Policy Update: Alaska: Finance Overhaul

Vital Statistics
53	Public school districts
482	Public schools
132,000	K-12 enrollment
36.9%	Minority students
11%	Children in poverty
13.8%	Students with disabilities
$1.1 billion	Annual K-12 expenditures (all revenue sources)

The Republican-controlled legislature also attached part of the Democratic governor's Quality Education Initiative to the finance bill, authorizing the state education department to adopt mandatory academic-content and performance standards for schools and create an aligned assessment system. That system is to be fully implemented in 2002, when high school students will have to pass an exit examination to receive a diploma, and poorly performing schools could be subject to state intervention.

Like the old formula, the new finance system takes into account the higher operating costs of rural districts that must ship in everything by plane and of small schools that have no economies of scale. But it gives somewhat less weight to those factors. The formula shifts from basing aid on "instructional units"--a group of 13 secondary school students or 17 elementary school students--to a simpler head count.

"Until we do the counts in October and distribute the money, we don't know how this is going to play out," Shirley Holloway, the state superintendent of schools, said last fall.

But most rural districts probably will qualify for less state aid--sometimes far less. Each district is guaranteed as much aid in future years as it now gets, as long as enrollment does not drop. Districts guaranteed those minimums, however, must forgo 40 percent of any additional aid they receive for new students, drastically limiting future funding increases.

For example, the Lower Kuskokwim district, which serves about 3,400 children in southwest Alaska, most of them Alaska Natives in tundra villages, will receive about $8 million less over 10 years than it would have under the old formula, Superintendent William Ferguson estimates.

"We're going to maintain our bilingual program, because it's an integral part of what we're doing here," he says. But vocational education eventually may be a casualty. The district will be hit especially hard by the new provisions because it has an extensive bilingual program that teaches many students in the Eskimo language of Yup'ik.

The new formula doesn't really kick in until the 1999-2000 school year, and most districts won't start seeing less money for new students until the year after that.

But educators say the law already has had one effect: Urban districts are rushing to expand their teaching staffs. That has caused a shortage of teachers in Alaska, particularly in rural areas that have lost some teachers to urban schools.

"Anchorage has hired 140 new teachers this year, and that's being replicated across urban Alaska," says John Cyr, the president of NEA-Alaska, the state affiliate of the National Education Association.

The urban lawmakers who have a majority in the legislature argue that they have corrected a funding formula that unfairly favored rural districts.

"The goal was to fix a formula developed more through a political process than an analytic process," explains Sen. Gary Wilken, a Republican from Fairbanks who heads the Senate education committee. "We've correctly identified the cost of educating students in Alaska."

But critics of the formula, including most education groups, contend that it is as much a product of political expediency as its predecessor.

"The thing that bothers me about the rewrite of the formula is that nobody looked at the impact this is going to have on education," says Cyr. "It's a political fix, not an educational fix."

The funding formula was only the most prominent area where urban-rural tensions simmered in 1998. The division was also reflected in legislative debates over whether Alaska Natives should retain preferential rights to hunt and fish in protected wilderness areas. Rural legislators and residents saw the finance law as part of an attack on rural populations, and some also viewed it as racist.

"How can we not view this as an attack on our people?" says Sen. Georgianna Lincoln, a Democrat who represents a sparsely populated area in central Alaska.

During the legislative debate, urban lawmakers were quoted as suggesting that Alaska's commitment to support full-service schools in every village might not be realistic. Rep. Con Bunde, a Republican from Anchorage, told the Anchorage Daily News that villagers should not expect state subsidies to maintain the same level of educational opportunity that is available in urban areas.

The issue is certain to be revisited. "The bill is still not perfect," the governor said at the signing ceremony. "It includes a provision for further study of fairness in school funding. And we want to review a last-minute amendment added by the legislative majority that, beginning in two years, means some rural districts will only get limited funding increases.

"We will make sure those reviews happen, and we will make sure all Alaska students are treated fairly."

The governor is also expected to push for portions of his education initiative, such as increased funding for teacher training, that were left out of the 1998 legislation. And Holloway says her agency will continue to work on raising teacher standards by developing a "master teacher certification" to recognize teachers who attain certification by the National Board for Professional Teaching Standards. In 1998, a new requirement that newly certified teachers pass the PRAXIS teachers' examination kicked in.

Education groups generally back Knowles' plan, including the provisions that authorized mandatory state standards for schools and a new state assessment system.

"I think it's fabulous, even if there's only $16 per student to implement it," says Ferguson, despite his estimate that as few as 75 percent of Lower Kuskokwim seniors will pass the graduation exam in 2002.

The high school assessment, which was approved by the legislature in 1997, is being field-tested this year. Tests at two other grade levels will be piloted in 2000, and all the tests will "count" starting in 2002.

It is not only students who will be expected to meet standards. The law mandates that the state's annual report card--which now includes demographic data and scores on standardized, norm-referenced tests--break down data at the school and district levels.

Starting in 2002, schools will be grouped into four categories based on multiple measures, including such factors as test scores, graduation rates, and student-attendance rates. Schools in the lowest two categories will have to draft improvement plans in consultation with state officials. The state school board is charged with determining the consequences or supports for schools that "need to turn around," Holloway says.

This year, districts must begin submitting plans to help students and teachers meet the standards.

But Cyr, who taught elementary students in the Eskimo village of Kipnuk for many years, points out that lawmakers have approved the state's first mandatory standards at the same time they have shifted resources away from Alaska's lowest-performing schools.

"Sitting here in my office in Anchorage, with the piped-in music, it's easy to lose the reality of what it means to be in Aniak or Akiachak," he says, referring to two villages on the Kuskokwim. "If we expect schools out there to do a good job, we need to step up to the table and pay for it."