SB36

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Presentation to parent and professional groups laying out changes in educational funding in Alaska, with speaker notes.

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  • Two theories of legislative action All work for common good Each works for interests Neither worked here. Allow extremists to set boundaries and never will get good legislation -- all effort spent in getting back to center Phillips, Wilken, Taylor, Torgerson Sponsors 1st bill -- Raised local contributions for all NS would pay all of its ED costs and also pay state Firestorm of protest Sponsors looking for other ways to accomplish goals. Need “authority” to deflect charges of racism, so paid for a study.
  • Background on contract: Contract limited their review -- Told to look at size and location (instead of “do size and location matter?”) Told to NOT look at how much is needed - only going to reallocate the existing pie Recommendations surprisingly support every suggestion made by Senators in 1997 State workers get as much as 42% extra for Barrow, Kotzebue -- based on regular cost of living studies. DEED says “Wrong!” -- teachers hard to recruit and keep.
  • DEED thought this was a rotten idea Why give a school 2 teachers where one can teach 20 students in grades K-8? Senate’s example was along lines of : 3 schools of 200 students each would count 816, while one school of 600 would count 655. No discussion of how school definition would affect matters.
  • Aleutian Region has 3 schools and 57 students in three separate villages. Limiting them to one school cuts their budget by $219,969 (or would but for Supp. Floor) Amended last year 750 -- 425. Helped one district.
  • Averaged a loss of 12.9%; state average was 1.2% loss.
  • Kake is a remote Native village (144 of 166 students are Native) on an island with no airport. Its DCF is 1.025. Does it really only cost 2% more for fuel and utilities in Kake than in Anchorage? Nenana’s DCF is 1.270, while Fairbanks’ is 1.039. It costs 23% more to run schools right on the Parks Highway? Klawock is another Native village on an island. Its DCF is 1.017, while Mat-Su’s is 1.010. DEED and McDowell agree in 2001 that they cannot update the figures, and must start from scratch: Need to study elements of cost -- state has issued contract -- not McDowell
  • Raises specter of cutting optional programs -- Saw bilingual taking away from gifted in Juneau
  • McDowell did not recommend and said a bad idea; DEED agreed. A $100k super. Would be $250 per students in Aleutian Region SD, but only $2 in Anchorage. Only Anch, Mat-Su, Juneau, & Sitka have met. REAA average is under 52%
  • DEED is pushing to eliminate erosion provisions and reinstate hold harmless.
  • Wilken was talking about taxing people who marginally are in the cash economy. Torgerson’s comment was about a district going from $10,000 to $8,000 per student (without floor funding)
  • REAA schools are 18% white, so 82% non-white Saying “they’re lying, so we can ignore them”?? Wilken talking about North Slope He was motivated as prime sponsor by problems with getting F-banks to approve a bond issue. Ignores that operating and capital budgets are unrelated. Also only “very little” if defined in terms of percent of taxable base.
  • Municipalities affected by Senate proposals: only those with huge tax base (read North Slope, where 4 mill=$50 million, 100% of basic need=$38 million)
  • Final version met Phillip’s idea of fairness -- Anchorage has around 38% of kids and got 36.5% of the new money.
  • State and Feds paid for enrollment growth, municipalities paid for inflation Average teacher salary down 17% (constant dollars)
  • Offset by $6MM (2000-01) and $12 MM (2001-02) learning opportunity grants, which are for one year only.
  • Senators fond of saying that we spend 31% of our budget on education, implying that we don’t need to increase the pie. Only true if you ignore all the items that are “off budget” like inflation proofing the permanent fund. Other states spend a greater percentage.
  • SB36

    1. 1. Senate Bill 36 Urban vs. Rural School Financing William Olmstead
    2. 2. SB36 Brought Revolutionary Change to School Funding <ul><li>Changed from “funding community” to individual school </li></ul><ul><ul><li>differential funding based on size of school </li></ul></ul><ul><li>Changed basis of area cost differential </li></ul><ul><ul><li>from market basket to actual school cost </li></ul></ul><ul><li>Changed Special Ed from individual funding to block grant </li></ul><ul><ul><li>replaced student counts with 20% block grant </li></ul></ul><ul><li>Set instructional component at 70% or greater of district budget </li></ul><ul><ul><li>old rule was 55% </li></ul></ul><ul><li>Put supplementary floor in place </li></ul><ul><ul><li>softens blow of other changes </li></ul></ul>
    3. 3. Changes Based on 1998 McDowell Study of Education Costs <ul><li>Assumes costs of running a school are the same everywhere </li></ul><ul><ul><li>could not find anyone who pays a cost-of-living differential (except State) </li></ul></ul><ul><li>Assumes teachers are easy to recruit and retain, even in the remote bush </li></ul><ul><li>Sometimes refuses to accept actual expenses (“would only reward over spenders”), but uses actual expense for cost differential. </li></ul>
    4. 4. Size Factor: 1 st Adjustment to Student Count <ul><li>Done on count at each school, not community or district </li></ul><ul><li>Ignores actual expenses - based on staffing levels that schools “ought” to have </li></ul><ul><li>Uses tax rate table approach </li></ul><ul><ul><li>for example, if you have 24 students in the school, find the “20-30” line and read over to see that your adjusted count will be: 39.6 + (1.6 * number over 20) = 46 </li></ul></ul><ul><li>This factor alone takes away 11% of rural district funding (per McDowell) </li></ul><ul><li>Sponsors testified that this rewards smaller schools </li></ul>
    5. 5. What is a school? <ul><li>Defined by number of students, not number of buildings </li></ul><ul><li>Up to 100 students in district is one school, even if in three buildings </li></ul><ul><ul><li>3 districts this size </li></ul></ul><ul><li>From 101 to 750 students is two schools </li></ul><ul><ul><li>33 districts in this category </li></ul></ul><ul><li>From 750 up, count actual buildings </li></ul>
    6. 6. REAA Funding by District Comparing Old Formula to SB36 (after size adjustment)
    7. 7. District Cost Factor (DCF): 2 nd Adjustment to Student Count <ul><li>Old adjustment based on cost of living (fuel, utilities, etc) </li></ul><ul><li>Now uses actual district costs for administration and non-personnel costs </li></ul><ul><li>It pays districts “for their current financial management practices - whatever they may be.” </li></ul><ul><li>Neighboring districts can be very different </li></ul><ul><li>Basic Need = (School count * Size factor) * DCF. Basic need varies from $4.858MM (Petersburg) to $9.389MM (Nenana) </li></ul><ul><li>Useless for future </li></ul>
    8. 8. Special Needs <ul><li>Old law was based on counts of students in particular categories </li></ul><ul><ul><li>ranged from $1,525 for gifted to $20,300 for intensive </li></ul></ul><ul><ul><li>Legislature worried schools were certifying to get dollars </li></ul></ul><ul><li>Now, the program is a block grant without regard to numbers </li></ul><ul><ul><li>covers gifted, vocational, bilingual, and exceptional students </li></ul></ul><ul><ul><li>does not have to be spent on special needs </li></ul></ul><ul><ul><li>power to school boards </li></ul></ul><ul><li>The adjusted student counts for each school are added, then sum is multiplied by 1.20 </li></ul>
    9. 9. Instructional Minimum Expense <ul><li>No less than 70% of operating budget to be spent on instructional component (teachers and pupil support services) </li></ul><ul><li>Was 55% until 1982, then dropped from statutes </li></ul><ul><li>Is much harder for small districts -- have fewer students to spread costs over </li></ul>
    10. 10. Supplementary Floor <ul><li>Old law cushioned against major (>10%) drops in dollars </li></ul><ul><ul><li>Spread over 3 years </li></ul></ul><ul><ul><li>Called “hold harmless” </li></ul></ul><ul><li>Now protects only against SB36 reduction </li></ul><ul><ul><li>Floor funding is in amount of the change from old to new in 1999 </li></ul></ul><ul><ul><li>Funding “erodes” as enrollment changes </li></ul></ul><ul><ul><ul><li>If enrollment increases, get only 60% of the increase in count </li></ul></ul></ul><ul><ul><ul><li>If it decreases, floor funding erodes by same percentage </li></ul></ul></ul>
    11. 11. Is there an urban/rural divide? YES! But mostly in the Senate. The Senate has repeatedly passed bills that would have had a great impact on the bush, only to have them modified by the House.
    12. 12. Urban/Rural <ul><li>Justifying taking from REAA because they aren’t taxing themselves: </li></ul><ul><ul><li>“ If folks will just help themselves a little bit in this effort, it helps the formula tremendously.” </li></ul></ul><ul><ul><ul><ul><ul><li>Senator Wilken (R, Fairbanks) </li></ul></ul></ul></ul></ul><ul><li>Some Senators tried to limit the Supplemental Floor, reasoning: </li></ul><ul><ul><li>“ Keep in mind the Lower Kuskokwim has a town of 6,000 and they don’t pay a dime towards education.” </li></ul></ul><ul><ul><li>Senator Torgerson (R, Soldotna) </li></ul></ul>
    13. 13. Urban/Rural <ul><li>“ When the subsistence issue is being discussed, I hear that 60% of rural Alaska is non-native, but with the education funding issue, I hear that 70-80% of rural Alaska is Native.” </li></ul><ul><ul><ul><ul><ul><li>Representative Bunde (R, Anchorage) </li></ul></ul></ul></ul></ul><ul><li>“ How can Fairbanks be asked to spend money on schools when there are boroughs with a value four times greater with one-eighth of the students who pay very little for education?” </li></ul><ul><ul><li>Senator Wilken (R, Fairbanks) </li></ul></ul>
    14. 14. Urban/Rural <ul><li>“ Nothing is so inherently unequal as attempting to equalize unequals.” </li></ul><ul><ul><ul><ul><ul><li>Leland Dishman </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Superintendent, North Slope Borough School District </li></ul></ul></ul></ul></ul><ul><li>SB 36 is a“reverse Robin Hood Strategy.” </li></ul><ul><ul><li>Patrick Doyle </li></ul></ul><ul><ul><li>Superintendent, Copper River School District </li></ul></ul>
    15. 15. Senate Bill 36: Required Local Contribution <ul><li>Originally, the Senate version required 4.5 mill, with excess funds collected going to the state to fund other districts </li></ul>
    16. 16. SB174 (2001) <ul><li>Senate Actions: </li></ul><ul><ul><li>Zeroed out North Slope Borough - took away $10 million </li></ul></ul><ul><ul><ul><li>That is, no education dollars </li></ul></ul></ul><ul><ul><li>Increased : </li></ul></ul><ul><ul><ul><li>Anchorage $4.4 million </li></ul></ul></ul><ul><ul><ul><li>Mat-Su $1.2 million </li></ul></ul></ul><ul><ul><ul><li>Fairbanks $1.1 million </li></ul></ul></ul><ul><ul><li>Net cost of bill only $1.6 million, so North Slope Borough would pay for most of the increases </li></ul></ul><ul><li>Final version of the bill that passed the Legislature: </li></ul><ul><ul><li>Every district got increases </li></ul></ul><ul><ul><li>Total cost $18.4 million </li></ul></ul><ul><ul><li>Anchorage got $6.7 million </li></ul></ul>
    17. 17. Senate Bill 48 (2001) Mandatory Borough Bill <ul><li>Senators bothered that they cannot find a way to make the REAAs pay for education </li></ul><ul><ul><li>Their solution: Force them into boroughs, which can tax, then withhold education funding if they don’t tax </li></ul></ul><ul><ul><li>New 3rd class borough can only tax and educate </li></ul></ul><ul><ul><li>Would be forced in by Department of Community and Economic Development </li></ul></ul><ul><li>Was in the Senate version of SB36 (in 1997), but they had to drop it </li></ul><ul><li>Passed Senate, sitting in House CRA Committee </li></ul>
    18. 18. Did SB 36 solve problems? <ul><li>Effect of size factor minimized by floor </li></ul><ul><li>Cost factors being redone, again </li></ul><ul><li>Few meeting 70% mandate </li></ul><ul><li>More and more funding responsibility being put on municipalities </li></ul>
    19. 19. 1990-2000 <ul><li>State funding up 31% </li></ul><ul><ul><li>26% enrollment increase </li></ul></ul><ul><ul><li>5% increases in foundation funding includes </li></ul></ul><ul><ul><ul><li>transportation increase </li></ul></ul></ul><ul><ul><ul><li>TRS increase </li></ul></ul></ul><ul><li>Local effort up $39 million (required) + $59 million (optional) = 55% increase </li></ul><ul><li>Anchorage CPI up 30% </li></ul>
    20. 20. 1990-2000 <ul><li>State funding going down </li></ul><ul><ul><li>2001 decrease by $19.2 million from FY2000 </li></ul></ul><ul><ul><ul><li>enrollment down </li></ul></ul></ul><ul><ul><ul><li>local required effort up </li></ul></ul></ul><ul><ul><ul><li>Federal impact aid up </li></ul></ul></ul><ul><ul><li>2002 decreased by another $10.5 million </li></ul></ul><ul><li>Funding has closely tracked enrollment. </li></ul>Enrollment Change State Aid Change
    21. 21. Priorities? <ul><li>FY2002 foundation budget </li></ul><ul><ul><li>$665 million for 133,330 children </li></ul></ul><ul><li>FY2002 cost to inflation-proof the Permanent Fund </li></ul><ul><ul><li>$714 million </li></ul></ul>

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