20% of total students enrolled in schools. An across the board allocation is made to each school district for its special needs students, to be spent as each local district deems appropriate. Categorical funding is abolished.
Funding provides for students indentified with intensive needs in addition to the 20% allocation.	Districts will get categorical funding only for students with the most serious, or intensive, disabilities.	Funding provides for students identified with intensive needs in addition to the 20% allocation.
Minimum size for funding is set at 10 ADM.	[SB 85] is bold. It is imaginative.	Minimum size for funding is set at 10 ADM.
Requires an area cost differential study to be completed and implemented in three years.	Funds a statewide study to determine the cost of operating schools.	Implements the Alaska School Operating Cost Study conducted by the McDowell Group.
Area cost differentials assigned at the funding community level.	The proposed foundation formula distributes [funding] ... in a fairer and easier to understand method.	District cost factors reflect non-personal services and administrative costs for each district.
Equalization is based on 3 mills plus supplemental equalization formula.	The foundation formula was developed over the past two years by the State Board of Education.	Equalization is based on 4 mills.
Allows additional local contributions without cap.	Lifting the current local funding cap that prevents local governments from contributing above a certain level of funding for schools.	Allows for additional local contributions capped at 23% of the district's state share of public school funding.
The description of SB 85 was taken from information provided by the Department of Education.