Proposed state regulation could force Anchorage School District to find $15 million, officials warn

The Anchorage School District Board of Education heard Aug. 5 that proposed changes to state regulations on local contributions could require the district to cover roughly $15 million this fiscal year if the rules are adopted as written, Superintendent Dr. Bryant told the board. The proposal, presented to the State Board of Education as an emergency regulation and later opened for comment, would (1) tie local contribution limits to federal definitions, (2) remove a narrower definition of “appropriations” that currently limits contributions to city/borough operating funds, and (3) broaden the definition of “in‑kind services,” officials said — changes that could bring transportation, food service and other items inside the local cap and reduce municipal support to districts. Board members were warned the language is vague and the district does not yet have a definitive list of what municipal items would be included if the regulation is adopted. “We really don't know, until we actually get some sort of definitive list from DEED or some sort of guidance,” Mister Ratliff, staff member, said during the meeting. Why it matters: ASD officials said the change could shift municipal payments that have historically been counted outside the local cap into the cap, forcing the district to replace that revenue. Superintendent Dr. Bryant said the district could be on the hook for “at minimum, … $15,000,000” if the regulation passes as proposed. District finance staff walked the board through how the rules would change current practice. Ratliff said one proposed section would treat transportation, food service and student-activity contributions as part of the local cap; another would eliminate the prior restriction tying contributions strictly to city/borough operating appropriations; and a third would rename and broaden what qualifies as in‑kind services. “It would be very broad and could go against a number of things, like meeting with the mayor, the assembly's time,” Ratliff said. Board members asked what state intent underlies the change. Member Higgins asked whether the commissioner of education had been asked to explain the intent; staff replied that officials believe two motivations are driving the change: meeting a federal impact‑aid disparity test and attempting to equalize funding among districts. “I don't know that this completely solves that problem,” Ratliff said of the federal test. Member Donley suggested a narrower regulatory remedy that would simply prohibit transfers out of transportation funds to general funds in districts that were moving those local line items, and noted tradeoffs if districts were prohibited from transferring unused transportation funds. Timeline and next steps: The district said the proposed regulation was first posted June 2 as an emergency action, was moved into the regular rule‑making process, and completed a third 30‑day comment period that closed July 25. The State Board of Education is scheduled to consider the regulation at its October meeting, at which point it may approve, disapprove or modify the proposal and could set an effective date covering the current fiscal year. District leaders urged the public to contact the State Board of Education and the commissioner before October if they are concerned. “The right people to be connecting with is the State Board of Education and the commissioner,” Dr. Bryant said. Ending: Board members and staff said they will continue monitoring the rule‑making timeline and will keep the board informed as DEED (the Alaska Department of Education & Early Development) provides additional guidance or a final list of included items.