Legislators got a closer look at the inner-workings of the state’s school funding system on Tuesday that highlighted its complexities. But however you cut the complexities, the message is the same: The buying power of schools is at a 20-year low thanks to inflation and flat-funding from the state.
The presentation was a historical look-back at the base student allocation and the foundation formula that the BSA runs through to determine how much state funding each district should receive. Legislative Finance Division Director Alexei Painter told the House Finance Committee that school funding is more complicated than just a single number.
“Oftentimes you’ll see graphs that show just the BSA, but that’s not the entire picture because $1 in the BSA is not equivalent over time,” he said. “It’s the same thing if you look at just state contributions over time versus the entire amount of basic need. It’s not the entire picture, so it can show sometimes a misleading picture because there are other payers.”
The BSA is a number that gets talked about a lot when it comes to funding, but schools rarely are getting exactly $5,960 per student. Instead that figure is run through the foundation formula, adjusting it for things like the size of the school district, the location of the school district and the needs of the students. It also sees some increases for things like special needs factor and career and technical education.
That complicated equation produces a number, called basic need, that is then filled with a combination of state funding, local funding and federal funding.
The message there, is there are multiple factors beyond just the BSA that impact how schools are funded and Painter provided several charts that show how the different layers all pile onto each other to result in school funding.
In the big picture, though, that school funding is not what it used to be. The trend in each is the same: The nominal dollars charts steadily grow from 2005 to 2015, when they level off with a few bumps before making a few slight dips in the recent years as one-time money expires. The inflation-adjusted charts show the same general growth from 2005 to 2015 but then the failure to keep up with inflation shows a steep downturn in buying power between 2020 and now.
“Today, the base student allocation is the lowest it’s been in the last 20 years, adjusted for inflation,” he said.
Here’s the look at just the history of the base student allocation:
The BSA in nominal dollars
And the BSA in inflation-adjusted dollars
Painter noted that the foundation formula itself has been changed by legislators a handful of times over the last two decades, but Painter stressed not all changes to the foundation formula are felt the same across the board. Some adjustments, like the location adjustment for example, won’t impact Anchorage all that much because it’s set as the baseline while it could be a boon for other districts.
There’s also the matter of things like one-time funding from the state or federal government that might boost a single year’s funding. Most of which is set to expire heading into this next budget year.
And there’s also a fair bit of variation where it comes to the contribution local governments can make to their school district. The state sets both a minimum local contribution and a maximum local contribution, which is there with the intention of keeping school funding reasonably equitable across the state.
When you roll it all together, you get these charts of school funding:
All the school funding rolled together in nominal dollars
All the school funding rolled together in inflation-adjusted dollars
That last bit about local contributions to school districts is worth highlighting because it’s one of the few areas I’ve heard any interest from some of the House Republicans who’ve otherwise been opposed to an increase in K-12 funding. Why not lift the cap and let the districts that really want to fund education, fund education all they want?
Painter explained that the cap is a product of the federal funding. Basically, the state currently receives about $73 million in impact aid from the federal government in districts where the federal government has a big presence (think military bases). The state can deduct that $73 million against what it has to put in, but only as long as the state passes the disparity test and local government contributions aren’t wildly uneven.
Removing that cap would mean the state couldn’t deduct that money, Painter explained, and that it would have a big cascade of impacts on how some districts are funded.
“We would end up with a much more equalized formula. You’d would end up with districts with impact aid that wouldn’t be deducted so those districts would get a lot more money, districts that had high tax bases would be able to contribute a lot more because there’d be no cap and districts that did not have a local tax base and did not have impact aid would be no better off,” he said. “There would be a lot more unequal funding between districts if we failed that disparity tests and just got rid of that cap.”
Why it matters: That last point is really important to keep in mind here. While there’s an overall push to increase education funding broadly, it appears that some House Republicans are interested in a more targeted approach. The more targeted the approach, it seems, the more unequal the impacts may be felt. Changes to the local contributions would not only have the impact of pushing the decision to levy higher property taxes to local governments but it would also open the door for greater disparities between wealthier local governments and everyone else.
Matt Buxton is a long-time political reporter who has written for the Fairbanks Daily News-Miner and The Midnight Sun political blog. He also authors the daily politics newsletter, The Alaska Memo, and can frequently be found live-tweeting public meetings on Twitter: @mattbuxton.
Matt Acuña Buxton is a long-time political reporter who has written for the Fairbanks Daily News-Miner and The Midnight Sun political blog. He also authors the daily politics newsletter, The Alaska Memo, and can frequently be found live-tweeting public meetings on Twitter.
