Senators Joe Paskvan, Dennis Egan, and Gary Stevens during the closeout hearing of the Senate Finance DEED Subcommittee, March 20, 2012
This blog contains highlights from the Alaska Education Update. The update is issued daily during session and contains detailed summaries of education issues under consideration by the Alaska State Legislature. If there is a hearing on a Monday, a report will, with few exceptions, be released by Tuesday morning. There is also a weekly edition of the update. During interim, reports are issued only when there has been action. Interim action may include hearings, bill signings, the release of the Governor's proposed budget for the next fiscal year, and other items that may be of interest to the education community.

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Monday, March 15, 2010

HB 350 - Public School Funding - Required Local Contribution

The House Education Committee heard and moved HB 350 today. The committee did not make any changes to the bill. It moves next to the House Finance Committee.

Chairman Seaton noted that there had been some misunderstanding regarding what HB 350 does. HB 350 does not change basic need. The only thing HB 350 changes is.....
the amount of basic need paid by the state and the amount of basic need paid by local effort. HB 350 standardizes the mill rate for local contribution and brings all districts back on an equal footing. Chairman Seaton said that because of the inequality between districts, HB 350 has support from almost everyone across the state.

Rep. Keller said what has been perceived as unfair funding is supposed to help fast-growing areas of the state with school funding. He opposes the approach in HB 350.

Rep. Wilson said there have been times that communities have voted not to build schools. Rep. Keller asked Rep. Wilson if she had information on when Mat-Su had voted down bonds for schools. Rep. Wilson and Rep. Keller agreed it had happened in the past, but they did not know if school bonds had recently failed. Rep. Keller said they had had a hard-core wakeup call in his community, and it wasn’t just for schools.

Chairman Seaton said that is why HB 350 still has an accommodation for growth – local contribution would only have to cover 50 percent of growth for the most recent year. He reminded people that HB 350 does not directly affect property taxes. The Kenai Peninsula Borough has a sales tax that is 100 percent dedicated to education funding. HB 350 is a method of calculation; it is not a mandated assessment. Communities can raise the money any way they want.

Rep. Muñoz said she is confused, because Juneau contributes 4 mills to education. Does HB 350 lower Juneau’s contribution to 2.7 mills? Chairman Seaton noted that Juneau has not been contributing 4 mills. [For the past several years, Juneau’s contribution has been just over 3 mills.] Juneau started out at 4 mills, like every district, but has decreased since 1999. If a community has had a lot of growth since 1999, then they are paying a lot less than communities without growth. The chairman said his borough, the Kenai Peninsula Borough is at 3 mills. Rep. Muñoz said that that was a choice of those boroughs. Chairman Seaton said it is not a choice. The basic need is calculated in the formula.

Rep. Keller asked if there is information on what the equivalent of the unorganized borough impact aid is, and if they should consider requiring local payment from the unorganized borough. The legislature is the school board for the unorganized borough; perhaps they should consider property taxes for schools. Rep. Edgmon suggested in that case, they also put the Mat-Su on diesel power. Chairman Seaton asked committee members not to get into cost differentials between areas. Rep. Keller noted that Mat-Su struggles with growth, while Rep. Edgmon’s district struggles with the cost of fuel.

Eddy Jeans, director, School Finance & Facilities, Dept. of Education & Early Development, said in response to what the local contribution from the unorganized borough is, that the required local contribution from Regional Education Attendance Areas (REAA’s) is not based on property taxes, but based on federal impact aid. Mr. Jeans said impact aid is the local contribution in REAA’s. Some REAA’s have more federal land than others, so they will have a larger impact aid contribution. But it is the same with municipalities. Some municipalities have a larger tax base than others. Those with a larger tax base are required to contribute more to support education. HB 350 levies a uniform mill levy. Mr. Jeans said that as the chairman pointed out, it is for basic need. Once basic need is determined, then we determine who pays. There are three components to that: required local contribution, which right now ranges from 4 mills to 2.7 mills, federal impact aid, and state aid. What HB 350 does is level the required local contribution to 2.7 mills across the board. It does not change the amount of money school districts will receive for basic need.

Rep. Wilson asked if HB 350 affects the amount of impact aid that REAA’s are required to contribute toward schools. Mr. Jeans said REAA’s are required to contribute 90 percent of the federal impact aid they receive to school funding, and HB 350 will not change that.

Rep. Keller asked if there are property valuations for REAA’s, so they can see how they compare to the 2.7 mills required by HB 350. Mr. Jeans said there are not property valuations for the unorganized areas. The closest they can come to a comparison between the contribution from federal impact aid in REAA’s and mill rates in organized areas is the per pupil valuation. There are a number of REAA’s contributing more per-pupil aid than many municipalities. But there are also some REAA’s at the bottom of the comparison because they don’t contain many federal lands. The range varies considerable. Rep. Keller said that if the goal is uniformity, then they have a lot more to look at.

Rep. Muñoz asked if the federal impact aid is based on economic activity on federal lands. Mr. Jeans replied no, it’s based on the fact that the land is non-taxable. It has nothing to do with economic activity. Some of the types of land that generate federal impact aid include federal land conveyed to native corporations that has not been developed, and military installations.

Rep. Keller objected to moving HB 350 from committee. A roll call vote was taken, and Rep. Keller was the only member voting against moving the bill.

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