Sponsor Statement for SB 142

Regional Education Attendance Areas

This legislation will (1) reduce school administration expenses by consolidation and (2) provide equity in local funding for Alaska's schools.

Consolidation: There are three types of school districts in Alaska: 18 Regional Education Attendance Areas (REAAs) which serve the unorganized borough, 18 first class city districts which are located in the unorganized borough, and 17 borough and home rule municipality districts. This bill would consolidate the 18 REAAs into 16 REAAs. This bill does not affect the city districts or the borough districts.

The estimated savings through consolidation are shown on the attached spread sheet, entitled REAA Consolidation Savings, and total some $2.6 million. The consolidation will conform to the Model Borough Boundaries, as established by the Model Borough Boundary Report (MBBR).

The Division of Legislative Audit issued a report May 11, 1992, titled Potential for Administrative Savings from School District Consolidation. The letter of transmittal from that report, dated June 3, 1992, sets out one of the reasons for this bill.

"We conservatively estimate that consolidation could reduce school administrative costs by $5.3 million. Our estimates represent potential savings that may be generated from economies of scale realized from the consolidation of 39 school districts and Rural Education Attendance Areas that currently operate in the State's unorganized borough."

While this bill does not completely consolidate the districts (it does not affect the City Districts), there are still savings to be realized through the concept of consolidation of the REAAs.

The concept of utilizing the MBBR for these boundaries is a familiar one, and was used by the previously mentioned Legislative Audit Report, where they noted that REAAs were established in response to the Alaska Supreme Court Molly Hootch decision in 1975 and stated in a foot note that "It should be noted that the factors specified in the formation of REAAs (transportation, communications, language, culture, and socio-economic factors) are similar to the factors identified in the constitution as serving a basis for boroughs: population, geography, economy, transportation and other factors."

The report also noted that REAAs were intended to be a transitional form of government necessary to deliver education to the children in the unorganized areas. As a validation of the report's use of the MBBR for the consolidation, the report stated that:

"Since the transition of REAAs to boroughs is the next most logical phase in Alaska's regional local government structure, we have based our school consolidation analysis on these projected boroughs."

Equity: Residents living in incorporated areas (borough and city districts) are currently required to contribute for education, but residents in the unincorporated areas (REAAs) are not.

• 92% of Alaska’s population live in boroughs and are required to pay a local contribution--they receive 79% of State foundation formula;
• 8% of the population pay no taxes and receive 21% of the state’s foundation formula.

The Borough and City schools districts are required to provide local contributions for the operation of the schools and so have taxing authority. The REAAs do not provide local contributions nor do they have taxing authority. This bill will remedy that inequity, by requiring a local contribution from the REAAs, through the authority of the legislature via this bill. The estimated local contribution is shown on the attached spread sheets REAA Local Contribution.

As required by the bill, the state assessor performs the functions necessary to collect the taxes levied under this bill. The Department of Community and Regional Affairs shall then develop a proposed method of levying and collecting the taxes, and prepare draft legislation for submittal to the legislature by January 1, 1999.

SS S(FIN): SB 142: 5/7/97: mj