Taylor's school funding bill spreads North Slope's wealth

Posted: Friday, February 16, 2001

JUNEAU (AP) -- Sen. Robin Taylor's plan to revamp the state's school funding system would spread financial goodies from the Yukon-Kuskokwim Delta to his own Southeast Alaska district, while yanking millions in state aid and local taxes out of the North Slope Borough.

Taylor, R-Wrangell, has long argued that Senate Bill 36, the sweeping rewrite of the school funding formula passed in 1998, hurt Wrangell and Petersburg. His attempts at a fix failed the past two years in the Legislature, but the measure introduced Thursday packages the fix with provisions attractive elsewhere in the state.

''We all knew at the time that Senate Bill 36 had some flaws,'' Taylor said.

The biggest financial chunk of Taylor's bill -- and the provision likely to generate a bitter battle -- would not only eliminate state education aid to the oil-rich North Slope Borough, it would require the borough to send some of its local property taxes to the state for redistribution to other areas.

Here's how it would work:

Under current law, the state pays all of most districts' basic educational need, minus either 45 percent or the equivalent of a 4-mill tax on property within the municipality. Only four communities choose the 45 percent option -- the North Slope Borough and the cities of Valdez, Unalaska and Skagway. All four have large tax bases and small populations, and choosing the 45 percent option brings them more in state aid.

Taylor's bill would eliminate the 45 percent option, which he estimates would save the state $13.3 million in aid to the four municipalities. The North Slope would lose all of its state aid because a 4 mill property tax on the oil and gas infrastructure there far exceeds the district's basic need.

''If I'm going to pay 4 mills on my house in Wrangell, then everybody else ought to pay 4 mills,'' Taylor said.

A separate provision would force the North Slope to pay about $22.9 million of its local property taxes -- the difference between 4 mills and its basic need -- to the state, Taylor estimates. The large, mostly Alaska Native borough would be the only district in the state forced to pump money into the system.

The idea alarmed lawmakers representing the North Slope, where property is already heavily taxed to cover debt payments and other municipal services.

''When you're starting to rob money from one school district to give it to another, we consider that terribly unfair,'' said Sen. Donny Olson, D-Nome.

However, Taylor's proposal contains other elements designed to build support from other areas of the state, although a district-by-district analysis of its impacts was not available.

It would repeal the so-called ''eroding floor'' installed in Senate Bill 36, which pays some rural districts only 60 percent of their current state aid for new students, which could reduce per-student aid in future years. Eliminating that provision is a high priority of Gov. Tony Knowles and many rural lawmakers.

''The one area of most concern to me was the eroding floor and he does plan on fixing that,'' said Sen. Lyman Hoffman, D-Bethel, whose vast Bush district includes both the villages of the Yukon-Kuskokwim Delta and the city of Unalaska. ''We have to weigh the whole package and see how everything falls out.''

The bill also adds $17.4 million earmarked for vocational education, and increases the per-student amount of money that goes into the formula by from $3,940 to $4,150 -- an increase of about $45.4 million statewide, Taylor said.

The proposal intrigued Sen. Gary Wilken, one of the main architects of Senate Bill 36, who had said he opposed revising the formula this year.

Wilken, R-Fairbanks, applauded the bid to pull money from the North Slope and increase the amount going into the formula overall, but expressed doubts about repealing the funding floor and dictating policy to school districts on vocational education.

The Department of Education and Early Development was reluctant to comment before conducting a detailed analysis of the bill.

''We haven't analyzed it, but we agree that we need more money through the foundation formula for schools,'' said Harry Gamble, a spokesman for the department.

For school districts in Taylor's Southeast Alaska district, the bill would bring home two benefits:

--Schools in Wrangell and Petersburg would be counted separately instead of as a single school, as they are under Senate Bill 36. The distinction costs the two districts about $600,000 a year, said Eddy Jeans, the state's school finance manager.

--School districts that lose 4 percent or more of their students in a year would lose the money associated with those students gradually over three years. Ketchikan, the largest community in Taylor's district, has suffered big enrollment drops in recent years.

The bill would also require the Department of Education and Early Development to conduct regular studies of the cost of doing business in various districts around the state and to adjust the funding formula accordingly. Under current law, the district cost differentials are revisited only when the law is revised, prompting complaints they are skewed by politics.

In a recent report on Senate Bill 36, the department criticized the current cost differentials and the study used to set them and asked for money to conduct a more in-depth study.

The bill was referred to the Health, Education and Social Services Committee and the Finance Committee.

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