Bill spreads oil wealth to schools

Taylor proposal would kill state aid to North Slope borough

Posted: Friday, February 16, 2001

Sen. Robin Taylor's plan to revamp the state's school funding system would spread financial goodies from the Yukon-Kuskokwim Delta to his own Southeast Alaska district, while yanking millions in state aid and local taxes out of the North Slope Borough.

Taylor, a Wrangell Republican, has long argued that Senate Bill 36, the sweeping rewrite of the school funding formula passed in 1998, hurt Wrangell and Petersburg. His attempts at a fix failed the past two years in the Legislature, but the measure introduced Thursday packages the fix with provisions attractive elsewhere in the state.

"We all knew at the time that Senate Bill 36 had some flaws," Taylor said.

The biggest financial chunk of Taylor's bill - and the provision likely to generate a bitter battle - would not only eliminate state education aid to the oil-rich North Slope Borough, it would require the borough to send some of its local property taxes to the state for redistribution to other areas.

Here's how it would work:

Under current law, the state pays all of most districts' basic educational need, minus either 45 percent or the equivalent of a 4 mill tax on property within the municipality. Only four

communities choose the 45 percent option - the North Slope Borough and the cities of Valdez, Unalaska and Skagway. All four have large tax bases and small populations, and choosing the 45 percent option brings them more state aid.

Taylor's bill would eliminate the 45 percent option, which he estimates would save the state $13.3 million in aid to the four municipalities. The North Slope would lose all of its state aid because a 4 mill property tax on the oil and gas infrastructure there far exceeds the district's basic need.

"If I'm going to pay 4 mills on my house in Wrangell, then everybody else ought to pay 4 mills," Taylor said.

A separate provision would force the North Slope to pay about $22.9 million of its local property taxes - the difference between 4 mills and its basic need - to the state, Taylor estimates. The large, mostly Alaska Native borough would be the only district in the state forced to pump money into the system.

The idea alarmed lawmakers representing the North Slope, where property is already heavily taxed to cover debt payments and other municipal services.

"When you're starting to rob money from one school district to give it to another, we consider that terribly unfair," said Sen. Donny Olson, a Nome Democrat.

However, Taylor's proposal contains other elements designed to build support from other areas of the state. A district-by-district analysis of its impacts was not available.

It would repeal the so-called "eroding floor" installed in Senate Bill 36, which pays some rural districts only 60 percent of their current state aid for new students. Eliminating that provision is a high priority of Gov. Tony Knowles and many rural lawmakers.

The bill also adds $17.4 million earmarked for vocational education, and increases the per-student amount of money that goes into the formula by from $3,940 to $4,150 - an increase of about $45.4 million statewide, Taylor said.

"We haven't analyzed it, but we agree that we need more money through the foundation formula for schools," said Harry Gamble, a spokesman for the state Department of Education.

For school districts in Taylor's Southeast Alaska district, the bill would bring home two benefits:

Schools in Wrangell and Petersburg would be counted separately instead of as a single school, as they are under Senate Bill 36. The distinction costs the two districts about $600,000 a year.

School districts that lose 4 percent or more of their students in a year would lose the money associated with those students gradually over three years. Ketchikan, the largest community in Taylor's district, has suffered big enrollment drops in recent years.

The bill would also require the Department of Education to regularly study the cost of doing business in various districts around the state and to adjust the funding formula accordingly. Under current law, the district cost differentials are revisited only when the law is revised, prompting complaints they are skewed by politics.

The bill was referred to the Health, Education and Social Services Committee and the Finance Committee.

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