#1What drives the cost of education in Alaska? Dayna Jean DeFeo, PhD Director, Center for Alaska Education Policy Research Institute of Social and Economic Research University of Alaska Anchorage April 15, 2019 Presentation to Alaska House Education Committee#2You're hearing from Here today Dayna Jean DeFeo ་ Research Assistant Professor of Education Policy Director, CAEPR UAA Institute of Social and Economic Research UNIVERSITY of ALASKA ANCHORAGE With input from ▸ Matthew Berman о 。 Professor of Economics ▸ Mouhcine Guettabi о Associate Professor of Economics ▸ Alexandra (Lexi) Hill о Education Policy Researcher ▸ Diane Hirshberg о 。 Professor of Education Policy ▸ Ralph Townsend O ISER Director 2#3Today's presentation 1. Context 2. What do we pay? 3. 4. Do we really pay that much more than the US average? What drives the cost? 5. Where are areas of opportunity? Student achievement ▸ Not directly addressed in today's agenda ▸ Will give input where data were readily available 3#4Context ▸ 130,000 k-12 public school students о 22% Indigenous ▸ Just over 500 public schools о Most funding comes from state о 。 Distributed across urban, rural hub, and remote rural communities ▸ State funds schools with 10+ students ▸ No Bureau of Indian Education (BIE) or tribally operated public schools 4#5Alaska exceptionality Diversity challenges looking at anything ▸ In aggregate ▸ In comparison ▸ As averages ▸ With small sample sizes "We're different from other places." ▸ And we're proud of that о 。 Underscored in education system • CCSS Alaska-specific standardized tests ▸ Exercise caution when looking at nationally normed measures of student achievement (NAEP) O о Do they know it? Can they apply it in the testing context? 5#6What do we pay? Question 1 6#7Alaska education funding State General Fund ▸ High proportion of total cost comes from the state 65% 22% 12% Other revenue sources + Federal - No BIE schools limits federal dollars for Indigenous students + Grant dollars + Local contributions - REAAs have no tax capacity + Other small revenue streams + Investment earnings + In-kind services ■Local ■Federal ■ State Source: US Census 2016 Public Elementary-Secondary Education Finance Data 7#8How do we come up with GF spending? Start with BSA ▸ Set by legislature ‣ Increased about 8% in last 10 years O 。 Not adjusting for inflation ▸ We have not done an adequacy study to determine actual need о 。 Called for in HB 278 Apply school foundation formula to determine what is actually spent More recent modifications ▸ Late 1990s - McDowell revises size adjustment ► 2002 – American Institutes for Research (AIR) develops structure including geographic cost differential ▸ 2005 - ISER updates cost differentials ‣ 2015 – ISER develops - community cost differentials 。 Not implemented#9How does the school foundation formula work? In a nutshell Starts with BSA ▸ Makes 3 categories of adjustments for differences among schools: Key considerations ▸ Includes о 。 Federal payments in lieu of taxes . Districts keep 10% O Required local contribution о School size 。 District cost factor о о Adjustments for certain programs о Hold harmless provisions ▸ Excludes о Limited extra local contribution 9#10Average 2016 per pupil spending: $17,510 Source: U.S. Census Bureau 2016 Annual Survey of School System Finances To put this in context... ▸ Private school tuition in Anchorage O о Lower costs relative to rest of state • Different student population (e.g., intensive SPED) Different services (e.g. transportation) ▸ Daycare costs in Anchorage Average $1000/month Private school tuition in Anchorage Pacific Northern Academy $13,815/year Anchorage Montessori (elementary program) $10,700/year 10#112016 spending per pupil Instruction employee salaries Instruction employee benefits ■Instruction staff support Pupil support ■General admin. School admin. Other Idaho Arizona Oklahoma Mississippi North Carolina Tennessee Florida Nevada Texas South Dakota Alabama Colorado New Mexico Georgia Arkansas Indiana Kentucky Kansas South Carolina. Missouri Oregon Louisiana Iowa West Virginia Montana Virginia Wisconsin California Washington Michigan AVERAGE Ohio Nebraska Minnesota. Average Maine North Dakota Hawaii 11 Illinois Maryland Source: U.S. Census Bureau 2016 Annual Survey of School System Finances AK adjusted to ANC Delaware New Hampshire Pennsylvania Rhode Island Massachusetts Alaska Vermont New Jersey Connecticut D.C. Alaska #6 New York 0 5,000 10,000 15,000 20,000 25,000#12Do we really pay that much more than the US average? Question 2 12#13Comparing apples to apples ▸ $17,510 is an average 13 о Includes costs for different places different programs ▸ Statewide о O Cost of goods varies by place 。 We typically adjust costs with differentials relative to Anchorage ▸ Nationally 。 Cost of living in Anchorage is higher than national average#14First: Adjust to Anchorage using community cost differentials Last updated by ISER, 2005 Galena North Slope Differentials 100-120 Differentials 121-150 Differentials Above 150 14 Northwest Arctic Yukon Flais Tanana Bering Strait Nome- Yukon-Koyukuk Fairbanks North Star Nenana Alaska Gateway Denali -Delta/Greely Lower Yukon Iditarod Matanuska Kashunamiut- Susitna Copper River Skagway St. Marys Haines Kuspuk Juneau Yupiit- Kenai Peninsula Chugach Yakutat Lower Kuskokwim Chatham Petersburg Dillingham Southwest Lake Region and Valdez Hoonah Wrangell Pribil of Islands Peninsula Kodiak Island Cordova Pelican Southeast Anchorage Sitka Island Kake Ketchikan Bristol Bay Unalaska Klawock Gateway Aleutian Region A Craig Annette Island Hydaburg Aleutians East#15Alaska 2016 spending per pupil adjusted to Anchorage costs Utah Idaho Arizona Oklahoma Mississippi North Carolina Tennessee Florida Nevada Texas South Dakota Alabama Colorado New Mexico Georgia Arkansas Indiana Kentucky Kansas South Carolina Missouri Oregon Louisiana Iowa West Virginia Montana Virginia Wisconsin 15 California Washington ■Instruction employee salaries Instruction employee benefits Instruction staff support Pupil support General admin. ■School admin. ■Other Michigan AVERAGE Ohio Nebraska Minnesota Maine North Dakota Hawaii Illinois Maryland Source: U.S. Census Bureau 2016 Annual Survey of School System Finances AK adjusted to ANC Delaware New Hampshire Pennsylvania Rhode Island Massachusetts Alaska Vermont New Jersey Connecticut D.C. Average AK adjusted to ANC #12 Alaska #6 New York 0 5,000 10,000 15,000 20,000 25,000#16Alaska 2016 spending per pupil adjusted to US average living costs Instruction employee salaries Instruction employee benefits Instruction staff support ■Pupil support General admin. School admin. Other Utah Idaho Arizona Oklahoma Mississippi North Carolina Tennessee Florida Nevada Texas South Dakota Alabama Colorado. New Mexico Georgia Arkansas Indiana Kentucky Kansas South Carolina Missouri Oregon Louisiana Iowa West Virginia Montana Virginia Wisconsin California Washington Michigan AK adjusted to ANC COLI AVERAGE Ohio Nebraska Minnesota Maine North Dakota Hawaii Illinois Maryland AK adjusted to US average Average AK adjusted to ANC #12 Source: U.S. Census Bureau 2016 Annual Survey of School System Finances AK adjusted to ANC Delaware New Hampshire Pennsylvania Rhode Island Massachusetts Alaska Vermont New Jersey Connecticut 16 Alaska #6 D.C. New York 5,000 10,000 15,000 20,000 25,000#17What drives the costs? Question 3 17#18What drives the cost? It's not... ▸ High per-pupil teacher salaries ▸ Extra contributions to retirement systems Evidence that it is…… ▸ Small schools ▸ Healthcare ▸ Energy ▸ Geographic costs O Already discussed 18#19Utah Per pupil teacher salaries Instruction employee salaries Instruction employee benefits Instruction staff support ■Pupil support ■General admin. School admin. Other Arizona Oklahoma Idaho Florida Mississippi Alabama Nevada Indiana AK adjusted to ANC COLI Tennessee Arkansas South Dakota Oregon Colorado South Carolina New Mexico North Carolina Michigan Louisiana Kentucky Kansas West Virginia Georgia Texas Missouri California Washington Wisconsin AK adjusted to US average – 23% below average Montana AK adjusted to ANC Ohio AVERAGE Virginia Iowa Illinois Nebraska Average AK adjusted to ANC #23 19 Source: U.S. Census Bureau 2016 Annual Survey of School System Finances Hawaii Maine Alaska Minnesota North Dakota Pennsylvania Delaware Maryland New Hampshire Rhode Island Vermont Massachusetts New Jersey Connecticut New York D.C. Alaska #14 0 2,000 4,000 6,000 8,000 10,000 12,000#20Alaska's small schools Alaska has a lot • Of the 443 "regular" schools 58 schools (13%) over 22 districts with fewer than 25 students • 34 schools (8%) have 26-50 students • More costly to operate High community cost of living • Don't benefit from economies of scale in capital costs Relatively small class sizes Higher turnover • Teachers Our legal and ethical responsibility • Hootch . . settlement (1976) Kasayulie v. State (1999) Moore v. State (2004) . Principals 20#21Healthcare costs ▸ Alaska has highest healthcare costs in US о Not unique to education Negatively affects private and public sector ▸ Health care costs are part of overall compensation о Starting with fixed budget, growth rate in healthcare costs puts downward pressure on wage Makes competing for teachers more difficult ► Benefits costs (using chart from before) о O 4th highest in nation 。 11 above average after all adjustments 21#22Energy is expensive and variable Costs ▸ Fuel O 。 Costs more in remote places O Costs fluctuate (a lot) 。 Districts have different O capacities to negotiate competitive prices ▸ Electricity 。 Schools don't benefit from о Power Cost Equalization (PCE) program Amount needed ▸ More to heat schools in colder places 22 ▸ Regardless of the number of students in your building, you have to heat it#23Where are the opportunities? Question 4 23#24So some points and opportunities Beyond education policy ▸ Fixed costs 。 Healthcare о O Operating costs ▸ Reality – basket of goods - 。 Stuff costs more in Alaska о о Stuff costs more in remote and rural places Policy opportunities Teacher salaries are one of the few areas with flexibility ▸ But proceed with caution ▸ Salary is critical to other objectives о O Recruitment Retention ▸ Other states are increasing teacher salaries 24#25Student achievement directly related to teacher quality ▸ Alaska has teacher turnover problem о Bigger in rural communities Ample research on teacher turnover and student achievement ▸ Nation has a teacher shortage о 。 Alaska competes for teachers in national market 。 Vast majority of our new teacher hires prepared out-of-state . Attract teachers • Attract GOOD teachers Retain them Attracting and retaining good teachers in to high-poverty 25 schools, unfamiliar cultural contexts, and new geographies costs more.#26Teacher compensation What's going on ▸ On average, Alaska teacher salaries about 15% below where they should be ▸ "Right” salary varies by community & working conditions there O 116% difference between high and low recommended salaries Opportunities to consider ▸ (More research needed) ▸ Improve 。 Salaries O O Working conditions ▸ Reduce turnover O 。 Invest in retention ▸ Maintain tenure 。 This is a cost savings о 26#27Fuel What's going on ▸ Districts have different capacities to negotiate competitive prices ▸ Changing prices challenge fiscal planning Opportunities to consider ▸ (More research needed) ▸ State negotiate fuel prices to ensure effective purchasing 。 Remove fuel from the funding formula 27#28Needed research Adequacy study ▸ Case studies around о Alternate models O о Settings that realize better-than-predicted outcomes 。 Efficiencies ▸ Causal studies around о 。 School cost variables (inputs) and student outcomes о Benefits (healthcare & retirement) as drivers of Alaska's ability to recruit & retain educators 28#29What we spend / How we spend it ▸ We could spend a lot more and still not produce desired outcomes. о We need to spend the money well. ▸ Reducing spending without changing how dollars. are spent will likely harm outcomes. о 。 It is difficult for districts to absorb cuts without increasing class sizes and laying off teachers. 29#30Thank you, questions, follow-up Dayna Jean DeFeo Director, Center for Alaska Education Policy Research 907.786.5494 [email protected] ISER team: http://iseralaska.org/ ▸ Matthew Berman ▸ Mouhcine Guettabi ▸ Alexandra (Lexi) Hill ▸ Diane Hirshberg ▸ Ralph Townsend 30