Municipal leaders tell Alaska Legislature local governments shoulder growing share of K-12 costs

Juneau — Nils Andreasen, executive director of the Alaska Municipal League, told a Feb. 19 joint meeting of the House and Senate education committees that local governments now shoulder a substantial portion of K‑12 funding and that the state should act to “inflation‑proof the BSA” and reform how federal and state funds flow to districts.

Andreasen said AML represents 165 cities and boroughs and described several findings from DEED audited financials and AML analysis that have informed the league's recommendations. “I'm not an attorney. I'm not an economist,” Andreasen said, adding his presentation was an AML assessment and that other analyses (including DEED and district financials) should also be considered.

AML framed the issue around two persistent gaps: equity and adequacy. The league presented DEED FY‑23 numbers showing 28 of 52 districts budgeted higher expenses than revenues and argued that municipal school districts rely heavily on local tax revenue — in some places making up nearly half of district revenue. AML noted REAAs received roughly $80,000,000 in federal impact aid in FY‑23 compared with about $50,000,000 for municipal school districts and said impact aid should flow directly to the districts it was intended to help.

AML urged three near‑term actions: (1) inflation‑proof the Base Student Allocation (BSA) so the state’s per‑pupil funding preserves purchasing power; (2) update the district cost study (last mentioned as 2005 in AML slides) to better define adequacy; and (3) restore or reform the school bond debt reimbursement and major maintenance grant programs to reduce a multibillion‑dollar facilities shortfall.

Andreasen described the school facilities funding gap using DEED material: a recommended capital renewal level of roughly $3,600,000,000 versus about $1,600,000,000 provided since FY‑11, creating roughly a $2,000,000,000 shortfall. He said only a fraction of projects submitted through the major maintenance and construction grant programs receive funding, and that low realization rates reduce districts’ incentive to invest limited planning dollars in multi‑year capital plans.

Committee members pressed for clarifications. Representative Rebecca Himshoot asked whether operations and maintenance totals included fixed costs such as energy and insurance; Andreasen said the DEED audited figures depend on each district’s chart of accounts and likely include such items but cautioned he had not reviewed every district account. Senator Kiel and others questioned historical trends; Andreasen said state contributions rose when state revenue did but that declines or flat funding between certain years left local governments to increase their share.

On mandates and accountability, AML provided a long list of district reporting and compliance tasks that Andreasen characterized as “a lot of work” distinct from meaningful accountability. He suggested some state requirements may be “check‑the‑box” activities that consume district administrative capacity without demonstrably improving student outcomes and recommended the legislature commission municipal and district fiscal notes to quantify staffing and other costs tied to state requirements.

AML also recommended reforming how impact aid is treated in the foundation formula, arguing that the state’s practice of reducing its obligation by offsetting state funding with impact aid undermines equity. On bond debt reimbursement, Andreasen described the moratorium on the program and urged the legislature to restore this tool to help local governments leverage bonding for major projects.

The AML presentation concluded with an offer to return with follow‑up materials, and the committee requested additional documents and fiscal detail. Andreasen told the committee he would provide a fuller list of identified mandates and any available cost estimates.

With the committees hearing municipal leaders later in the session, AML’s core ask was clear: define adequacy, update cost studies, inflation‑proof the BSA and restore capital funding tools so local governments and districts can plan and invest with confidence.