The Foundation Formula Explained
(It ain’t just the BSA, Felicia)

Whether you’re a parent, teacher, or community member, you should know how Alaskan schools are funded. At the center is the Foundation Formula, the tool we use to make sure education dollars are fairly distributed across our vast and diverse state. Here’s how it works, where federal dollars fit in, why it all matters, and where the holes are:

Step 1: Counting Students

It begins by counting students, using something called Average Daily Membership (ADM), the average number of students enrolled over a 20-day stretch in October. That includes kids in the classroom and in correspondence programs.

Step 2: Adjusting for Fairness

No two districts are the same, and the formula accounts for that. These adjustments give us the Adjusted Average Daily Membership (AADM):

• School Size: Small rural schools, get additional funding per student. It costs more to keep the lights on and to hire qualified staff in these areas.
• Location Costs: It’s not cheap to run a school in places like the Aleutians. Districts receive extra based on a geographic cost factor. But here’s the problem: that factor hasn’t been updated since 2008.
• Special Needs, Vocational, and Bilingual Education: Schools get a 20 percent increase for these programs. It’s a multiplier of 1.2 applied to students needing moderate special education, job training, or English language support.
• Intensive Needs Students: These are our most vulnerable kids. If a student requires one-on-one aides or specialized care, they count as 13 students under the formula. It reflects how much those services really cost.
• Career Training: For students in grades 7 through 12, there’s a 1.015 multiplier to support hands-on programs like shop, welding, or computer coding.

Once these adjustments are made, then adding correspondence students at 90 percent we get a more accurate number: the real cost of educating each district.

Step 3: Setting the Funding Baseline

Next, the AADM is multiplied by the Base Student Allocation (BSA). That’s the amount of money per student, set by the Legislature. In 2024, that figure is $5,960.

So, if a district has an AADM of 23,073, its Basic Need is: 23,073 × $5,960 = $137,515,080.

The BSA, among several factors in the formulas, has not kept up with inflation. $5,960 BSA today doesn’t buy what it did 10 years ago. The geographic portion of the salary survey and the required local contribution cap have also not been adjusted for inflation. So it is NOT just the “BSA.”

Step 4: Where Federal Money Comes In

Federal funds are an important piece of the puzzle:

• Federal Impact Aid in the Formula: The feds provide Impact Aid to offset some districts tax losses because of tax-exempt lands, like military bases or Alaska Native lands. The state deducts 90% of that from what it owes. So, if a district gets $5 million in Impact Aid, the state reduces payment by $4.5 million. That avoids double-dipping. After deducting local taxes and Impact Aid, the state pays what’s left.

• Other Federal Funds: Outside the formula, schools receive targeted federal dollars. These don’t affect state contributions.
  
  • Title I Grants (~$40 million): For schools with lots of low-income students.
  • Special Education Grants (~$35 million): Supports kids with disabilities.
  • School Meals (~$20 million): Helps feed kids who need it.
  • Other programs: For English learners, Alaska Native education, and teacher training.

Federal money makes up 10 to 15 percent of total school funding, with rural districts relying heavily on it.

Step 5: Local Taxes and the Funding Cap

In places like Anchorage and Fairbanks, local governments chip in through property taxes. This is called the Required Local Contribution. It’s based on the district’s property values.

For example: $12.8 billion in property value × a set rate = $33,913,088.

Rural areas without local governments skip this part. The state picks up more of the tab. Also questionable is property values and adjustments. But here’s the other issue. State law (AS 14.17.410) caps how much local governments can contribute. This cap hasn’t been adjusted for inflation either. That’s tying the hands of cities that want to do more to support their schools. They’re stuck with rising costs and limited tools.

If we want a strong future for Alaska, we need a funding system that keeps up with reality.

Some districts find ways around it, like voter-approved bonds. Others can’t, or have no ability to bond, and their schools fall further behind. Also concerning is if local taxes go too high, the federal government might reduce Impact Aid. That risk is real, especially for districts that depend on those funds.

Step 6: The State’s Share and Extras

Once you subtract local taxes and Impact Aid, the state pays the rest through Foundation Aid. In 2023, the state paid about $1.2 billion.

Beyond the formula, the state also funds:

• Transportation: $71.8 million
• One-Time BSA Grants: “outside the formula” BSA.
• Teacher Pensions: Covered separately by the state.

Why This Matters

The Foundation Formula is about fairness. Our constitution says: “The legislature shall by general law establish and maintain a system of public schools open to all children of the State.” But our system has serious cracks:

• The BSA is outdated.
• Local contribution caps don’t reflect today’s economy.
• Geographic cost adjustments are based on old data from 2008.
• Temporary relief money has dried up.
• Reduced funding for correspondence students is no longer appropriate.
• No Special Ed or Intensive needs funding for correspondence students.

If we want a strong future for Alaska, we need a funding system that keeps up with reality. Just adjusting the BSA is not the answer.

The views expressed here are those of the author.

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