Compromise splits school funding increase


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From left, Sens. Mike Dunleavy, R-Wasilla, Kevin Meyer, R-Anchorage, and Lyman Hoffman, D-Bethel, who were serving on the education conference committee, huddle during a break in an afternoon meeting on April 22 in Juneau. The eventual compromise that passed split $300 million evenly between an increase to the base student allocation and funds to schools outside of the formula.

Photo/Becky Bohrer/AP

Disagreements over school funding brought the Legislature to a boil in its closing hours and extended the session by five days beyond its normal 90-day adjournment deadline.

The point of contention wasn’t that schools need more money — on that, all sides agreed — but how the money would be distributed. School districts, teachers and an aggressive citizen group, Great Alaska Schools, lobbied hard for additional funds to be included in the base student allocation, or BSA, the formula through which state money for education is distributed around the state.

The resistance came from a core group of legislators, mainly Senate Republicans, who wanted part of the money distributed to schools outside the formula with some designated for special purposes.

The senators won that battle.

Gov. Sean Parnell, who signed the bill May 13, was the big winner overall, however, because the governor got essentially everything he asked for when he introduced House Bill 278 in January, although the final price was higher.

Parnell wanted more money for schools, increased flexibility for charter schools, more resources for boarding schools, tax credits for school residential facilities, reauthorization and expansion of vocational programs, and an end to the unpopular higher school “exit” test. He got all of it.

It was hard-fought battle for all sides, though. As the bill passed the Legislature, it allocated $300 million more per year to school districts with $150 million of this within the BSA formula and $150 million outside the formula for the first of three years beginning in fiscal year 2015 that starts July 1.

Sen. Kevin Meyer, R-Anchorage, who chaired the Senate conference committee on HB 278, said the conference committee was deadlocked between its House and Senate members over how to resolve the split between money within the formula and outside it.

Senate Republican leaders, led mainly by Sen. Mike Dunleavy, R-Wasilla, held firmly to a position that more experimentation in education is needed and a share of the additional money should go to encourage this, Meyer said.

School districts and the Great Alaska Schools lobby felt this would divert money from school districts that are facing budget gaps and teacher layoffs.

As the days of the extended session ticked on it was Parnell who stepped in, informally, to suggest the two sides just split the difference, half the $300 million going into the BSA and half outside of it, Meyer recalled. Both sides accepted the compromise.

In the final version of HB 278, money is added to the BSA over the next three years, up $150 to $5,830 per student in FY 2015; up an additional $50 to $5,880 in the second year and another $50 to $5,981 in the third year.

Money distributed outside the formula would decrease, however, from $44 million in FY 2015 to $33 million in FY 2016 and $21 million in FY 2017.

Tam Agosti, chair of Anchorage’s school board, said the extra money inside and outside the formula is appreciated but the main problem is that money outside the formula can’t be counted on for the future.

“The BSA funding is sustainable. We can do planning around it. The money outside the formula isn’t sustainable. It may not continue, so we can’t plan on it,” she said.

But the additional money, in the BSA and outside it, still won’t be enough to avoid continued budget cuts and teacher layoffs in many school districts.

Agosti said Anchorage needs $20 million more per year to offset increased costs mainly in health and energy and the new money will supply only about half of that. School districts have lost ground against inflation because there has been no BSA increase in recent years, she said.

Also, in several previous years the Legislature, with the governor’s support, has made special appropriations to help schools offset high energy costs. But there is no special money for energy this year, so rising energy costs must be paid for out of the BSA increase.

“People are calling me asking if, with the increased money, we can avoid teacher layoffs,” she said.

That’s uncertain. She called House Bill 278, the school funding bill “a shell game.”

“When you factor in our inflationary increases the real added funding after three years is zero,” she said.

Sen. Berta Gardner, D-Anchorage, who is on the opposite side of the issue from Senate Republicans, agrees with Agosti. Keeping half of the increased funding outside the formula will make it easier to cut, she said.

Still, one victory for the school districts was to persuade legislators not to put strings on the money outside the BSA, and to allow school districts the flexibility to spend it where it is best needed, according to Norm Wooten, government relations director for the Association of Alaska School Boards.

“We were adamant about this. Last year they (the Legislature) gave us $40 million but they told us we could only spent the money on safety and security, which meant we couldn’t spend it on operating costs,” Wooten said.

Meyer felt the debate had become too focused on the BSA and the amount to be added.

“It was if the BSA had become everything to educators and parents. To them it is the only element of education funding. The fact is that it is an element of the formula but not the entire formula,” and it no longer accurately reflects what it costs to educate a student in Alaska, Meyer said.

HB 278 requires the Legislative Affairs Agency to initiate a study of the foundation formula, and the bill approves $650,000 for the study. That’s a first step toward a proposal to change the formula to favor urban schools, which is surely coming.

That means another huge fight over the BSA could occur next year, this time over how money is distributed between urban and rural schools in the foundation formula.

The urban-rural school funding battle almost erupted this year amid the heat of the other school issues. The House Finance Committee, in its version of the school bill, included changes in the base student allocation between large schools and small schools so that the benefits of money added to the BSA would flow mainly to large urban schools. Small schools, mostly rural, would be left with the same funding.

This language was taken out of the bill on the House floor through an amendment by Rep. Bryce Edgmon, D-Dillingham, and had the support of a number of urban Republican House members.

Meyer supports a change in the foundation formula, but not this year.

“Large school districts, like Anchorage, actually receive less per student, but we know that larger school districts naturally have larger problems, like security, and require more teachers per school than smaller school districts,” Meyer said.

Rural educators would disagree with that, citing higher costs for energy and maintenance, particularly in remote locations.

Meanwhile, one other provision in the House-passed education bill that didn’t survive the conference committee was language requiring teachers in urban schools to work for five years instead of three to gain tenure. The House left rural schools’ tenure at three years because of the difficulty in getting teachers to go to rural Alaska.

The conference committee took this out. “We found that three years for tenure is the norm for school districts in other states,” Meyer said.

One important change in HB 278 decreases the amount of money the state will pay to help municipalities with debt service on school bonds.

There are now two programs for this, one that reimburses municipalities for 70 percent of debt service and a second that reimburses at 60 percent, depending on whether facilities fall within or without of certain state-mandates square-footage regulations.

These amounts were changed to 60 percent reimbursement instead of 70 percent on one program and 50 percent reimbursement instead of 60 percent on the second.

This won’t have any immediate effect because no municipalities are currently planning to issue new debt for school construction but it will have big effects in the future because it means local taxpayers will have to chip in more of the cost of building new school facilities.

The total increase in school funding is $100.25 million for the FY 2015 budget.

As it passed, the bill allocates $37.15 million more to schools through the BSA formula and $44 million outside the formula in fiscal year 2015. There is also money, $12.29 million, appropriated in addition for special projects.

The bigger items among these include $3 million to expand science and mathematics study in middle schools; $2.25 million for increasing funding to boarding schools and new regional learning centers being developed by rural school districts, and $5 million to expand broadband technology in rural areas, to enhance distance education.

Among the HB 278 increases is $6.32 million in additional state help for students taking correspondence courses, which Gardner questions. The state now helps support this by paying up to 80 percent of the BSA per-student allocation for correspondence students, which goes to 90 percent under HB 278.

School districts receive this money and either pay a certain amount for the courses purchased by the student or parents or refund the student or parents for expenses they incur buying the courses.

“I don’t remember much discussion about this in the education committee. I never heard anyone pushing for it,” Gardner said.

It is an example of something being introduced into the school bill late in the legislative process, and without vetting, which is normally done in the regular House and Senate committees.

Gardner’s biggest concern about correspondence study paid for by the state is the level of supervision of content and curriculum by school officials of the quality and content of the course materials being purchased. The state Department of Education and Early Development has only a very limited role of review of these programs.

Correspondence courses are a “profit center” for some school districts and if curriculum packages are purchased, particularly in bulk, from religious education centers it can run afoul of the state’s constitutional prohibition of aid to religious and private schools, she said.

Although the amount of money is relatively small, at $620,000, HB 278 also requires the Department of Education and Early Development to do a study of school design and construction, which might point toward ways of saving money through standardized designs.

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