Legislature(2001 - 2002)
04/24/2001 02:24 PM House FIN
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* first hearing in first committee of referral
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HOUSE BILL NO. 105
An Act relating to the base student allocation used in
the formula for state funding of public education; and
providing for an effective date.
REPRESENTATIVE GARY STEVENS noted that Alaska's Public
Education Funding Formula is based on a specific dollar
amount per student. The base student allocation was
established in 1998 as $3,940 per student and has not been
increased since that time. HB 105 increases the allocation
by $101 dollars.
Representative Stevens advised that during the past 14
years, inflation has had an impact on public school funding
and that the purchasing power of the general fund education
dollars have slowly eroded over time. Although, the State's
contribution to the 53 school districts has increased 54%
since FY88, the effect of annual inflation, as well as an
increase in student enrollment, has negated the growth and
the purchasing power of the student dollar has been
diminished.
Representative Stevens pointed out that the public school
foundation program has lost 13.9% on a student dollar basis
since FY88 due to the cumulative effect of annual inflation.
HB 105 proposes to recoup some of that loss.
Representative Stevens commented that supporters of a world
class educational system for Alaska must agree that, while
at the same time inflation is eroding the purchasing power
for the student dollar, Alaskans are asking public schools
to take on more and more responsibility in three areas.
· First, many parents today regularly drop off
their children at school early in the morning
and pick them up after work. School
personnel today provide not only classroom
instruction for these students but also offer
the emotional, social, and moral support
needed before and after regular school hours
at a level unheard of a generation ago. The
increased time that a child spends at school
increases the responsibility of the local
teachers and administrators.
· Secondly, as performance standards and the
corresponding assessments become a reality
and are accepted as commonplace, each
neighborhood school and classroom will be
held more accountable for student learning.
Children who need extra innovative
instruction to master these standards will be
identified and teachers will offer
appropriate remedial learning opportunities.
The added tutoring sessions necessary for
some students may be offered within the
regular school day or during a Saturday or
summer school program. The added
accountability is a step in the right
direction, but it does have substantial
impact on the financial resources of our
local school districts.
· Lastly, classroom teachers are on the
frontline with the children and must be held
accountable for their learning and
performance. Alaska's young people deserve
to be taught by the very best teachers
possible. Alaska's school districts are
faced with the responsibility of recruiting
and retaining a highly qualified work force
at a time when teachers are in short supply,
which is not an easy task. The State has an
obligation to provide adequate funding to all
public school districts so that all school
districts can hire and retain quality
teachers
Representative Stevens summarized that public education is
faced with the unenviable position-assuming greater
responsibility with a reduction in the purchasing power of
the student dollar. Alaska cannot continue to ask the 53
school districts to meet all these additional
responsibilities with a dwindling budget, therefore,
additional funding is a necessity. Representative Stevens
stressed that the increase of $101 dollars per student
provided the legislation would assist local school districts
to meet, and hopefully exceed, the public's expectations and
demands.
Representative Davies asked if the 30% inflation costs would
be covered. Representative Stevens stated that it would not
and that it would be substantially less.
Vice-Chair Bunde asked if the 30% inflation increase had
been in the last ten years. Representative Stevens replied
that the Anchorage School district had calculated it. He
added that there is no way to determine if that was the
correct amount, but emphasized that it was the amount that
had been spent.
Vice-Chair Bunde asked how many schools were receiving
classroom instruction waivers so that they could put that
money into administrative costs. Representative Stevens
recommended that the Department answer that question.
Representative Whitaker asked if the 30% inflation factor
had included the increase in contributions from local
property taxes. Representative Stevens did not know. He
reiterated that the figures had been provided from the
Anchorage School district.
Representative Hudson inquired when the last time the
foundation formula increased. Representative Stevens
replied that since 1988, it has increased by 54%.
Representative Davies asked the funding need in various
school districts. Representative Stevens replied that there
exists a tremendous problem in the school districts. He
claimed that it would be a disservice to the entire
profession. Putting money into the foundation formula also
raises the cap. The cap is the amount that the local
districts contribute of their own money for schools. He
noted that districts are finding ways to circumvent the cap.
Vice-Chair Bunde noted that not all schools make local
contributions. Representative Stevens acknowledged that was
true and that some districts receive money for funding
outside State contributions.
Representative Harris pointed out that the original number
had been reduced and referenced other legislation regarding
the costs of running schools. If that legislation becomes a
reality, next year education would be funded at a higher
level. Representative Harris noted that he supported that
legislation. Representative Stevens stressed that it is
essential that a study be undertaken as additional costs are
pending.
Representative Davies believed that it would be easier to
get an increase if the base had been built up.
Representative Stevens responded that whatever help could be
offered this year would be appreciated.
EDDY JEANS, MANAGER, SCHOOL FINANCE AND FACILITIES SECTION,
DEPARTMENT OF EDUCATION & EARLY DEVELOPMENT, clarified that
inflation has increased 30% over the past ten years. The
Legislature has increased the base allocation by only 5%.
The formula self adjusts for the property tax increases.
The minimum level for the base student allocation has been
determined and the minimum level of revenue that districts
need to support education. That money is divided between
pots of federal, local and state dollars. As property
values increase, if the base student enrollment is held
constant, then the State general fund requirement would
decrease. The base allocation to school districts over a
ten-year period has only increased by 10%.
Representative Whitaker asked if there has been a one to one
reduction in the ratio. Mr. Jeans replied that was close.
Vice-Chair Bunde asked how many school districts were
currently requesting money for waivers. Mr. Jeans replied
that was the provision which required school districts to
spend 70% of their fund on instruction. The districts may
apply for a waiver from the State Board of Education if
there are circumstances beyond their control. In FY2001,
there were 24 school districts applying for waivers. In
many of those school districts, there is a dispersed and
small population so many sites are being operated with high
operational costs. He noted that all 24 waivers were
granted.
Vice-Chair Bunde questioned how many single site schools
with high overhead there were and how many schools districts
that makes no local contribution. Mr. Jeans replied that
there are 19 Regional Education Attendance Areas (REAAs)
that do not make a local tax appropriation to education.
The Administration's position has always been that impact
aid is in lieu of property taxes. Those lands have been
moved by federal action from the tax rules. Even if those
lands moved into boroughs, most of them are still non-
taxable and would be used to offset the general fund
requirements. In response to Vice-Chair Bunde comment, Mr.
Jeans advised that those communities do not make a local tax
contribution for their schools through an organized
government. They make it through the federal government.
Representative Davies asked what the high operational costs
are. Mr. Jeans explained that those costs relate to
economies of scale. Some school districts, serve many
communities. There is one community that serves over 100
students. They do not have the population to spread the
operational costs over. He noted that fuel costs have
increased over the past year.
Representative Whitaker referenced federal impact dollars.
Mr. Jeans explained that they are called federal impact aid
dollars and they are received in lieu of local property
taxes. Those properties are non-taxable due to some type of
federal intervention. The federal government has come back
from their own program and indicated that they recognize
their obligation to support education because those
properties were moved off the tax roles. If those regions
were incorporated into boroughs, those properties still
would not be taxable and they would still generate the
federal dollars.
Mr. Jeans pointed out that the last student increase amount
occurred in 1993 under the instructional unit method of a
1.7% increase. Over the last ten years, that 1.7% increase
plus the 3.3% amount under SB 36 provides the 5% increase.
Representative Davies asked if any urban districts had
received some of the federal impact aid. Mr. Jeans stated
that there is only six schools districts in the State that
do not receive the impact aid. Most of the urban districts
do. In the military installations in Anchorage and
Fairbanks, the land is non-taxable and generates revenue.
Mr. Jeans addressed the cost differential adjustments. He
pointed out cost differences by regions, providing a
comparable program. It is not about adequate level of
funding. Under the cost differential, there will be
shifting in money once the report comes out. There will not
be a large increase required as a result of that study. The
number will adjust the way that the money is distributed in
the formula.
Representative Lancaster asked if it was expected that there
would be an increase as a result of that. Mr. Jeans replied
that the increase would be modest. Through the foundation
program, a $665 million dollar program in FY02 budget, and
the portion that makes up the cost differentials is less
th
than $70 million dollars. That would be 1/10 of the local
program.
SENATOR ROBIN TAYLOR advocated that the foundation formula
should be increased. He recommended that there needs to be
modifications and fine-tuning to that formula. He commented
that this would be the best the Legislature will see this
year. He noted that the bill that he submitted would raise
the formula by $210 dollars per student. Senator Taylor
stated that the bill provides for less than half of what is
necessary to adequately fund education. He encouraged
members to move forward.
In response to Representative J. Davies, Senator Taylor
advised that there are no nurses, no art and music programs,
and no physical education programs in the elementary schools
in his district. He stressed that there is a disparity in
the formula. The formula must be adjusted upward and he
proposed that the bill would be a good compromise.
SENATOR ALAN AUSTERMAN voiced his support for HB 105. He
stressed that the State must put more money into education.
Funding has not been increased for years and it is long
overdue. He noted that he had introduced legislation that
provides for a school head tax to help pay for education.
He offered to discuss that option.
CARL ROSE, EXECUTIVE DIRECTOR, ASSOCIATION OF ALASKA SCHOOL
BOARDS, JUNEAU, voiced support for the legislation. Mr.
Rose noted that he had served on the Governor's Education
Task Force. That Task Force identified $34 million dollars
that is needed to "do the job". He pointed out that there
is one school district in which 58 positions have not been
filled. If those positions are not filled, they will be
filled with substitutes who are not qualified. He asked
what the chances were that those kids would be able to reach
the standards with substitute and unqualified teachers.
Mr. Rose suggested that over a period of time, the State has
been unable to attract and maintain quality teachers. A
future cost model would not reflect the ability to hire and
maintain good teachers. That is where the grade is made or
not. Mr. Rose voiced support for increasing the number
back to the original $28 million dollars that was contained
in HB 105. He stressed that there needs to be a broader
view, with a sound fiscal long-range plan. The State needs
to broaden the perspective for the future for Alaska. Mr.
Rose projected that with the current funding, education will
"hit the wall" in four to five years. He emphasized that
$34 million dollars was a modest request.
Vice-Chair Bunde pointed out there is a $600 million dollar
fiscal gap. He stated that whatever is done now, those
children will have to pay taxes to fill that gap. Mr.
Rose responded that the future holds potential for increased
revenue. The ability for the State to pay now and dollars
to be leveraged out of the earnings reserve, provide that a
number of options could generate a modest rate to offset
declining revenues and project a better picture for the
future.
PATRICK HICKEY, (TESTIFIED VIA TELECONFERENCE), KENAI
PENNINSULA BOROUGH SCHOOL DISTRICT, KENAI, voiced support
for the legislation.
Representative Moses noted that he resented the fact of
using the "fiscal gap" for not supporting the funding of
education. The State should be funding education properly.
Representative Davies MOVED to ADOPT Amendment #1. [Copy on
File]. Co-Chair Williams OBJECTED.
Representative Davies explained that the amendment would
delete "$4,041" and insert "$4,091" to Page 1, Line 6. The
change would bring the State closer to the inflated number.
TAPE HFC 01 - 93, Side B
Co-Chair Williams agreed with Representative Moses that the
State should be increasing the amount, he however, pointed
out the difficulty increasing that amount would politically
cause at this time on the Senate side. He claimed that the
"push" to increase the budget came from the public.
Representative Croft questioned with whom the House Finance
Committee was compromising with. He stated that if the
House Finance Committee agrees that $150 dollars would be
the proper amount, then that is the amount that should be
included in the bill and forwarded to the other body.
Compromise is an important part of the legislative process.
He pointed out that two Senators have already indicated that
the number is too low. He emphasized that the appropriate
number should be placed into the legislation.
Representative Croft added that the formula would generate a
reduction to the State's contribution.
Representative Whitaker interjected that the Legislature has
begun the negotiation process. He acknowledged that there
would be a compromise within any system. He stated that $20
million dollars would be a reasonable number given the
circumstances. Representative Lancaster echoed sentiments
proposed by Representative Whitaker.
Vice-Chair Bunde pointed out that regardless the agreed
number, it would be impossible to satisfy all parties.
Recess: 3:20 p.m.
Reconvene: 3:40 p.m.
A roll call vote was taken on the motion to adopt Amendment
#1.
IN FAVOR: Davies, Moses, Croft
OPPOSED: Foster, Harris, Hudson, Lancaster, Whitaker,
Bunde, Williams, Mulder
The MOTION FAILED (3-8).
Co-Chair Mulder MOVED to ADOPT Amendment #2, the Intent
Language. [Copy on File].
Representative Davies noted concern that there would be a
separate accounting attached. Co-Chair Mulder explained
that his intent was to include "outcome performance based"
objectives.
Vice-Chair Bunde noted that there was other legislation that
would call for a similar report. Co-Chair Mulder suggested
that both pieces of legislation could use the one report.
Representative Davies asked if it was the intent that the
language be placed in statute. Co-Chair Mulder replied that
it was his preference that the language be included in an
intent section in the bill. He added that either way would
be okay if it was attached. There being NO OBJECTION,
Amendment #2 was adopted.
Co-Chair Mulder MOVED to report out of Committee CS HB 105
(EDU) with individual recommendations, the Letter of Intent
and with the accompanying fiscal note. Representative
Davies OBJECTED for a comment. He stated that the Minority
Caucus believes that the amount proposed was too low.
Representative J. Davies WITHDREW his OBJECTION. There
being NO further OBJECTION, it was so ordered.
CS HB 105 (EDU) was reported out of Committee with a "do
pass" recommendation and with a House Finance Letter of
Intent and a fiscal note #1 by Department of Education &
Early Development dated 4/23/01.
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