Educators across the state, and especially in the Kenai Peninsula Borough School District, can breathe a collective sight of relief.
Gov. Frank Murkowski on Friday signed into law Senate Bill 202, the education funding legislation passed by the Legislature last month.
"We're very pleased that the governor has moved forward with addressing education funding needs," said Melody Douglas, the Kenai Peninsula district's chief financial officer. "At least now we know what we're dealing with."
Educators nervously have been awaiting Murkowski's action on the bill, as he threatened line item vetoes on some parts of the Legislature's fiscal year 2004 budget.
The bill rolls Learning Opportunity Grant money into the state's foundation formula for education, meaning districts across the state will receive $4,169 per student, up from the $4,010 per student they have received the past several years.
Learning Opportunity Grants (LOGs) were in the past awarded to districts to use for curriculum purchases and remediation programs. The money now will be available for a wider range of uses. Rolling the grants into the formula also means districts are eligible for additional contributions from local sources, including the Kenai Peninsula Borough.
The bill represents a $32 million addition to the state's foundation formula and is a 3.9 percent increase the largest single increase to education funding in Alaska in the past decade, Murkowski said.
The bill is a sort of saving grace for the Kenai Peninsula. Officials in the district have been struggling for months to come up with a balanced budget for the 2004 fiscal year.
The preliminary budget presented to the school board was about $2.9 million short, even after 56 teachers were laid off as a result of declining enrollment. To fix the problem, the school board approved a budget that cut curriculum adoption, reduced staff in the central office, revised the custodial staffing formula, abolished the unallocated fund and significantly reduced extracurricular and supply budgets.
Douglas and other district officials have said all along that some of those cuts were only a temporary fix and that the budget would have to be revised after state funding was approved.
For example, the district cannot function with the severe supply budget cuts, and the unallocated fund is important to allow the district the flexibility to hire extra teachers if a particular class is overcrowded.
Douglas said Friday the increase to the funding formula will help fix those problems. The district stands to receive about $2.8 million from the increase, and the administration will recommend the school board use that money to reinstate the supply budget ($1.2 million) and unallocated fund ($400,000), she said.
The district also will recommend the additional money be held in reserve, because the closure of Kenai's Big Kmart and potential layoffs at Agrium may mean a further decline in student enrollment next fall, which would cut some funding from the district.
The increase in the funding formula also means the district will not be forced to cut extracurricular activities next fall an emergency plan the district was considering in case Murkowski did opt to veto SB 202. Nonetheless, school board members are likely to continue discussing the district's approach to extracurricular activities as funding continues to be tight.
Also Friday, Murkowski promised to support full school debt reimbursement, which is of special importance to the Kenai Peninsula. Last October, voters approved a bond issue for a new middle school in Seward to replace the existing building, which is falling to pieces.
The bond was contingent on at least 60 percent debt reimbursement from the state, which Murkowski threatened to cut. With or without the bond, the crumbling middle school would have had to be replaced, though, and the governor's support of debt reimbursement means the construction will not put additional strain on the district's budget.
Not all aspects of Senate Bill 202 were positive for the district. Included in the bill is a change to the state's method of funding pupil transportation.
At present, the state reimburses districts for 100 percent of their student busing costs. The new bill, however, creates a grant program, funding districts on a per-pupil basis derived from their 2003 spending levels.
"Under the current reimbursement program, there is no incentive for local school districts to find efficiencies," Murkowski said in a press release. "This bill provides those incentives, because if the schools can provide more efficient busing, they can apply any savings from the grant to other classroom activities."
KPBSD officials contend the bill punishes the district for an already efficient transportation system. Nonetheless, the district is thoroughly analyzing its transportation program to find ways to cut the $650,000 the state's new funding system will cost locally.
If the full balance of the cuts can't be made, district administration will ask the board to seek a direct appropriation from the Kenai Peninsula Borough, as pupil transportation is one area the borough is legally allowed to fund "outside the cap."
The governor's signing of Senate Bill 202 also came with some conditions. He said during a press conference Friday that the state must take serious measures to make sure education funding is used wisely to benefit students in the classroom, and that achievement and efficiency must be improved.
One of Murkowski's hopes is to consolidate some school districts across the state for the sake of efficiency. For example, there are 17 districts in Alaska that serve fewer than 250 students.
"One has to wonder if all these districts are necessary and how much we could possibly save by consolidation," he said. "We could ask the question, why shouldn't districts get together to use common payroll, common personnel, common purchasing departments?"
"I was pleased to note we're on target with the way we're operating the district and where we're heading," Douglas said.
Murkowski commended the Kenai Peninsula Borough School District in his speech Friday as well, repeatedly noting his approval of the recent decision to consolidate Nikiski and North Star elementary schools.
"We've seen a rather remarkable reaction where districts begin to look internally at increasing efficiency. We've seen a consolidation on the Kenai Peninsula, saving some $250,000," Murkowski said.
"I can't help but pick up on the remarks of one gentleman representing the school board on the Kenai Peninsula. And I quote, he stated, 'It's hard to remain credible if we have two schools less than half full less than 5 miles from each other and whine that we're broke,'" he said, quoting school board President Joe Arness.
"Well they did something about it. They reviewed their situation and took appropriate action."
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