Lawmakers hear testimony on bill to smooth Alaska school funding and allow multi-year enrollment averaging

Rep. Andy Story, House sponsor of HB 261, told the Senate Education Committee on May 15 in Juneau that Alaska’s ‘‘education funding process is broken’’ and urged support for a committee substitute that would let districts use the greater of a prior three‑year average verified student count or the prior year’s count when setting budgets.

Story argued the change would allow districts to offer employment contracts earlier and reduce staffing turnover, saying, "We can fix this." He described provisions to allow a second February count for intensive‑needs students, to treat small alternative programs as separate schools for school‑size adjustments, and to grandfather districts currently on hold‑harmless status during a transition.

Invited witnesses and agency officials backed the sponsor. Dr. Cindy Mica, superintendent of the Kodiak Island Borough School District, said the proposal ‘‘gives districts the ability to make more educated and informed decisions by utilizing a more stable and predictable average ADM model’’ and described local decisions to close schools and cut positions because of funding uncertainty. Katie Parrott, president of the Alaska Association of School Business Officials, presented modeling that she said closely matched the department’s fiscal note after adjusting for COVID‑era enrollment outliers and recommended the averaging approach as a stability measure for school budgets.

Department of Education and Early Development director of finance Heather Heineken walked the committee through DEED’s fiscal notes tied to the bill and the committee substitute. She said the department’s projection for the public education fund cost would be approximately $154,050,000 in fiscal year 2027, rising in subsequent years (DEED noted the committee substitute will alter those figures and likely reduce the projected costs). Heineken also outlined a one‑time estimated $18,000,000 legal/regulatory cost to establish new regulations and reporting processes related to alternative programs and intensive‑student reporting.

Commissioner Dina Bishop cautioned that removing the minimum ADM threshold for alternative‑school status without regulatory guardrails could allow ‘‘programming that grows unnecessarily’’ as districts seek to maximize formula benefits; she recommended clear regulation to prevent inappropriate splitting of programs into separately counted schools.

Public testimony strongly favored the bill’s stability measures. Lon Garrison, executive director of the Association of Alaska School Boards, and representatives of NEA Alaska said the averaging would reduce repeated budget revisions and help retain educators. Several rural superintendents and a classroom teacher from the Kenai Peninsula described how late funding determinations forced tough local choices: Derek Ratliff said his district faces multimillion‑dollar deficits and school closures and criticized relying on rising property assessments that ‘‘don’t bring a single dollar into our schools’’ but change state allocations.

The committee adopted the committee substitute as its working document but took no final vote on the bill; Chair Tobin held HB 261 until 11 a.m. the following day for continued review and recessed the hearing.

What’s next: The committee will reconvene at 11:00 a.m. on the scheduled follow‑up date to continue deliberations on HB 261 and any proposed amendments.