For Immediate Release April 26, 2007

AASB Statement on the 25^th Alaska Legislature

“It looks like a good session for public school children,” says Rose

JUNEAU – As the 25^th Alaska Legislature works toward adjournment in less than three weeks, the basic elements of forward-thinking policies and a financial plan for K-12 public education are coming together, school board members learned this week. About 80 local school leaders from around the state lobbied the Legislature for two days during the AASB Fly-In and came away optimistic.

“The message of local school board members was heard loud and clear by state leaders,” said Carl Rose, executive director. “Alaska’s children deserve an education that will prepare them for the 21^st century and Alaska’s school districts need help from the state to get that job done.”

During their lobbying efforts, AASB member districts were told that a far-reaching set of reforms to the foundation funding program for K-12 schools was being developed by House and Senate leaders. In addition, the Legislature and Gov. Sarah Palin are poised to deposit $1 billion in surplus state money in the Public Education Fund, inject $450 million into the teachers and public employees retirement system, and renew consideration of a long-term fiscal plan for the state.

Foundation Funding Reforms

At the urging of local school districts, the Legislature is tackling the first changes of the basic K-12 school funding law, the foundation program, since 1998. Among the elements of the law up for revision are the district cost factor, the base student allocation, the funding provided for intensive needs students and the requirement for local taxes to supplement state aid for schools.

“While we have seen several proposals in this reform package, the final shape of the bill has yet to emerge,” Rose said. “School officials have encouraged legislative leaders to look at ways to improve the foundation program that will benefit students and their communities. We are optimistic the ultimate reforms will include improvements to at least four parts of the formula.”

$1 billion to the Public Education Fund

Now headed to Gov. Palin, a supplemental budget (SB 61) passed by the House and Senate this week includes a deposit of $1 billion to the Public Education Fund (AS 14.17.300). Created by the Legislature in 2005, the fund has been used as a holding area for cash until legislators decide how to spend it on education or other programs.

“An appropriation of $1 billion speaks very loudly about the priority the Legislature puts on education,” Rose said. “If a like-sized appropriation is committed to the classroom next year, the Legislature would have the option of early- or forward-funding K-12 schools or supplementing education into the future.”

Retirement Costs

An appropriation of $270 million to the Teachers’ Retirement System (TRS) and $180 million to the Public Employees’ Retirement System (PERS) has cleared both the House and Senate as part of the state operating budget (HB 95). The final version of that bill will be negotiated by a conference committee of the two chambers.

The Legislature intends the $450 million to lower retirement costs for local public employers, including school districts, to 12.56 percent for the TRS and 22 percent for PERS. Under a decision by the Alaska Retirement Management Board, the employer rates for TRS are scheduled to rise to 54 percent of payroll and for PERS to 39 percent of payroll, effective in July.

“Our member districts are very thankful that the exorbitant retirement rates the state had threatened to enact will be set aside. In fact, the 12.56 percent rate for school districts lowers our costs substantially next year, and should help many districts cope with other rising costs, especially fuel.” Rose said.

Long-Term Fiscal Plan

School board members were briefed on pending bills that would re-open debate over the state’s long-term financial future. One of those bills, SB 134, by Sen. Gary Wilken, R-Fairbanks, proposes to use revenue in the Constitutional Budget Reserve and the earnings reserve account of the Alaska Permanent Fund to “bridge the gap” created by any budget deficits between now and 2018, when revenue from a North Slope natural gas pipeline might flow into the treasury.

“School board members have not endorsed any particular approach to creating a fiscal plan for the state,” Rose said. “But with a third of the state budget devoted to K-12 education costs, we are very interested in adding stability to the state’s financial picture over the long term.”

For additional information contact:

Carl Rose, AASB, at 586-1083