SCHOOL FUNDING; LOCAL CONTRIBUTION

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HOUSE BILL NO. 122

IN THE LEGISLATURE OF THE STATE OF ALASKA

THIRTY-FOURTH LEGISLATURE - FIRST SESSION

BY REPRESENTATIVE PRAX

Introduced: 2/28/25
Referred: Education, Finance

A BILL

FOR AN ACT ENTITLED

"An Act relating to education; relating to local contributions of a city or borough school 1
district; relating to school funding; and providing for an effective date." 2
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 3
* Section 1. AS 14.03.260(a) is amended to read: 4
(a) A local school board shall provide an approved charter sch o o l w i t h a n 5
annual program budget. The budget shall be not less than the am ount generated by the 6
students enrolled in the charter school less administrative cos ts retained by the local 7
school district, determined by a pplying the indirect cost rate approved by the 8
department up to four percent. Costs directly related to charte r school facilities, 9
including rent, utilities, and maintenance, may not be included in an annual program 10
budget for the purposes of calculating the four percent cap on administrative costs 11
under this subsection. A local school board shall provide a charter school with a report 12
itemizing the administrative costs retained by the local school board under this section. 13
The "amount generated by student s enrolled in the charter schoo l" is to be determined 14
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in the same manner as it would be for a student enrolled in ano ther public school in 1
that school district and includes funds generated by grants, ap propriations, federal 2
impact aid, [THE REQUIRED LOCAL CONTRIBUTION,] the local contri bution 3
under AS 14.17.410(c), special needs under AS 14.17.420(a)(1), and secondary school 4
vocational and technical ins truction under AS 14.17.420(a)(3). A school district shall 5
direct state aid under AS 14.11 for the construction or major m aintenance of a charter 6
school facility to the charter sc hool that generated the state aid, subject to the same 7
terms and conditions that apply to state aid under AS 14.11 for construction or major 8
maintenance of a school facility that is not a charter school. 9
* Sec. 2. AS 14.12.020(c) is amended to read: 10
( c ) T h e l e g i s l a t u r e s h a l l p r o v i d e t h e s t a t e m o n e y n e c e s s a r y t o maintain and 11
operate districts of the state public s chool system described in AS 14. 12.010 [THE 12
REGIONAL EDUCATIONAL ATTENDANCE AREAS]. The borough assembly fo r 13
a borough school district, and the city council for a city scho ol district, may [SHALL] 14
provide [THE] money for a local contribution under AS 14.17.410(c) [THAT 15
MUST BE RAISED] from local sources to maintain and operate the district. 16
* Sec. 3. AS 14.17.410(b) is amended to read: 17
(b) Public school funding consists of state aid, a [REQUIRED] local 18
contribution under (c) of this section , and eligible federal impact aid . State 19
[DETERMINED AS FOLLOWS: 20
( 1 ) S T A T E ] a i d e q u a l s b a s i c n e e d m i n u s [ A R E Q U I R E D L O C A L 21
CONTRIBUTION AND] 90 percent of eligible federal impact aid for that fiscal year. 22
Basic [; BASIC] need equals the sum obtained under (4) [(D)] of this subsection 23
[PARAGRAPH], multiplied by the base student allocation set out in AS 14.17.470 . 24
The [;] district adjusted ADM is calculated as follows: 25
(1) [(A)] the ADM of each school in the district is calculated by 26
applying the school size factor to the student count as set out in AS 14.17.450; 27
(2) [(B)] the number obtained under (1) [ ( A ) ] o f t h i s subsection 28
[PARAGRAPH] is multiplied by the district cost factor described in AS 14.17.460; 29
(3) [(C)] the ADMs of each school i n a district, as adjusted accor ding 30
to (1) and (2) [(A) AND (B)] of this subsection [PARAGRAPH], are added; the sum 31
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is then multiplied by the special needs factor set out in AS 14 .17.420(a)(1) and the 1
secondary school vocational and technical instruction funding f actor set out in 2
AS 14.17.420(a)(3); 3
(4) [(D)] the number obtained for intensive services under 4
AS 14.17.420(a)(2) and the number obt ained for correspondence s tudy under 5
AS 14.17.430 are added to the number obtained under (3) [(C)] of this subsection 6
[PARAGRAPH] or under (8) and (9) [(H) AND (I)] of this subsection 7
[PARAGRAPH]; 8
(5) [(E)] notwithstanding (1) - (3) [(A) - (C)] of this subsection 9
[PARAGRAPH], if a school district's ADM adjusted for school size under (1) [(A)] of 10
this subsection [ P A R A G R A P H ] d e c r e a s e s b y f i v e p e r c e n t o r m o r e f r o m o n e f i s c a l 11
year to the next fiscal year, the school district may use the l ast fiscal year before the 12
decrease as a base fiscal year to offset the decrease, accordin g to the following 13
method: 14
(A) [(i)] for the first fiscal year after the base fiscal year 15
determined under this paragraph [SUBPARAGRAPH], the school district's 16
ADM adjusted for school size determined under (1) [(A)] of this subsection 17
[PARAGRAPH] is calculated as the district's ADM adjusted for sc hool size, 18
plus 75 percent of the differen ce in the district's ADM adjuste d for school size 19
between the base fiscal year and the first fiscal year after the base fiscal year; 20
(B) [(ii)] for the second fiscal year after the base fiscal year 21
determined under this paragraph [SUBPARAGRAPH], the school district's 22
ADM adjusted for school size determined under (1) [(A)] of this subsection 23
[PARAGRAPH] is calculated as the district's ADM adjusted for sc hool size, 24
plus 50 percent of the differen ce in the district's ADM adjuste d for school size 25
between the base fiscal year and the second fiscal year after t he base fiscal 26
year; 27
(C) [(iii)] for the third fiscal year after the base fiscal year 28
determined under this paragraph [SUBPARAGRAPH], the school district's 29
ADM adjusted for school size determined under (1) [(A)] of this subsection 30
[PARAGRAPH] is calculated as the district's ADM adjusted for sc hool size, 31
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plus 25 percent of the differen ce in the district's ADM adjuste d for school size 1
between the base fiscal year and the third fiscal year after the base fiscal year; 2
(6) [(F)] the method established in (5) [(E)] of this subsection 3
[PARAGRAPH] is available to a school district for the three fiscal years following the 4
base fiscal year determined under (5) [(E)] of this subsection [PARAGRAPH] only if 5
the district's ADM adjusted fo r school size determined under (1) [(A)] of this 6
subsection [PARAGRAPH] for each fiscal year is less than the district's A DM 7
adjusted for school size in the base fiscal year; 8
(7) [(G)] the method established in (5) [(E)] of this subsection 9
[PARAGRAPH] does not apply to a decrease in the district's ADM adjusted for school 10
size resulting from a loss of enrollment that occurs as a resul t of a boundary change 11
under AS 29; 12
(8) [(H)] notwithstanding (1) - (3) [(A) - (C)] of this subsection 13
[PARAGRAPH], if one or more school s close and consolidate with one or more other 14
schools in the same community and district and, as a result of the consolidation, basic 15
need generated by the district's ADM of the consolidated schools as adjusted under (1) 16
- (3) [(A) - (C)] of this subsection [PARAGRAPH] decreases, the district may use the 17
last fiscal year before the consolidation as the base fiscal ye ar to offset that decrease 18
for the first four fiscal years following consolidation accordi ng to the following 19
method: 20
(A) [(i)] for the first two fiscal years after the base fiscal yea r, 21
the district's ADM of the consolidated schools as adjusted under (1) - (3) [(A) - 22
(C)] of this subsection [PARAGRAPH] is calculated by dividing the sum of 23
the district's ADM of the consolidated schools as adjusted under (1) - (3) [(A) - 24
(C)] of this subsection [PARAGRAPH] for the base fiscal year by the sum of 25
the district's ADM of the conso lidated schools for the base fis cal year without 26
adjustment, and subtracting the quotient obtained by dividing t he district's 27
ADM of the consolidated schools for the current fiscal year as adjusted under 28
(1) - (3) [(A) - (C)] of this subsection [PARAGRAPH] by the sum of the 29
district's ADM of the consolidat ed schools for the current fisc al year without 30
adjustment, multiplying that number by the sum of the district' s ADM of the 31
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consolidated schools for the current fiscal year without adjustment, and adding 1
that number to the sum of the di strict's ADM of the consolidate d schools for 2
the current fiscal year as adjusted under (1) - (3) [(A) - (C)] of this subsection 3
[PARAGRAPH]; 4
(B) [(ii)] for the third fiscal year after the base fiscal year, t he 5
district's ADM of the consolid ated schools as adjusted under (1) - (3) [(A) - 6
(C)] of this subsection [PARAGRAPH] is calculated by dividing the sum of 7
the district's ADM of the consolidated schools as adjusted under (1) - (3) [(A) - 8
(C)] of this subsection [PARAGRAPH] for the base fiscal year by the sum of 9
the district's ADM of the conso lidated schools for the base fis cal year without 10
adjustment, and subtracting the quotient obtained by dividing t he sum of the 11
district's ADM of the consolidat ed schools for the current fisc al year as 12
adjusted under (1) - (3) [(A) - (C)] of this subsection [PARAGRAPH] by the 13
sum of the district's ADM of the consolidated schools for the c urrent fiscal 14
year, multiplying that number by the sum of the district's ADM of the 15
consolidated schools for the current fiscal year without adjustment, multiplying 16
that number by 66 percent, and adding that number to the sum of the district's 17
ADM of the consolidated schools for the current fiscal year as adjusted under 18
(1) - (3) [(A) - (C)] of this subsection [PARAGRAPH]; 19
(C) [(iii)] for the fourth fiscal year after the base fiscal year, the 20
district's ADM of the consolid ated schools as adjusted under (1) - (3) [(A) - 21
(C)] of this subsection [PARAGRAPH] is calculated by dividing the sum of 22
the district's ADM of the consolidated schools as adjusted under (1) - (3) [(A) - 23
(C)] of this subsection [PARAGRAPH] for the base fiscal year by the sum of 24
the district's ADM of the conso lidated schools for the base fis cal year without 25
adjustment, and subtracting the quotient obtained by dividing t he sum of the 26
district's ADM of the consolidat ed schools for the current fisc al year as 27
adjusted under (1) - (3) [(A) - (C)] of this subsection [PARAGRAPH] by the 28
sum of the district's ADM of the consolidated schools for the c urrent fiscal 29
year, multiplying that number by the sum of the district's ADM of the 30
consolidated schools for the current fiscal year without adjustment, multiplying 31
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that number by 33 percent, and adding that number to the sum of the district's 1
ADM of the consolidated schools for the current fiscal year as adjusted under 2
(1) - (3) [(A) - (C)] of this subsection [PARAGRAPH]; 3
(D) [(iv)] to calculate the district's basic need for each fiscal 4
year, the number obtained through the calculation in (A), (B), or (C) [(i), (ii), 5
OR (iii)] of this paragraph [SUBPARAGRAPH] is added to the number 6
obtained under (3) [(C)] of this subsection [PARAGRAPH] for the remainder 7
of the district; 8
(9) [(I)] if the basic need calculated under (8)(A) - (C) [(H)(i) - (iii)] of 9
this subsection [PARAGRAPH] for one of the first four fiscal years after 10
consolidation is less than t he basic need calculated under (1) - (3) [(A) - (C)] of this 11
subsection [PA RA G RA PH ] f o r th a t f is c a l y e ar , th e b a s ic n e e d may n o t b e a djusted 12
under (8) [(H)] of this subsection [PARAGRAPH] for that fiscal year; 13
(10) [ ( J ) ] a d i s t r i c t m a y n o t o f f s e t a d e c r e a s e u n d e r (8) [(H)] of this 14
subsection [PARAGRAPH] if 15
(A) [(i)] a new facility is constructed in the district for the 16
consolidation; or 17
(B) [(ii)] the district offset a decrease under (5) [(E)] of this 18
subsection [PARAGRAPH] in the same fiscal year; 19
(11) [(K)] a district that offsets a decrease under (8) [(H)] of this 20
subsection [PARAGRAPH] may not reopen a school that was closed for 21
consolidation in the district until 22
(A) [(i)] seven or more years have passed since the school 23
closure; and 24
(B) [(ii)] the district provides evidence satisfactory to the 25
department that the schools affected by the consolidation are over capacity; 26
(12) [(L)] a district may not reopen and reconsolidate a school that was 27
consolidated in the district more than once every seven years f or purposes of the 28
calculations made under (8) [(H)] of this subsection [PARAGRAPH]; 29
(13) [(M)] a district offsetting a decrease under (8) [(H)] of this 30
subsection [PARAGRAPH] shall provide the d epartment with the list of scho ols 31
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participating in the consolidation and the corresponding ADM [; 1
(2) THE REQUIRED LOCAL CONTRIBUTION OF A CITY OR 2
BOROUGH SCHOOL DISTRICT IS THE EQUIVALENT OF A 2.65 MILL TAX 3
LEVY ON THE FULL AND TRUE VALUE OF THE TAXABLE REAL AND 4
PERSONAL PROPERTY IN THE DISTRICT AS OF JANUARY 1 OF THE 5
SECOND PRECEDING FISCAL YEAR, AS DETERMINED BY THE 6
DEPARTMENT OF COMMERCE, COMMUNITY, AND ECONOMIC 7
DEVELOPMENT UNDER AS 14.17.510 AND AS 29.45.110, NOT TO EXCEED 45 8
P E R C E N T O F A D I S T R I C T ' S B A S I C N E E D F O R T H E P R E C E D I N G F I S C A L 9
YEAR AS DETERMINED UNDER (1) OF THIS SUBSECTION]. 10
* Sec. 4. AS 14.17.410(c) is amended to read: 11
(c) A [IN ADDITION TO THE LOCAL CONTRIBUTION REQUIRED 12
UNDER (b)(2) OF THIS SECTION, A] city or borough school distric t in a fiscal year 13
may make a local contribution of not more than the greater of 14
(1) the equivalent of a two mill tax levy on the full and true value of 15
the taxable real and personal pr operty in the district as of Ja nuary 1 of the second 16
preceding fiscal year, as determined by the Department of Comme rce, Community, 17
and Economic Development under AS 14.17.510 and AS 29.45.110; or 18
(2) 23 percent of the total of the district's basic need for t he fiscal year 19
under (b) [(b)(1)] of this section and any additional funding distribute d to the district 20
in a fiscal year according to (b) of this section. 21
* Sec. 5. AS 14.17.420(a) is amended to read: 22
(a) As a component of public sc hool funding, a district is eli gible for special 23
needs and secondary school voca tional and technical instruction funding and may be 24
eligible for intensive services funding as follows: 25
(1) special needs funding is available to a district to assist the district 26
in providing special education, gifted and talented education, vocational education, 27
and bilingual education services to its students; a special nee ds funding factor of 1.20 28
shall be applied as set out in AS 14.17.410(b) [AS 14.17.410(b)(1)]; 29
(2) in addition to the special needs funding for which a distr ict is 30
eligible under (1) of this subsection, a district is eligible f or intensive services funding 31
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for each special education stude nt who needs and receives inten sive services and is 1
enrolled on the last day of the count period; for each such stu dent, intensive services 2
funding is equal to the intensive student count multiplied by 13; 3
(3) in addition to the special needs and intensive services fu nding 4
available under (1) and (2) of t his subsection, secondary schoo l vocational and 5
technical instruction funding is available to assist districts in providing vocational and 6
technical instruction to student s who are enrolled in a seconda ry school; a secondary 7
school vocational and technical i nstruction funding factor of 1 .015 shall be applied as 8
set out in AS 14.17.410(b) [AS 14.17.410(b)(1)]; in this pa ragraph, "vocational and 9
technical instruction" excludes costs associated with 10
(A) administrative expenses; and 11
(B) instruction in general literacy, mathematics, and job 12
readiness skills. 13
* Sec. 6. AS 14.17.460(a) is amended to read: 14
(a) For purposes of calculating a district's adjusted ADM unde r 15
AS 14.17.410(b) [AS 14.17.410(b)(1)], the district cost factor for a school di strict is 16
(1) for the fiscal year ending June 30, 2009, the factor set out under column (A) of this 17
subsection, (2) for the fiscal year ending June 30, 2010, the f actor set out under 18
column (B) of this subsection, (3 ) for the fiscal year ending J une 30, 2011, the factor 19
set out under column (C) of this subsection, (4) for the fiscal year ending June 30, 20
2012, the factor set out under column (D) of this subsection, a nd (5) for fiscal years 21
ending on or after June 30, 2013, the factor set out under colu mn (E) of this 22
subsection: 23
DISTRICT COST FACTOR 24
DISTRICT (A) (B) (C) (D) (E) 25
Alaska Gateway 1.443 1.481 1.519 1.557 1.594 26
Aleutians East 1.707 1.778 1.849 1.920 1.991 27
Aleutians Region 1.838 1.864 1.890 1.916 1.939 28
Anchorage 1.000 1.000 1.000 1.000 1.000 29
Annette Island 1.175 1.216 1.257 1.298 1.338 30
Bering Strait 1.762 1.821 1.880 1.939 1.998 31
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Bristol Bay 1.370 1.397 1.424 1.451 1.478 1
Chatham 1.348 1.405 1.462 1.519 1.576 2
Chugach 1.395 1.420 1.445 1.470 1.496 3
Copper River 1.246 1.264 1.282 1.300 1.316 4
Cordova 1.165 1.182 1.199 1.216 1.234 5
Craig 1.108 1.133 1.158 1.183 1.206 6
Delta/Greely 1.174 1.191 1.208 1.225 1.241 7
Denali 1.323 1.326 1.329 1.332 1.332 8
Dillingham 1.300 1.312 1.324 1.336 1.346 9
Fairbanks 1.055 1.059 1.063 1.067 1.070 10
Galena 1.370 1.376 1.382 1.388 1.391 11
Haines 1.104 1.128 1.152 1.176 1.200 12
Hoonah 1.227 1.270 1.313 1.356 1.399 13
Hydaburg 1.295 1.348 1.401 1.454 1.504 14
Iditarod 1.658 1.705 1.752 1.799 1.846 15
Juneau 1.075 1.093 1.111 1.129 1.145 16
Kake 1.242 1.296 1.350 1.404 1.459 17
Kashunamiut 1.504 1.533 1.562 1.591 1.619 18
Kenai Peninsula 1.088 1.109 1.130 1.151 1.171 19
Ketchikan 1.085 1.106 1.127 1.148 1.170 20
Klawock 1.160 1.196 1.232 1.268 1.302 21
Kodiak Island 1.191 1.216 1.241 1.266 1.289 22
Kuspuk 1.584 1.622 1.660 1.698 1.734 23
Lake and Peninsula 1.776 1.831 1.886 1.941 1.994 24
Lower Kuskokwim 1.577 1.599 1.621 1.643 1.663 25
Lower Yukon 1.650 1.703 1.756 1.809 1.861 26
Matanuska-Susitna 1.040 1.048 1.056 1.064 1.070 27
Mt. Edgecumbe 1.098 1.123 1.148 1.173 1.195 28
Nenana 1.304 1.313 1.322 1.331 1.338 29
Nome 1.385 1.402 1.419 1.436 1.450 30
North Slope 1.648 1.684 1.720 1.756 1.791 31
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Northwest Arctic 1.686 1.720 1.754 1.788 1.823 1
Pelican 1.384 1.408 1.432 1.456 1.477 2
Petersburg 1.122 1.153 1.184 1.215 1.244 3
Pribilof 1.555 1.589 1.623 1.657 1.691 4
Sitka 1.098 1.123 1.148 1.173 1.195 5
Skagway 1.159 1.163 1.167 1.171 1.174 6
Southeast Island 1.264 1.299 1.334 1.369 1.403 7
Southwest Region 1.554 1.587 1.620 1.653 1.685 8
St. Mary's 1.488 1.522 1.556 1.590 1.624 9
Tanana 1.641 1.677 1.713 1.749 1.786 10
Unalaska 1.343 1.368 1.393 1.418 1.441 11
Valdez 1.133 1.143 1.153 1.163 1.170 12
Wrangell 1.080 1.100 1.120 1.140 1.159 13
Yakutat 1.229 1.275 1.321 1.367 1.412 14
Yukon Flats 1.892 1.948 2.004 2.060 2.116 15
Yukon/Koyukuk 1.669 1.711 1.753 1.795 1.835 16
Yupiit 1.596 1.628 1.660 1.692 1.723. 17
* Sec. 7. AS 14.17.510(a) is amended to read: 18
(a) To [DETERMINE THE AMOUNT OF REQUIRED LOCAL 19
CONTRIBUTION UNDER AS 14.17.410(b)(2) AND TO] aid the departmen t and the 20
legislature in planning, the Department of Commerce, Community, and Economic 21
Development, in consultation w ith the assessor for each distric t in a city or borough, 22
shall determine the full and true value of the taxable real and personal property in each 23
district in a city or borough. If there is no local assessor or current local assessment for 24
a city or borough school distric t, then the Department of Comme rce, Community, and 25
Economic Development shall make t he determination of full and t rue value guided by 26
AS 29.45.110 and based on a determina tion of full and true valu e made by the state 27
assessor at least every two years using the best information available, including on-site 28
inspections made by the state assessor in each of those districts at least once every four 29
years. For purposes of this subsection, the full and true value of taxable real and 30
personal property in any area detached shall be excluded from the determination of the 31
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full and true value of the municipality from which the property was detached for the 1
two years immediately preceding the effective date of the detachment. Also, in making 2
the determination for a municipality that is a school district, or for a city that is within 3
a borough school district, the asse ssed value of property taxab le under AS 43.56 shall 4
be excluded if a tax is not levied under AS 29.45.080 by the mu nicipality that is the 5
school district. The determinati on of full and true value shall be made by October 1 6
and sent by certified mail, ret urn receipt requested, on or bef ore that date to the 7
president of the school board i n each city or borough school di strict. Duplicate copies 8
shall be sent to the commissione r. The governing body of a city or borough that is a 9
school district may obtain judicial review of the determination. The superior court may 10
modify the determination of the Department of Commerce, Communi ty, and 11
Economic Development only upon a finding of abuse of discretion or upon a finding 12
that there is no substantial evidence to support the determination. 13
* Sec. 8. AS 14.17.990(3) is amended to read: 14
(3) "district adjusted ADM" means the number resulting from th e 15
calculations under AS 14.17.410(b) [AS 14.17.410(b)(1)]; 16
* Sec. 9. AS 14.20.177(a) is amended to read: 17
(a) A school district may imple ment a layoff plan under this s ection if it is 18
necessary for the district to reduce the number of tenured teachers because 19
(1) school attendance in the district has decreased; or 20
(2) the basic need of the sc hool district determined under 21
AS 14.17.410(b) [AS 14.17.410(b)(1)] decreases by three percent or more from t he 22
previous year. 23
* Sec. 10. AS 43.23.220(d) is amended to read: 24
(d) On July 1 of each year, the commissioner shall 25
(1) determine the fund balance for the previously closed fisca l year, 26
including the earnings of the fund; and 27
(2) when the average market value for that fiscal year exceeds 28
$1,000,000,000, transfer 4.5 percent of the average fiscal-year-end market value of the 29
balance of the fund for the last five fiscal years, including t he fiscal year just ended, 30
and including any unrealized gains and losses, to the Departmen t of Education and 31
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Early Development for distribu tion as supplemental grants to sc hool districts 1
according to the average daily membership for each district adj usted under 2
AS 14.17.410(b)(1) - (4) [AS 14.17.410(b)(1)(A) - (D)], subject to appropriation. 3
* Sec. 11. AS 43.23.230(c) is amended to read: 4
(c) Of the donations received in a year under (b) of this sect ion, the legislature 5
shall appropriate 25 percent to the education endowment fund es tablished in 6
AS 43.23.220 and shall appr opriate 25 percent to the dividend r affle fund. The 7
legislature shall appropriate the remaining 50 percent of the d onations received under 8
(b) of this section to the Department of Education and Early De velopment for 9
distribution as supplemental gran ts to school districts accordi ng to the average daily 10
membership for each district adjusted under AS 14.17.410(b)(1) - (4) 11
[AS 14.17.410(b)(1)(A) - (D)]. 12
* Sec. 12. AS 14.17.410(d), 14.17.410(e), and 14.17.410(f) are repealed. 13
* Sec. 13. This Act takes effect July 1, 2025. 14