Senate panel advances bill to stabilize Alaska school funding with enrollment averaging

The Alaska Senate Education Committee heard a bill Friday that would change how the state funds schools by allowing districts to use multi-year enrollment averages instead of annual counts, then recessed the hearing until the next day to continue consideration.

House Bill 261 would let districts use either a three-year average of prior student counts, the previous year's count, or the current year count for their budgets, whichever is greater. Supporters say the change addresses a timing problem where districts must make staffing decisions months before knowing final funding levels, contributing to teacher retention problems and school closures across the state.

"Our education funding process is broken," said Representative Andi Story, who co-chairs the House Education Committee and sponsored the bill. "School communities routinely do not learn their final funding levels for the upcoming school year until late May, after critical staffing and program decisions must be made."

The committee adopted a substitute version of the bill before taking testimony. The substitute removed provisions capping growth in required local contributions from municipalities, an issue addressed separately in Senate Bill 278, which the committee advanced earlier in the same meeting.

Heather Heineken, director of finance and support services for the Department of Education and Early Development, told the committee the fiscal note projects costs of $154.5 million in fiscal year 2027, rising to $226.3 million by fiscal year 2032. Story noted that the averaging component alone accounts for $113 million in the first year, with the remainder covering career and technical education programs and reading initiatives under the Alaska Reads Act that the House added to the bill. The department based its estimates on current enrollment data, acknowledging it lacks the capacity for more sophisticated modeling.

Twenty-six other states already use multi-year enrollment averaging, a practice recommended for Alaska more than a decade ago in a 2015 legislative study. The Alaska Association of School Business Officials presented modeling showing the bill would provide needed stability while costs would decline in later years as enrollment trends smooth out.

"This timeline forces districts to deliver a notice of possible non-retention, the pink slips, in the late spring, causing educators to be left in limbo unsure whether they have a contract for the following upcoming school year," Story said. "This matters because education operates in a competitive labor market. In the middle of a national teacher shortage, Alaska's families, children and communities cannot wait until the rest of the nation has already recruited the best teachers."

Multiple school superintendents testified in support of the bill, citing recent school closures as evidence the current system has failed. Dr. Cindy Micka, superintendent of the Kodiak Island Borough School District, told the committee her district closed one elementary school last year and considered closing another this year while cutting 35 positions totaling $2.7 million. Lily Boron, superintendent of the Haines Borough School District, said uncertainty about enrollment and funding delays staffing decisions, causing districts to lose qualified employees to other opportunities. Susan Nezda, superintendent of Hoonah City School District, said stable, predictable funding is vital to the budgetary process and leads to retention and recruitment improvement.