Legislature Reconsiders How to Distribute Public School Funding

The state’s Legislative Budget and Audit Committee is examining how education funding is distributed. A new study doesn’t look at how much money districts should get. Instead, it asks if all the districts are being treated fairly.

The Legislative Budget and Audit Committee listens to a report on how to improve the school funding formula. Hillman/KSKA
The Legislative Budget and Audit Committee listens to a report on how to improve the school funding formula. Hillman/KSKA

Consultants reviewed the state’s education funding formula, compared it to other states, and interviewed school district leaders. Justin Silverstein with APA Consulting said that overall the state’s complicated education funding formula is pretty good, but some changes are recommended.

“What we’re analyzing is is this structure a sound structure for the differences you face in the state. And so there are recommendations here that could have a fiscal impact,” Silverstein said during the presentation.

One such area is funding special needs students. Data shows that Limited English Proficiency, special education, and Alaska Native students are not performing as well academically in Alaska. Unlike many other states, the pot of money to help these kids is not tied to specific individuals, it’s distributed to districts based on total student population size. That means that school districts with higher percentages of these students are not receiving extra money to help them. They receive the same proportion as all the others. Changing the formula could significantly alter how much money each district receives.

Silverstein said the formula also includes problems called funding cliffs — losing just one or two students can completely change how much money a school gets from one year to the next.

“When we’re looking at the efficiency and effectiveness of a formula, we wouldn’t want to see that if I lose one or two students then I could either get a lot more or a lot less funding. One, it can build in perverse incentives and two… cliffs are just not something we want to see.”

One of those incentives is school size. Large districts might build smaller, less efficient schools because they get more money that way. School size is factored in when determining how much money a school gets per student. This was one of the factors the Anchorage School District took into account earlier this year when considering if it should consolidate schools to save money. Ultimately, because of the funding formula, closing schools would have cost the district money.

Silverstein said one possible solution is changing the rules for larger districts. The state could also stabilize district funding by basing it on the average student count over a three-year period instead of using yearly counts.

The report also recommends a closer look at state versus local contributions to education funding. Can some areas contribute more? Should they be required to give less? The study did not factor in the potential impact of a lawsuit filed by the Ketchikan Gateway Borough. The state’s Superior Court ruled that requiring municipalities to help pay for district schools is not constitutional. The state is appealing the ruling.

Committee Vice Chair Senator Anna MacKinnon said the 140-page report will help inform education policy decisions going forward.

“I wouldn’t want to suggest to Alaskans that there’s any additional new money, but we are trying to look at how we make the system as fair and equitable as possible and this is giving us a chance to do that.”

The report will be used along with other studies looking at school design and school district salaries to evaluate education funding when the conversations continue in September.