Local responsibility for school funding grows

Juneau residents willing to pay more, but tax cap may be a factor

Posted: Sunday, February 25, 2001

Fewer students are attending Juneau's public schools, but local taxpayers are asked to pay more, thanks to the way the state funds schools.

Juneau's public schools will have $580,000 less to spend next school year due to declining enrollments, school district administrators believe. Yet the city contribution may jump by about $607,000 over this school year.

Keeping up with the school district's needs could affect other local services or require higher taxes, Juneau Assembly members said.

A large portion, called the basic need, of a school district's operating funds is tied to the Legislature's fixed per-student allowance. The state's share of basic need is based on enrollments, but cities' portions are based on property values.

Because Juneau's property is worth more, local taxpayers will give more to the schools next year. And because there are fewer students, the state will pay less.

That works both ways for cities and boroughs, said Kevin Ritchie, executive director of the Alaska Municipal League/Alaska Conference of Mayors. When property values go down, the state steps in and provides more of the school funds.

But when local property values go up, it's a windfall of savings for the state, and the municipal league thinks the state should reinvest that money in the schools, Ritchie said.

In all, Juneau would pay $17.43 million under the proposed $37.32 million operating budget for next school year to serve about 5,435 students. That's up from a $16.82 million local contribution this school year toward a $37.89 million operating budget for 5,520 students.

The problem for the city is it has a 12 mill property tax cap, said Deputy Mayor John MacKinnon. Two-thirds of the property tax revenue already goes to the schools.

"We could get to the point in the next couple of years where we bump up against our cap," he said.

Details, details

The Legislature allows $3,940 per student for the basic need in a formula that increases the actual number of students by various factors.

The factors include the size of a student's school, to account for economies of scale, and the school district's cost of living compared with that of Anchorage. That adjusted figure is increased by a fifth to account for special education, vocational education, and bilingual and gifted programs. The number of correspondence students is decreased by a fifth, and the number of students with intensive needs is quintupled.

All told, about 5,435 actual Juneau students will be transformed into 7,617.62 formula students who will be funded with $3,940 each, or about $30 million in all.

Out of that, the city is required to pay the equivalent of a 4 mill tax on the full value of real property, or $400 on a $100,000 home. That comes to nearly $10.5 million next school year. The state pays whatever remains, which is about $19.5 million.

The city also has the option of adding more money in a real increase to the schools' operating budget. In order to keep school districts roughly equal in their per-student funding, the state limits those extra funds to 23 percent of the basic need or nearly $7 million next school year for Juneau.

The city has funded up to the cap, and sometimes beyond it for some exempt services such as after-school activities, since the early 1990s, said city Finance Director Craig Duncan.

Although the city must give more money for basic need next year, it could make up for that with less in optional funding.

"If our increased (schools) contribution takes money away from library hours and some other program that the public feels very strongly about, it's going to be a tough decision," Deputy Mayor MacKinnon said.

Keeping up with inflation

Education has been a growing financial burden on municipalities, says a group of mostly school and municipal officials who recently reported on the funding adequacy of Alaska's schools.

In Juneau, the local share of the school district's operating budget has grown from a quarter in fiscal 1985 to more than a third in fiscal 1990 and to nearly half projected for next fiscal year.

In the past decade, education spending from the state's general fund has grown 25 percent just to keep pace with enrollments that jumped by that much. The funding formula also has included two increases, totaling 5 percent, in the per-student dollar amount that is used to calculate basic need.

But inflation has risen 30 percent in the same period, beyond costs added by growing enrollments, the state Department of Education says in a recent report to the Legislature. At the same time the federal government has added more requirements for bilingual and special education, without fully funding them.

Increasingly in Alaska it's the cities and boroughs that have tried to meet the added costs. Their contribution to schools has grown by 55 percent in the past decade, the state Department of Education says.

"Local taxpayers have been asked to shoulder 100 percent of the inflationary burden," said Ritchie of the Alaska Municipal League, and it's a major factor in municipalities' tax increases.

There's no legislative movement to change the way the funding formula works. But the governor and several legislators would like to pump more state money into the schools.

Gov. Tony Knowles has supported a task force's recommendation that the per-student amount for basic need be raised gradually by about 10 percent over five years, to $4,354, with the increase funded by the state.

The first year of Knowles' proposal would add $875,000 to the Juneau schools' operating budget next year, plus $373,000 more in grants to meet new academic standards.

Republican Sens. Gary Wilken of Fairbanks and Robin Taylor of Wrangell have submitted bills for per-student increases that would add about $1.1 million and $1.6 million respectively in Juneau. Another bill, by Sen. Bettye Davis, an Anchorage Democrat, would raise the per-student amount to keep up with inflation as measured in Anchorage.

But Juneau's schools would benefit fully from these bills only if the city doesn't cut its optional funding. It's not unusual to see local governments pull back when the per-student formula is increased, said Carl Rose, executive director of the Association of Alaska School Boards.

Rep. Con Bunde, an Anchorage Republican who chairs the House Special Committee on Education, said he was inclined to fund the schools more, but not without accountability.

He said it's not good that the Knowles administration wants more money while also asking to put off the effective date of the new high school exit exam from 2002 to 2006.

"It's incumbent on schools to show they're getting the best bang for their dollars, and then they'll get more dollars," Bunde said.

Eric Fry can be reached at efry@juneauempire.com.

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