Alaskanomics

September Unemployment Rates

The Alaska Department of Labor & Workforce Development released the latest employment numbers last Friday. The seasonally adjusted unemployment rate remains unchanged in September and is 7.2 percent. Alaska’s not-seasonally adjusted rate grew three-tenths of a percent from August, which is typical as the season work around the state winds down for the year. The seasonal loss of fishing and tourism jobs accounted for much of the increase in unemployment.

Unemployment rates fell in seven boroughs and census areas. The largest decrease was in Kusilvak Census Area. The current rate is 17.8 percent, down from 21.2 percent in August. The census areas is still the highest in the state.

Alaska’s total employment numbers were also released and show a drop of 1.3 percent in September, which is a loss of about 4,600 jobs from September 2016. The construction industry and oil and gas industry has large decreases and both lost 6.7 percent over last year. Three areas did add jobs. Health care added 1.4 percent, leisure and hospitality added 0.3 percent and local government added 0.2 percent. Other industries were either flat or had modest losses.

Detailed employment statistics can be found at the State of Alaska's website.

Teacher Turnover Costs Alaska $20 Million Annually

By Dayna DeFeo, Center for Alaska Education Policy Research at the Institute of Social and Economic Research, UAA

On average, every teacher who leaves a school district in Alaska costs that district nearly $20,500. A third of that is for recruiting and hiring a replacement teacher, and half is for training the new teacher. Overall, teacher turnover costs the state’s school districts about $20 million a year.

These are the first systematic estimates of the costs when teachers leave Alaska school districts. Several colleagues and I developed the estimates earlier this year, after interviewing administrators in 37 of the state’s 54 districts about their expenses when teachers leave their jobs.

Turnover among teachers in Alaska—especially in rural areas—has historically been high, and economic circumstances today make it even more challenging to recruit and keep teachers. Fewer people are going into the teaching profession, meaning that the national pool of teachers is low. This teacher shortage, coupled with a strong economy and competitive salaries in the Lower 48, make it more difficult for Alaska to recruit teachers—80% of the state’s new hires are from out of state. Once teachers are hired, keeping them is also a challenge. Data from the Alaska State Policy Research Alliance show that in the 2016-2017 school year, individual schools in remote rural locations had over 30% teacher turnover, schools in hub communities 22%, and schools in more populated areas 14%-16%.

Some turnover is inevitable, and it’s not all bad. For instance, some teachers leave to take other jobs in education, and some retire, indicating stability. But research has shown that high teacher turnover hurts student achievement—and it’s expensive. Our estimates of turnover costs are conservative, based on what school administrators told us about expenses for separation, recruitment, hiring, and training. We did not estimate additional costs districts face, such as teachers leaving mid-year, or the broader costs to Alaska, related to teacher preparation and reduced student achievement.

Still, even our conservative estimates show that the direct costs of high teacher turnover are significant. If school districts could reduce turnover, they would have more money to invest in teaching and learning. You can download the report, The Cost of Teacher Turnover in Alaska, by Dayna DeFeo, Trang Tran, Diane Hirshberg, Dale Cope, Pamela Cravez.

If you have questions, get in touch with Dayna DeFeo, director, Alaska Center for Education Policy Research, at 907-786-5494 or d[email protected].

Local Government State Aid

By Mouhcine Guettabi, assistant professor of economics, Institute of Social and Economic Research, UAA

When oil prices were high, the state government collected billions of dollars in oil revenues every year—and it shared a lot of that money with Alaska’s local governments. State aid helps pay for general government expenses and school operations, as well as municipal bond debt for school construction. And in the years when oil revenues were high, the state also paid for hundreds of local capital projects.

But since 2013, much lower oil prices have left the state with a huge hole in its budget, and in the most recent years the state has been cutting aid to local governments. In 2015, for example, the legislature put a 5-year moratorium on paying any share of new school bond debt, and in 2017 the governor vetoed part of the state reimbursement for existing debt. The state’s community assistance program (formerly called revenue sharing) in the most recent fiscal year was about half what it had been two years earlier. The state capital budget has shrunk to a small fraction of what it was a few years back.

How vulnerable are Alaska’s local governments to continuing cuts in state aid? In the summer of 2017, I analyzed how much Alaska’s 19 borough governments rely on state aid. The analysis looked at changes in state aid to borough governments between 2000 and 2015. It found:

• Boroughs as a group depended twice as much on state dollars in 2015 as they had in 2005. The average share of borough revenues coming from the state increased from 12% to 28% over that decade. But among individual boroughs, that share varied widely. On average from 2000 through 2015, the share of revenues from the state varied from 4% in Anchorage—which has a far bigger tax base than any other borough—to more than 35% in several boroughs with small tax bases.
• State aid also helps support local government jobs—which in turn are important to local economies. In 2015, local government jobs made up roughly 8% to 10% of all jobs in the larger urban areas, but as much as 60% of all jobs in more remote places.
• If borough governments had to replace the state dollars they received in 2015 with local tax dollars, residents of individual boroughs would have to pay anywhere from $250 to nearly $5,000 per person in additional taxes.

This research was funded in part by a grant from Northrim Bank. Download the report, A Regional Assessment of Borough Government Finances and Employment (PDF, 1.8MB). If you have questions, get in touch with Mouhcine Guettabi at [email protected] or 907-786-5496.