Finance committee warns proposed state rule could expand what counts as local contribution to schools

At the Sept. 25 municipal board finance committee meeting, Mr. Ratliff, the district’s chief financial officer, briefed members on a proposed regulation from the state Department of Education (DEED) that would change the definition of “local contribution.”
Ratliff explained the proposal would remove language limiting local contribution to money “appropriated to a school district’s operating fund” and thereby allow special‑revenue funds — including transportation, student nutrition and activity funds — to be counted in the state’s local contribution calculation. He said that, for the Anchorage district, transportation and preschool together represent about a $15 million annual municipal line item that could be affected.
“So by removing this separate definition, they’ll expand that special revenue funds, which should include grants, student nutrition, food service, and student activities,” Ratliff said. He told the committee the change would also broaden what the state could accept as in‑kind services; where current guidance explicitly lists items such as insurance, utility payments and facility maintenance, the new language would refer more generally to “services,” leaving the department discretion to determine what qualifies.
Committee members asked how the change would be applied in practice. A board member asked if the municipality could still directly pay those costs; staff responded that, while the municipality may pay directly, the regulation’s broader definition and the in‑kind language would give the commissioner discretion to determine whether such payments count as local contribution. The staff presentation noted that, if adopted, the regulation could affect how school resource officers, transportation and other locally provided services are treated for the state local‑contribution maximum.
Board members raised concerns about the vagueness of the draft regulation and the potential for future commissioners to change interpretation. Staff noted the State Board of Education was scheduled to consider the regulation at its October meeting and that public comment opportunities accompany board action; staff told the committee they would notify board members about how to submit comment.
Ratliff recommended the committee and district stakeholders monitor the State Board process and be prepared to supply written and oral comments describing local funding structures, especially for programs such as transportation and preschool that local governments often pay for outside the operating fund.