Sixty percent of teachers cut.  Property tax increases of 33 percent.  Nearly 30 Kindergarteners per classroom.  These are some of the options school districts are considering to deal with education cuts in Gov. Mike Dunleavy’s FY 2020 budget.

The House Finance Committee has been examining K-12 public education funding in light of Dunleavy’s proposed $300 million cut.

Under Dunleavy’s budget, the Base Student Allocation (BSA) would drop from $5,930 per student to $4,880.  Unrestricted general funds (UGF) for the education formula and pupil transportation would be reduced by 25 percent.

Last year, the legislature forward-funded FY 2020 education in HB 287, adding $30 million in one-time funding.  If the legislature takes no action this year on education, the BSA would be fully funded and not subject to a Dunleavy veto.

“House Bill 287 was significant to education,” Anchorage School District (ASD) Superintendent Deena Bishop testified in a House Finance hearing Tuesday, March 5.

Though FY 2020 funding is protected, assuming legislative inaction, Dunleavy’s proposals hint at similar cuts to come in the FY 2021 budget that would be subject to a veto.

Office of Management and Budget (OMB) Director Donna Arduin has repeatedly said that the State does not micromanage school districts and therefore cannot comment on the local impacts of cuts.

On Tuesday, House Finance heard from school districts that the State cuts would be compounded at the local level because of the education foundation formula.

While the proposed cuts would reduce State funding to the Kenai Peninsula Borough School District (KPBSD) by $21 million, the education formula would result in a local contribution $4 million smaller than it would be without the State cuts.

“Not only would we need to cut because of the governor; we now need to cut $1,496,000 because the borough would be able to give us less money than they’re currently giving us,” KPBSD Assistant Superintendent Dave Jones said, comparing to FY 2019 funding.

The formula caps required local contributions at 45 percent, based on real property value.

“No school district in Alaska is contributing more than 45 percent towards education in their community,” Michael Partlow, a fiscal analyst with the Legislative Finance Division, said in a hearing Monday.

But there is also a voluntary contribution.  More populous school districts, like Anchorage and Juneau, fund to the cap here because the formula disperses a disproportionate amount to rural districts.

“We want to fund to the cap,” Juneau City Manager Rorie Watt said.  “Even though Juneau always funds to the cap, our school district has not been able to deliver the educational programs that they would like to.”

The caps reduce the funding disparity among school districts across the state and maintain compliance with rules tied to federal funding.

Yet the caps also mean that a reduction in the BSA further reduces local voluntary contributions on a pro rata basis.

Therefore, KPBSD would see a $25 million cut to education, not just $21 million.

The district contributes $2 million below the cap, Jones said.

Juneau School District would see its $10.2 million cut in State funding exacerbated by a $3 million loss in local funding.

“I suppose you could look at it as a property tax reduction, though not one that we want,” Watt said of the $3 million.

Separate Bills Exacerbate Education Funding Issues, Increase Local Taxes

Other Dunleavy proposals pour gas on the foundation formula fire.

HB 59 would repeal local petroleum property taxes, transferring $420 million in municipal revenue to the State.

Under the bill, State funding to KPBSD would be greater due to reduced taxing authority, but local contributions would be even less because assessed property value would be less.  HB 59 would cost KPBSD another $500,000 in total funding.

North Slope Borough School District (NSBSD) would be hit the hardest by the petroleum property tax repeal. 

Fadil Limani, deputy director of finance for the North Slope Borough, testified that HB 59 would reduce local property tax revenue from about $380 million to $14 million.  That would leave the whole borough with just $38 million, $15 million of which would be the minimum required contribution to education.

State cuts to NSBSD would total $10.6 million. 

The school bond debt reimbursement program, which covers a portion of the cost of new schools and maintenance of existing schools, would be repealed under Dunleavy’s HB 66.

Juneau School District has $67 million in deferred maintenance.  Repeal of school bond debt reimbursement would cost the district an additional $7.1 million.

“Money is money.  If the legislature doesn’t fund our school debt, that affects our ability to fund all of our programs,” Watt warned. 

The repeal of school bond debt reimbursement would have a particularly adverse impact on the Matanuska-Susitna Borough School District (MSBSD).  The borough has grown 65 percent in 20 years.  It has built six new schools since 2011.

The nearly $40 million reduction in formula funding to MSBSD would cost the district 390 jobs, 221 of which are full-time teachers.  That would increase pupil/teacher ratios by six, resulting in 29 Kindergarteners and 38 high schoolers per classroom.

MSBSD Superintendent Monica Goyette reminded House Finance members that those ratios are averages.  Some classes would see more than 50 students.

Mat-Su charter schools would also suffer.  Their reliance on volunteer work from parents means their budgets are almost exclusively composed of teacher salaries and benefits.

The Dunleavy budget would see some Mat-Su charter schools lose one-third of their teaching staff.

While the Anchorage Consumer Price Index (CPI) has increased 12 percent over the last ten years, MSBSD notes education funding has only increased 7.5 percent.  Consequently, MSBSD has made incremental reductions every year, Goyette said.

Watt estimates median Juneau property taxes would have to be raised by about $1,200, or 33 percent, to compensate for the education cuts, though that would violate the education formula statute capping local contributions.

According to a calculation by Legislative Research Services, Anchorage property taxes would increase by 25 percent, or $1,407 for the median home value, to compensate for the education cuts.

In addition to a loss of $86 million in State funding, ASD would lose nearly $20 million in local contributions.

Elimination of school bond debt reimbursement would cost ASD another $41 million.

ASD would lose 1,125 jobs, about 800 of which are teachers or special education personnel.

“How are you keeping people calm about the potentiality of Kindergarten classes with 45 students?” Rep. Andy Josephson (D-Anchorage) asked Bishop.

Bishop replied that ASD is spreading information about the budget to principals and PTAs, but the proposed cuts are so absurd she doesn’t expect it to pass as is.

“The education of our children would look very different if a reduction of this magnitude actually did occur,” Bishop said.  “You would lose people from Alaska.” 

It should be noted that while Dunleavy has introduced bills shifting costs onto local governments, he has not introduced a bill to change the education funding formula that would allow districts to compensate for the loss in State funding.

Cuts Poised to Punish Districts as Performance Improves

Arduin has repeated that only 54 percent of average district spending is in the classroom.  

Yet according to Legislative Finance, 76 percent of district spending is considered “instructional” under former State law.

The Northwest Arctic Borough School District (NWABSD) budget bears this out.

NWABSD stands to lose $8 million under the Dunleavy budget.  The cuts could mean the loss of 60 percent of its teachers.

NWABSD Superintendent Annmarie O’Brien told House Finance that losing even one teacher from the Kobuk School would mean the remaining teachers would each handle four grades.  That would make it impossible to provide a quality education, she said. 

In a letter to legislators, O’Brien advised that non-tenured teacher contracts are being held while the education cuts are on the table.

“If there is no resolution on education before the end of the school year, many of the district’s non-tenured teachers will leave the region.  Without contracts and no visible means of employment, we anticipate few will remain in the area,” O’Brien wrote.  “The current process serves to exacerbate the exodus of teachers from rural Alaska and ultimately negatively impact the education of our students.”

O’Brien said Tuesday that the district is in limbo because they can’t post teaching vacancies until they have officially received resignations from teachers that may leave.

Rather than just eliminate teachers, NWABSD could choose to eliminate specialists and their programs, including pre-K, music, art, bilingual instruction, and counseling.

Ninety-three percent of the district’s students are Alaska Native.  All qualify for reduced or free school lunches.

The programs are culturally significant, while the counselors help students process their feelings so they have better education outcomes.  NWABSD notes there have been 26 confirmed suicide threats at district schools this year.

“As you all know, the Northwest Arctic region has the highest suicide rate in the state of Alaska,” O’Brien told committee members.

“The role our counselors play is just so critical,” she said.  “They are the first line of contact for our students, so we struggle with limiting the counselors that we have.” 

Contrary to a narrative about poor performance statewide, NWABSD graduation rates exceed those of Alaska Natives in Anchorage or Fairbanks.

“We are on par [with], and in some regards a little ahead of, the state,” O’Brien said.

Graduation rates in the Mat-Su have been steadily rising to an estimated 86 percent in FY 2020.

MSBSD also notes that Alaska students performed as well on the 2018 ACT as the national average, while they greatly exceeded the national average on the SAT.

“We were above the national average in every area,” Goyette said of SAT scores.  “I want to challenge that easy rhetoric of, ‘We’re the lowest in the nation.’  There’s a lot of areas that we’re doing a really good job.”

School district officials are forced to respond to the budget Dunleavy has proposed until the legislature makes it clear it will not cripple public education.

“I couldn’t imagine the legislature not supporting public education in our state,” Bishop said hopefully.

“We’re waiting to react or respond to whatever you do,” Watt told House Finance.

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