Alaska Senate Passes Education Bill With 4% Property Tax Cap

The Alaska State Senate passed a major education reform bill Tuesday night after adopting an amendment to cap required local contribution growth. The provision sparked debate over state versus local school funding responsibilities.

The Senate first rejected an amendment to cap required local contribution growth at 3.5 percent in a 10-10 tie vote. It then approved a second amendment by an 11-9 margin. The required local contribution is a state-mandated calculation based on property values that determines how much municipalities must contribute to school funding. As property values rise, the required local contribution increases and state aid decreases by an equal amount.

Jesse Bjorkman sponsored both amendments. He said the cost shift from state to local governments had defunded school districts even as the legislature raised the base student allocation last year. Bjorkman said when the check arrived at local school districts, it was actually less money than the state had funded K-12 education before. He cited the Kenai Peninsula Borough School District, which lost $3.6 million in revenue due to required local contribution increases last fiscal year, compared to $700,000 lost to declining enrollment.

Loki Tobin opposed the amendments. She said the Senate Finance Committee had modeled a 5 percent cap and understood its consequences. Tobin said at 3.5 percent, she did not know what the impact would be to the budget. She warned the chamber should not rewrite the education funding formula on day 120 of the session without thorough vetting.

Lyman Hoffman read a letter from the Alaska Council on School Administrators supporting the 5 percent cap as a moderate approach that provides budget predictability while recognizing the need to evaluate long-term impacts. He noted the fiscal cost of capping required local contribution growth would reach $41.6 million by fiscal year 2035.

The bill establishes a state energy grant program that covers a three-year average of school energy costs. The program is subject to appropriation but would reimburse districts for energy expenditures in brick-and-mortar schools.

The bill also establishes a three-year pilot teacher student loan repayment program for educators in STEM fields, special education, and English language learning. Teachers in those fields would receive up to $5,000 annually in loan repayment.

The Senate passed the bill 17-3 on final reading. The bill now returns to the House for concurrence on Senate amendments.

Several municipalities supported a lower cap on required local contribution growth, including the Alaska Municipal League, the Borough of Kodiak, the Matanuska-Susitna Borough, the Fairbanks North Star Borough, and the Kenai Peninsula Borough.