Cost of rural education not as high as once thought

Juneau would gain additional $425,000 from state under proposed new school-funding formula

Posted: Sunday, January 19, 2003

ANCHORAGE - A new study for the Legislature says the cost of education in many rural school districts is not as high as previously thought.

If adopted by the Legislature, a new formula would reduce state funding to many rural districts while increasing funding for other regions.

The Juneau School District would gain an additional $425,000 from the state, given the same number of students as this year, according to district figures. The state gave the Juneau schools about $20.5 million toward this year's $39 million operating budget.

Juneau district officials weren't available for comment on the study Friday.

The study increases the Juneau "district cost factor" from 1.005 to 1.020, with Anchorage as the base unit of 1.0. It says Juneau's personnel costs are 1.01, compared to Anchorage, meaning they're 1 percent higher.

The study says Juneau's energy costs for the oil-heated school buildings are 0.74. Juneau's costs for supplies, materials and small equipment is 1.53, and its cost for travel for district officials is 1.20. The study gives varying weights to those elements in determining the overall cost factor.

Because the method of determining the maximum local contribution to schools is based on a percentage of the state aid, an increase in Juneau's state funds would trigger the possibility of more local funds, too. But cities don't have to give the maximum local contribution.

The study, released Thursday, is likely to disappoint rural districts that hope to reverse what they saw as unfair changes to the state's school-funding formula made in 1998. Those changes trimmed the traditionally high state school aid going to high-cost rural areas.

Legislative leaders have said they want to take another look at the way the state distributes money for schools, known as the foundation formula, in the upcoming legislative session, once they get to see their consultant's study of relative costs.

House Speaker-elect Pete Kott, an Eagle River Republican, said the Legislature would not try to second-guess the findings for particular districts. But it may try to raise education funding overall, he said, so that no districts lose money in the near term under a new formula.

"I think to be fair you have to take the whole study," Kott said. "You can't just cherry-pick."

Rep. Reggie Joule, a Kotzebue Democrat, said the new study is "probably a good first step" toward getting updated cost information. But he said it fails to account for several important factors, especially what he called "adequacy" - the cost of providing educational opportunities in small remote districts that can produce test scores comparable to those in urban areas.

"I think we would really push to get those other issues discussed," Joule said.

The state will spend about $670 million next year in education aid to districts, said Eddy Jeans, school finance manager for the state Department of Education. That money is parceled out by a formula, of which the cost-differential ratio accounts for 10 percent, he said.

The old cost-differential formula was based on a 1982 survey of state salaries in different regions, Jeans said. The new study is more accurate because it looks at four cost factors in each region: salaries, energy, supplies and equipment, and travel. It was prepared by American Institutes for Research, a private consultant under contract to the Legislature.

"It's going to shift some money," Jean said. "Some people anticipated this other approach would have produced a different result from what it did."

Jeans said federal rules prevent the Legislature from tinkering politically with the cost-adjustment formula, which is supposed to be based on objective standards. Other factors in the overall foundation formula can be adjusted, he said.

He said it would take at least a week for the department to confirm the monetary gains and losses of various districts under the new report.

But winners and losers can be seen in comparing the cost-differential ratios under the old and new formulas.

The consultants compared costs in each district with Anchorage. So the highest-cost district, the North Slope Borough, was given a ratio of 1.58, meaning the cost of education there is 58 percent higher than in Anchorage, whose ratio is the benchmark at 1.0. The North Slope Borough was around 1.5 under the old formula, so it would gain funding if the new formula were adopted.

Other winners would be Fairbanks, Juneau, the Aleutians East Borough and the Kenai Peninsula Borough.

Big drops show for the Lower Kuskokwim, the western Aleutians, Yukon Flats and the Denali and Northwest Arctic boroughs, among others.

As the benchmark against which others are measured, Anchorage would neither gain nor lose under the new formula - unless the Legislature increased funds for all districts to protect the losers.

The Matanuska-Susitna Borough School District appears on the new list with a ratio of 0.99, which means the consultants believe Mat-Su needs to spend about 1 percent less than Anchorage to provide comparable educational services. Under the old formula, Mat-Su had a rating of 1.1

"We're not quite sure how that is. We're a combined rural-urban district," Mat-Su district spokeswoman Kim Floyd said Thursday. She said the district could lose several million dollars if the new cost-differential formula were adopted. "We believe this penalizes our district for doing more with less in the past."

On the other hand, Kenai Peninsula Borough School District superintendent Donna Peterson said the rise from 1.004 to 1.03 could mean a million dollars more in state aid. Since that would bring a corresponding increase in local taxes, the total to the district would be $1.7 million, she said.

"We're dying down here. We need the $1.7 million yesterday," she said.

Eric Fry of the Empire staff contributed to this article.



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