District may lose more funds

MAT-SU -- Just when the Mat-Su School District had hopes of coming up with a balanced budget for next year, the state Dept. of Education and Early Development (DEED) announced results of a study that could cost the district a million or more in state funding.

The Alaska School District Cost Study was conducted by the American Institute for Research and was published last week on the DEED Web site with little fanfare. Its ramifications, however, could be far-reaching, especially for districts that rely heavily on state funding, as does Mat-Su.

The study used several factors to compare the costs of "doing business" among the state's school districts. It used Anchorage as a baseline, comparing costs for personnel, energy, supplies and travel to come up with a figure for each district relative to what those things cost in the state's largest city.

Amazingly, according to Mat-Su officials, the study found it cheaper to do business in the Valley then in Anchorage -- in spite of the fact that the Valley is a combined rural/urban district and spans about 25,000 square miles. It rated Mat-Su School District a .99 to Anchorage's 1.0.

Mat-Su school officials were shocked. "I find it very hard to believe it is less expensive to do business here than in Anchorage," said Kim Floyd, public information officer for the district. "We don't believe we've gotten a fair shake."

Floyd said administrators planned to work with Valley legislators to see how the damage could be minimized.

The most recent cost study conducted by the state found Mat-Su to be just slightly more expensive than Anchorage, giving it a rating of 1.01, or two percentage points more. "At one point, before that, we were at 1.06," Floyd added.

While the study found higher costs for energy (1.06), supplies (1.26) and travel (1.22) in the Mat-Su than in Anchorage, it rated personnel costs cheaper, at .97 to Anchorage's 1.0. However, personnel costs weighed so heavily in the overall rating, (88 percent of the final tally) it brought Mat-Su's "score" down.

Furthermore, the personnel cost rating was not based on what the Mat-Su Borough School District actually paid teachers and other workers, but on statistical averages for the area, said Eddy Jeans, school finance manager for DEED. "They basically looked at what people were willing to work for in that region, in various occupations," he said. "They found people in the Mat-Su are basically willing to accept less pay than people in Anchorage."

Jeans noted that the previous cost factor study was based on actual wages. "But districts always argued that the differentials were not right," he said. "In fact, as long as I've worked here they've said it wasn't right."

The reason a mere percentage point or two is so crucial is because the state allocates education funding to districts based on a complicated formula, of which the cost-differential ratio accounts as much as 10 percent. When the amount in question is in the tens of millions of dollars, one or two percent could offset an entire spending plan.

The numbers are not final, but Jeans estimates the state will have contributed $67.5 million to the Mat-Su district's budget this year. The district is currently facing a budget shortfall of more than $3 million. Next year's budget is due to be presented before the school board on Feb. 5.

"If we had stayed at 1.01, we could have balanced the budget [for next year]," Floyd said. That is now in jeopardy, since the change will surely mean a loss of state funds, she said.

Some school districts stand to gain funds by the new cost study. The North Slope Borough, for example, was found to be the most expensive district to do business in, with a rating of 1.58 -- eight points up from their last rating of 1.5. Other districts showing substantial gains were Kenai, Fairbanks, Yakutat and several others. On the other hand, the Aleutian Region received a rating of 1.46, down from their previous 1.74, a difference of 32 percentage points. The Denali Borough, Kuspuk, Nome City, Pelican City, Southwest Region, Tanana City, Yukon Flats and Yupiit all received ratings that differed by 15 percentage points or more from their current scores.

Overall, though, Jeans said, "there were a lot more losers than winners."

The actual fiscal ramifications may not be known at least until some time next week, Jeans said, when all of the fiscal data for next year's budget are calculated by his staff.

Furthermore, the study has virtually no effect until the legislature enacts a law that adopts the new data. The previous ratings are a part of Alaska Statute 14.17, Jeans said.

The legislature convened Jan. 21.