News from the Senate Majority
Alaska State Legislature

Wendy Lindskoog, Senate Majority Press Secretary
State Capitol
Juneau, AK 99801-1182
Phone: 907/465-4582
http://www.akrepublicans.org
Broadcast Actualities: 800/478-6540

Senate Passes Rewrite of School Funding Formula

Proposal Strives for Simplicity and Equity

For Immediate Release: March 11, 1998 Contact: Senator Randy Phillips, at (907) 465-4949.

Juneau – The Senate Wednesday passed a rewrite of Alaska’s school funding formula to it more simple and equitable. Senate Bill 36, sponsored by Senators Randy Phillips, John Torgerson and Gary Wilken, was up for reconsideration today and passed by a vote of 12 to 8.

SB 36 is based on an operating cost study conducted by the McDowell Group in the fall of 1997. McDowell is a private consultant firm that examined actual school costs in Alaska to determine if and where school funding inequities exist. This study is the first in Alaska’s history to examine the real cost of operating a school.

"According to McDowell, our current school funding formula short-changes 82 percent of Alaska’s students – it’s broken and needs to be fixed," said Phillips. "The current distribution in state public education dollars is based on outdated cost factors of operating a personal household rather than the real cost of operating a school. A lot has changed since the formula was first written. It’s time our funding formula is updated to meet the needs of Alaska’s students today."

According to Torgerson, 92% of Alaskans pay a local contribution toward education and receive only 79% of the state support. The other 8% of Alaskans who do not pay a contribution receive 21% of the money.

"We have unorganized areas of our state, some on the road system and some not, that contribute little or nothing towards the education of their children. Instead, they pass the burden on to the organized areas," Wilken said. "To make the system fair, all areas of the state must assist in educating our children. All local residents should be required to contribute their fair share."

Wilken said the inequities in the current system also exist between the organized areas. "There are organized areas of our state that pay at a lesser rate than others, even though their tax base wealth is far greater than other organized areas," Wilken said.

The North Slope Borough, for example, pays a property tax rate toward education of only .8 mills or $80 per a $100,000 home, compared to Anchorage that pays 8.2 mills ($820 per $100,000 home) or Fairbanks that pays 7.9 mills ($790 per $100,000 home).

Senate Bill 36 will base funding on a per student basis rather than an instructional unit value while ensuring that the higher operational costs of education in rural areas for necessities like heat, fuel, electricity and books are taken into account.

After reviewing audited financial statements provided by all 53 school districts, McDowell found that 70% of the cost to educate a child is virtually the same whether that child is taught in rural or urban Alaska. This factor is the main reason for funding shifts between districts.

Based on this information, the new formula considers the number of students enrolled (relating to instructional costs) and the actual operational costs for each school to determine the fair per student funding level.

Following are examples showing a comparison between school districts based on a per student allocation under the old and new formula:

Changes to the new formula found in Senate Bill 36 include:

• Will base funding on a per student basis rather than an instructional unit value.
• Adjusts funding based on size of school.
• Sets categorical funding at 20% over the per student cost. This applies to students who are designated in categories such as gifted and talented, bilingual, cultural, or special education. (The current formula varies in funding from 14% to 58%).
• Mandates 70% of all education dollars be spent in the school district’s instructional component. The instructional component includes expenditures for teachers and for pupil support services.

"We spend approximately 40 percent of our state general fund dollars on education – that’s more per capita than any other state," said Phillips. "After looking at the numbers, throwing more money at the current formula will not fix the problems. It only increases the disparities."

Senate Bill 36 was created after extensive public hearings held statewide and long hours of work and public testimony by the Senate Finance Committee. "For years, Alaskans have criticized the formula, but have shied away from creating a solution," Torgerson said. "When the Legislature finishes this rewrite, we will have a simpler formula to understand that is based on real cost; one that treats all Alaskan students fairly; and one that begins to recognize the current discrimination of local share requirements."

Senate Bill 36 will now move the House of Representatives.

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Broadcast note: Radio Actualities are available by calling 800/478-6540.
= Gary Wilken, 19 K = John Torgerson, 23 K = Randy Phillips, 77 K