House Education Committee reviews K-12 funding mix, foundation formula and policy levers

Juneau — The Alaska House Education Committee on Jan. 24, 2025, heard a detailed briefing on K‑12 finances from Legislative Finance officials, who said the state supplies roughly 62% of school district revenue and that the foundation formula — built on a $5,960 base student allocation (BSA) multiplied by an adjusted student count — is the single largest source of flexible school funding.

The briefing by Alexi Painter, director of the Legislative Finance Division, and Connor Bell, a fiscal analyst with Legislative Finance, walked members through the state, local and federal shares of school revenue, the formula’s structure and recent history, and the policy levers available to the legislature.

Why it matters: Decisions about the foundation formula and related funding affect district operating budgets, personnel and services across Alaska. Committee members said the mix of one‑time and ongoing funding, growth in intensive special‑education counts, enrollment declines and limits on local taxing authority are shaping district capacity to maintain staffing and services.

Painter told the committee, “The state provides about 62% of school district revenue in the current year. Local governments provide 25%, the federal government 11%, and other sources like tuition and investment returns are 2%.” He added that “nearly half of the total is the foundation formula,” which is the focus of the presentation.

Bell described how the foundation formula is calculated: the statutory student count (average daily membership, or ADM) from the October count is adjusted by school‑level and district multipliers to reach an adjusted ADM (AADM). “The average daily membership is the student count… that’s the base,” Bell said. After applying the school size factor, district cost factor, a 1.2 special‑needs block grant multiplier, a 1.015 career‑and‑technical education multiplier and the intensive special‑education multiplier (13× per intensive student), the AADM is multiplied by the BSA to produce a district’s Basic Need.

Key numeric and structural details raised in the presentation and committee discussion: - Base student allocation (BSA): $5,960 (current statutory amount). - Foundation formula composition: school size factor (applied at the school level; statewide aggregate examples ran from about 1.13 in Anchorage to 3.3 in the Aleutians), district cost factor (geographic cost differences), special‑needs block grant (1.2 multiplier), career and technical education factor (1.015 multiplier), and an intensive special‑education factor (13× per identified intensive student). Correspondence students are counted at 0.9 ADM. - Revenue mix (FY25 data cited by Legislative Finance): state 62%, local 25%, federal 11%, other 2%. - Outside‑the‑formula funds: Legislative Finance noted substantial one‑time or outside‑formula appropriations in recent years (Legislative Finance cited $174.7 million in outside‑formula funding in FY25 and additional one‑time pupil transportation funding in the $7 million range). - Enrollment: Legislative Finance said total ADM has declined from its peak; the FY26 ADM projection cited in the briefing was about 124,679, and a multi‑year demographic trend predicts continued enrollment pressure.

Committee members repeatedly pressed staff on areas where policy choices interact with district operations. Rep. Rebecca Schwanke and others asked about the growth in students classified as requiring intensive special‑education services; Painter and Bell said the per‑student count for intensives has grown substantially and that the multiplier (now 13×) was raised incrementally over past legislative sessions (from 5× to 9× to 11× to 13× by FY12) but is a fixed multiplier, not an enrollment‑driven per‑student reimbursement beyond the count itself.

Members also asked about the district cost factor — the geographic adjustment intended to reflect differential costs across regions. Bell said the last comprehensive study to set those differentials dated to data collected in the early 2000s and was implemented in stages from FY09–FY13; statute directs review of the district cost factor every two years, but Bell said those periodic updates stopped after a prior Department of Education attempt drew legislative concern. He told the committee an updated study would likely cost in the low hundreds of thousands of dollars, but exact pricing would require a new procurement.

On another frequently raised topic, Legislative Finance explained the statutory interplay with local contributions and federal impact aid. Municipal school districts must make a required local contribution (the briefing cited a 2.65‑mill floor or 45% of basic need in current law as a structural element), and local optional contributions are capped (the presentation cited a 23% cap on optional local contribution of basic need). Painter said the cap exists in part to pass a federal disparity test that allows the state to deduct federal impact aid from the state’s share; losing that deduction, he said, would raise state costs by an estimated $81 million and could redistribute federal funds across districts.

On temporary versus ongoing funding, members and staff agreed that outside‑the‑formula (one‑time) appropriations are not equivalent to increases in the BSA for district budgeting and stability. “When districts are building their budget, they often build to the statutory amount,” Painter said, noting districts may gamble on outside funds but that one‑time funding can create fiscal instability for personnel if it is used to support recurring costs.

Other technical features the committee discussed included hold‑harmless language (a phased, three‑year protection for districts with at least a 5% ADM drop), phased treatment for school consolidation (four‑year phase‑in of reductions tied to consolidations), PERS/TERS employer on‑behalf payments (state‑paid amounts that reduce district obligations), and the REAA fund for capital in unorganized areas.

What the committee asked staff to follow up on: members asked Legislative Finance and the Department of Education to circulate the 2015 Institute of Social and Economic Research (ISER) report (and related prior studies) and to provide a one‑page description of the statutory criteria used to designate an “intensive special‑education student.” Painter and Bell agreed to provide those materials to the committee.

No formal actions or votes were taken at the meeting; the session was a technical briefing and question‑and‑answer period. Committee leaders said they will hold additional hearings, public testimony and a public comment session on education funding in the coming week.

Looking ahead, committee co‑chair Rep. Andy Story said the panel plans additional invited testimony and public comment in advance of any bill referrals or committee bills seeking to change funding levers.

(Reporting based on the Jan. 24, 2025 House Education Committee hearing; direct quotations attributed only to listed speakers.)