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Alaska To Take On School Finance Reform

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With school finance reform expected to dominate Alaska's legislative session, rural lawmakers there are bracing themselves for a long four months.

Three of the four finance proposals now under consideration in the Republican-led legislature ask that people living in the rural boroughs begin to contribute to the cost of educating students.

Under the current system, residents of populated areas such as Fairbanks and Anchorage supplement state education aid with their own local property taxes, while the state pays the entire cost of educating students in rural areas.

Squeezed by growing enrollments in recent years, urban districts are asking for a greater share of state money.

Sen. Gary Wilken, a Republican from Fairbanks who heads the Senate education committee, says the state needs to adopt a system that would send more money to the areas that serve the most students.

State at a Glance:Alaska

Population: 551,947
Governor: Tony Knowles (D)
State superintendent: Shirley J. Holloway
Number of K-12 students: 129,425
Number of K-12 public school districts: 53
Fiscal 1998 K-12 budget: $796 million

His committee has proposed a financing system that would allot money to districts on a per-student basis, weighted according to the cost of operating schools in different parts of the state. All districts would pay taxes to defray expenses.

"A lot of folks are trying to characterize this as an effort to take from the rural to give to the urban, and that's not the case," Mr. Wilken said. "The current formula is complicated and it's unfair."

Proposals from Democratic Gov. Tony Knowles and the House education committee also call for dividing up school funds according to enrollment. Alaska's schools now receive money from the state based on the number of "instructional units," or classes full of students, that they serve. Factors such as the size and location of the school are also considered in the present formula.

Rural Opposition

Some rural legislators such as Sen. Al Adams acknowledge that the funding formula should be revised, but they argue that taxing rural areas is unnecessary when the state has other sources of cash. Mr. Adams, a Democrat who represents the North Slope Borough, a well-to-do rural district that would be hit by new tax requirements, suggests taking money from the state's reserves or the permanent fund that the state set up with its oil revenues.

"Many of the rural residents don't have employment records," Mr. Adams said. "Some depend on state and federal aid. You can't tax those people."

Sen. Georgianna Lincoln, who represents a rural district almost as large in area as Texas, says legislators need to weigh more seriously the costs associated with rural school districts, where even small necessities like office supplies must be delivered by plane.

Each of the current proposals would adjust funding according to the wide range of education costs in different parts of the state. But Ms. Lincoln said there's a danger that rural areas would be shortchanged and that education programs would suffer.

"We're setting up areas of Alaska to fail," she said.

Everyone Would Pay

Rural legislators are quick to note that while their residents do not pay taxes to the state, in many cases the state government does receive money for the land. Under the Alaska Native Claims Settlement Act, the federal government already reimburses the state for what Alaska could collect in property taxes for many of the rural areas.

But some legislators from cities and municipalities want all residents to make an individual contribution.

Because the incomes of rural residents vary widely, from the very rich to the very poor, Sen. Wilken of Fairbanks suggests that rural residents should pay some type of income tax, while urban residents would continue to pay property taxes. Alaska residents do not pay local or state income taxes.

"There are very few people in Alaska that don't receive some type of income," Mr. Wilken said. "There is wealth out there. It's time that those people help."

Outnumbered by their urban counterparts, some legislators representing rural areas are supporting Gov. Knowles' proposal, which would not tax rural areas. The governor's plan would simplify the finance formula and pump extra dollars into public schools from the state reserves.

But with Republicans and urban legislators making up the legislative majority, all that rural legislators can do "is stop a bad piece of legislation, or do revisions," Sen. Lincoln said.

Eddy Jeans, the manager of school finance for the state education department, said the legislative session will definitely result in a shift in the funding formula.

"Whether or not it's going to devastate the rural school districts awaits to be seen," Mr. Jeans said.

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