House Bill 278 is like a spaghetti bowl of education spending measures, and now that it has moved out of the House Finance Committee, lawmakers will throw it at the wall and see what sticks.


The bill makes more money available through schools in two ways: an increase in the Base Student Allocation and an adjustment in the way students are counted.


The BSA is one of the formulas the state uses to decide how much to spend per student.


There was an attempt by Anchorage Rep. Lindsey Holmes to raise the BSA to $475 dollars over the next three years. But that measure failed, as well as 19 other amendments the committee considered Wednesday before passing the bill.


In the end, the BSA was increased to $300 over three years; a hundred dollars more than recommended by Gov. Sean Parnell.


As a rule of thumb, a $100 bump in the BSA is equivalent to $25 million dollars in spending. So over three years, HB 278 increases that amount to about $75 million dollars.


Democrats on the committee — like Anchorage Rep. Les Gara — say the BSA increase still doesn’t address the shortfall at the Anchorage School District, which needs a $400 increase in the BSA to avert huge cutbacks in the classroom.


“The current proposal leaves Anchorage short by about $8 million in the first year, but in the second year causes massive lay-offs,” said Gara, who warned even more cutbacks would be needed in the third year.


The BSA is currently at $5,680. Under HB 278, it would grow to $5,981 in fiscal year 2017.


David Teal, a budget analyst for the Legislature, said the focus on the BSA can be misleading because it’s just one component among many that determines what the state will spend per student.


“I know BSA fits on the sign easily,” said Teal, referring to recent education rallies in Anchorage. “People focus on the BSA, because it’s easy.”


But Teal said to do that is vastly oversimplifying how the state calculates per-student spending.


“You could increase the BSA to $1,000, but wind up giving schools less” if other components of the state’s education funding formula are changed, Teal said.


Teal said the BSA is adjusted by a number of other factors:



  • Size, which makes an adjustment for small schools

  • Geographic differential

  • Special needs factors

  • Career-technical education

  • Intensive needs factor


When the BSA is adjusted for size, Teal said, the formula uses a multiplier to account for the higher costs of operating a small school.


For example, the Aleutians East Borough School District receives $40,000 per student. Teal said the district’s 31 students are counted as if they are 226 students.


Teal said the Lower Kuskokwim School District has 4,000 students but after the adjustment, they are counted as the equivalent of about 13,000 students.


The spending bill also changed this multiplier — known as the “size factor” — boosting it to help larger schools.


Under HB 278, Teal said every district will get at least a 3 percent increase but Anchorage, for example, would see a 5.4 percent increase; about $23 million dollars more.


Some of the other increases:



  • Aleutians East Borough School District: 3.3%

  • Lower Kuskokwim School District: 3.4%

  • Juneau School District: 4.3%

  • Fairbanks North Star Borough School District: 4.4%

  • Matanuska-Susitna Borough School District: 4.6%


During Wednesday’s committee hearing, Rep. Bryce Edgmon, a Dillingham Democrat, raised questions about whether the “size factor” has now been skewed too much to favor urban school districts. He spoke of how some rural communities have to cope with fuel as high as $13 dollars a gallon and other expenses that have dramatically driven up the costs of providing an education to students.


Rep. Tammie Wilson, a Republican member of the House Finance Committee, said an increase in the “size” factor is just part of a comprehensive approach to education spending that HB 278 takes, which benefits all school districts.


“I think it’s been a long time since we’ve taken this serious of a look overall, more long term, of what our education needs are,” Wilson said. “And so this bill really just reflects that.”


The bill also proposes a major change in how the state would pay down the teacher retirement fund debt.


Democrats and a few Republicans opposed the change and introduced an amendment to strip this provision out of the bill, but it failed on a 5-5 vote.


Under HB 278, the state’s debt to the teacher retirement system would be paid out over a long period of time, which runs counter to Parnell’s plan to address the state’s obligation in both the teacher’s retirement fund as well as the public employees fund, collectively known as PERS/TRS.


The governor wants to dip into budget reserves and pay $3 billion towards the debt, which would cap annual payments to the system at $500 million.


“I really do think it comes down to which plan you believe we can afford now,” said Wilson, who compared HB 278’s approach to buying a house. “Most of us want to pay things off in 15 years, if we can afford to do that. But we will usually sign on the dotted line for 30 years.”


Rep. Cathy Munoz, a Juneau Republican, said the bill goes against the advice of the state revenue commissioner, who warned it could affect the state’s financial ratings and its ability to borrow money, which the state will need if lawmakers decide to buy a stake in a liquefied natural gas project.


“I want to be clear. I support the governor’s approach, which has been presented as paying off our unfunded liability in 20 years,” Munoz said. “Another concern I have with the proposal is that it has had very little vetting. We asked for an actuary analysis for the proposal. We have yet to see an analysis for this.”


Rep. Steve Thompson of Fairbanks also protested.


“It’s just a tough one,” Thompson said. “I don’t want to see this put into statute where this takes away our flexibility in the future.”


Democrat Gara also said he prefers the governor’s plan for addressing pension fund obligations, which is very similar to one Democrats have proposed in a past session.


HB 278 now moves to the House floor, where it will likely be debated and amended.


The Senate Finance Committee has a competing plan that also boosts education spending but doesn’t put the increases in the BSA.


The Senate and House plans will likely merge before the end of session. Both have lots of moving parts, with one change affecting another part of the education-funding machine.


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