Legislature(2011 - 2012)CAPITOL 106
03/02/2012 08:00 AM House EDUCATION
| Audio | Topic |
|---|---|
| Start | |
| Presentation: University of Alaska, Dr. Alex Hwu - Distance Education | |
| HB256 | |
| HB313 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
| += | HB 313 | TELECONFERENCED | |
| += | HB 256 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| + | TELECONFERENCED | ||
HB 313-STUDENT COUNT ESTIMATES
9:43:33 AM
CHAIR DICK announced that the final order of business would be
HOUSE BILL NO. 313, "An Act relating to student counts and
estimates for public school funding; and providing for an
effective date."
9:43:59 AM
REPRESENTATIVE PRUITT made a motion to adopt the proposed
committee substitute (CS) for HB 313, labeled 27-LS1223\M,
Kirsch/Mischel, 3/1/12.
9:44:15 AM
REPRESENTATIVE SEATON objected for the purpose of discussion.
9:44:31 AM
REPRESENTATIVE ERIC FEIGE, sponsor, referred to the proposed
committee substitute by section. He stated that two sections
have been changed, but everything else is the same as Version A
of the bill. He referred to Section 4, which adds a provision
to prohibit a municipal assembly from taking funds away from a
district after having allocated the funds to the district. He
stated that in talking to some of the chief financial officers
in the districts he discovered one of their frustrations is that
they may do very well on managing their money, and most of these
districts actually spend less than what is planned into their
budgets. However, for some districts that lie within
municipalities or boroughs, the local government currently has
the option at the end of the year to reallocate or reappropriate
surplus funding remaining in the district's unrestricted funds
account, which is the local contribution funding. He
characterized this as something of a shell game with the public,
since at the start of the year local government announces it is
spending "x" amount on education, but at the end of year the
borough will remove funding allocated and use it for other
purposes. He offered his belief that it would be a great help
to the districts if the ability to reappropriate the funds was
curtailed.
9:46:32 AM
REPRESENTATIVE FEIGE referred to Section 7 and explained that
under current statute, the unrestricted reserve account is
limited to 10 percent. He explained the district can maintain
only up to 10 percent of what they have expended in the current
school year and those funds can be retained until the next
school year. This bill would raise it to 15 percent, which
would allow districts to manage their own funding and allow the
districts to maintain a greater reserve fund. He suggested that
this would allow them greater flexibility to manage fluctuations
in their cash flow and manage their funds instead of having
their funds managed for them by local government. Finally,
Section 11 would provide an effective date clause. The fiscal
note has not been changed, he said.
9:47:41 AM
REPRESENTATIVE SEATON related that last year the Kenai Peninsula
School District had to return some funds to the Kenai Peninsula
Borough (KPB) since they were over their legally allowed cap.
He asked how this provision will influence the district and if
the EED would take the excess funds by reducing the contribution
to the district in the same manner they do if contributions are
over the cap and state funding is reduced by that amount.
REPRESENTATIVE FEIGE answered that it would allow the KPB School
District to sit close to the ten percent cap so it would raise
that cap and give them more latitude to run up to that cap if
necessary. He suggested he was probably correct in terms of the
ability to reallocate or reappropriate the funds. He stated
that if they were at the cap local government would still not be
able to withdraw the funds.
REPRESENTATIVE SEATON stated that in the circumstance of the KPB
school district the state would reduce funding for the school
district on any amount over the cap.
9:50:12 AM
ELIZABETH SWEENEY NUDELMAN, Director, School Finance and
Facilities Section, Department of Education and Early
Development (EED), answered that if a school district has more
than 10 percent in unreserved fund balance at the end of the
year, the state would reduce state funding, thus returning the
funds to the state.
REPRESENTATIVE SEATON stated that under the current circumstance
the borough had funded additional money above the minimum the
school district would return the funding to stay within the cap
to the borough. He related his understanding that under the
bill, the district would have paid the money, but the funds
would reduce the state funding for the schools. He recapped
that they couldn't transfer the excess to the borough and would
need to transfer it to the state.
MS. NUDELMAN stated that if they were returning the money since
they were at the cap and chose to return it to the local
government rather than the state that is correct.
9:51:46 AM
CHAIR DICK recalled times in which money was shoveled into one
end of the district, but the money was taken out the back end.
He related his understanding that this language would fix that
problem. He referred to Section 7, which seems to provide the
districts with the security of knowing what their budget will
be, but they need more flexibility since the student count could
fluctuate so they need the leeway in order to respond to the
unforeseen changes. He commented that these are both good
changes.
REPRESENTATIVE FEIGE suggested that the problem Representative
Seaton is raising could be fixed by a conceptual amendment.
9:53:08 AM
REPRESENTATIVE SEATON referred to Section 8. He asked whether
there were any changes.
REPRESENTATIVE FEIGE answered that Section 8 is the same as
Section 6 in Version A.
9:53:40 AM
REPRESENTATIVE SEATON removed his objection. There being no
further objection, Version M was before the committee.
9:53:57 AM
MICHAEL PASCHALL, Staff, Representative Eric Feige, Alaska State
Legislature, stated that the changes that Representative Feige
addressed are the only changes to the bill.
9:54:20 AM
REPRESENTATIVE FEIGE referred to Conceptual Amendment 1, on page
8, line 20. He stated that if the population of a district
increases by five percent it would be eligible for supplemental
funding for the current year from the EED. He reiterated the
threshold is five percent. He suggested that five percent is
relative and could be a lot of money or not. There was a fair
amount of resistance from some of the larger districts since it
was a significant amount of funding for some districts at five
percent. He explained that Conceptual Amendment 1 would lower
that to a three percent threshold. He asked members to keep in
mind that most student populations typically do not change more
than about one percent.
REPRESENTATIVE FEIGE moved to adopt Conceptual Amendment 1, on
page 8, line 20, which read, as follows [original punctuation
provided]:
Change Sec. 6 AS 14.17.410(b)(1)(H) by deleting [FIVE]
and inserting three.
9:56:13 AM
REPRESENTATIVE PRUITT objected. He said the school district in
his community is large so he objected. He stated that in his
school district it would amount to 1,200 students, which is a
lot of money. He acknowledged that the figures do not change
very much. He suggested that the range is between 200 and 900
students. The potential would exist that several hundred
students could be involved and districts would not have the
funding. He agreed it is better, but he could not continue to
support this. He stated that between 200 and 300 students
represents less than one percent of the students, which may be
manageable in his school district. He suggested language that
said increases by the lesser of 200 students or a three-percent
cap.
REPRESENTATIVE FEIGE agreed.
REPRESENTATIVE PRUITT moved to adopt Conceptual Amendment 1 to
Conceptual Amendment 1, on page 8, line 20 to read: increases
by "the lesser of two hundred students or three percent." He
suggested the bill drafters could correct the conceptual
amendment to match the intent.
9:58:11 AM
REPRESENTATIVE P. WILSON objected for the purpose of discussion.
She recalled Representative Pruitt had stated 200-900 students.
She asked for the percentage 200 students of the total school
district's population.
REPRESENTATIVE PRUITT reported the school district in his school
district has 44,000 students, so 220 students would be about
one-half of one percent. He computed that for 200 students at
the current student base allocation of $5,800 would represent
$1.1 million for his school district.
REPRESENTATIVE P. WILSON asked for the figures for the overall
budget.
REPRESENTATIVE PRUITT answered it was about $700 million.
REPRESENTATIVE P. WILSON stated that a small school system with
a tiny budget comparatively would be significant.
9:59:34 AM
REPRESENTATIVE FEIGE asked for the amount that the Anchorage
School District currently has in reserve.
MR. PASCHALL answered the Anchorage School District has about
$56 million in their unreserved fund balance. This issue has
been debated and the larger school districts - except for those
districts in which the local government removes the funding -
have the funding to cover the year. The Conceptual Amendment 1
to Conceptual Amendment 1 actually would increase the comfort
level. He stated that considering smaller school districts and
looking at percentages instead of dollars and the overall impact
varies by district. He suggested Conceptual Amendment 1 to
Conceptual Amendment 1 addresses the issue because the carryover
from this year to next year is at issue and may affect whether
the district can make it to next year. He remarked that next
year the money will be received. He acknowledged the Conceptual
Amendment 1 to Conceptual Amendment 1 was designed for the
smaller school districts where the percentages are more crucial.
He offered his belief that would satisfy the concern.
REPRESENTATIVE P. WILSON said that she was unsure.
10:01:56 AM
MR. PASCHALL answered that it is a cash flow and not an income
issue. He referred to the basis for HB 313, which is to change
the timing of the funding and not the amount of the funding. He
highlighted some objections were raised with respect to cash
flow. He stated that he reviewed the numbers and cash flow was
not an issue for the majority of the school districts. He did
not speak to Anchorage, but Fairbanks raised a similar
objection; however, he stated they have the cash flow to do
this. He stated that the Conceptual Amendment 1 to Conceptual
Amendment 1 addresses the concern and the bill sponsor is
agreeable. He anticipated that the second amendment would allow
for an alternative funding method in the current year.
10:03:08 AM
REPRESENTATIVE P. WILSON withdrew her objection to Conceptual
Amendment 1 to Conceptual Amendment 1. There being no further
objection, Conceptual Amendment 1 to Conceptual Amendment 1 was
adopted.
REPRESENTATIVE PRUITT withdrew his objection to Conceptual
Amendment 1. There being no further objection, Conceptual
Amendment 1 was adopted.
10:03:32 AM
REPRESENTATIVE FEIGE moved to adopt Conceptual Amendment 2,
which read [original punctuation provided]:
Add a new section to read: "If a district is unable to
meet current year funding needs and is not protected
by the provisions of AS 14.17.410(b)(1)(H), the
district may apply to the department for supplemental
funding for the current fiscal year."
10:04:00 AM
REPRESENTATIVE SEATON objected for the purpose of discussion.
10:04:09 AM
MR. PASCHALL referred to page 8, following line 29.
REPRESENTATIVE FEIGE stated that Conceptual Amendment 2 would
assist small school districts where the addition of 1-3 students
does not cross the threshold; however, if they are special or
intensive needs kids the cost would be significant and the
addition would then exceed the threshold. He explained that it
would meet any other requirements for additional funding that
cannot be foreseen at this point. He characterized this
amendment as a catch-all and as a way for a school district that
may not have reserves and additional expenses to still seek
funding from the department.
10:05:31 AM
REPRESENTATIVE SEATON asked whether this would be limited to
requests for additional funding under this chapter or it applies
for any reason.
REPRESENTATIVE FEIGE responded that the intent is to address
situations in which a school district does not have any
reserves, but has additional expenses due to changes in the
school population, and to provide an avenue to seek supplemental
funding from the department. He said it is not intended to be
used every year, but just for special cases.
REPRESENTATIVE SEATON agreed with the changes to the timing of
the formula, but his interpretation of the amendment is it
appears when a school district has a shortfall, no matter the
reason, that no restrictions apply for supplemental funding. He
suggested the language needs to be tightened to the change in
the student count timing.
REPRESENTATIVE FEIGE answered that this language requires an
application to the department, but it does not guarantee that
the department will approve and distribute supplemental funds.
He emphasized that there needs to be some provision in the bill
so the school district doesn't become bankrupt in the middle of
the school year.
10:07:17 AM
REPRESENTATIVE SEATON agreed if it is driven by the change in
the student count. He offered his belief that this language
represents a fundamental change if the legislature allows
districts to apply for supplemental funding due to shortfalls.
The school districts could then shift money between districts
without anything being related to the count.
10:08:20 AM
REPRESENTATIVE P. WILSON moved to adopt Conceptual Amendment 1
to Conceptual Amendment 2 to delete "needs" at the end of the
first line and add, "because of change in student counts" and
leave the existing language. Conceptual Amendment 1 to
Conceptual Amendment 2 would read, as follows:
If a district is unable to meet current year funding
because of change in student counts and is not
protected by the provisions of AS 14.17.410(b)(1)(H),
the district may apply to the department for
supplemental funding for the current fiscal year.
10:08:50 AM
REPRESENTATIVE FEIGE referred to [subparagraph] (H), which is
referenced in Conceptual Amendment 2 refers to the student
counts.
REPRESENTATIVE P. WILSON withdrew proposed Conceptual Amendment
1 to Conceptual Amendment 2.
REPRESENTATIVE FEIGE declared that the intent is not to reward
bad behavior, but if a situation arises beyond the control of a
school district, especially a small school district, the
department can be engaged to assist. The department will
determine the merits of supplemental funding.
10:09:55 AM
REPRESENTATIVE SEATON referred to page 7, line 5, which refers
to the adjusted ADM.
The committee took an at-ease from 10:09 a.m. to 10:10 a.m.
10:10:24 AM
REPRESENTATIVE SEATON asked whether this language is a new
subparagraph (I) or if it will be a new section.
REPRESENTATIVE FEIGE offered his belief that it would be a new
[subparagraph] (I).
REPRESENTATIVE SEATON suggested if the language is a new
subparagraph (I), it would relate to the previous subsection on
page 7, line 5, which would pertain to the calculation of the
ADM for school districts. He explained that if a school
district is not protected by one provision it is protected by
the ADM calculation in subsection (b) in circumstances in which
the district cannot meet its needs. He highlighted that if the
proposed conceptual Amendment 1 to Conceptual Amendment 2 only
applies to subparagraph (H) it would only apply to the three or
five percent change in student counts; however, if the proposed
amendment is to subparagraph (I) it would also affect the
adjusted ADM calculation.
10:12:05 AM
MR. PASCHALL explained the intent of Representative Feige's
Conceptual Amendment 2 is to only apply to unique circumstances
such as if the school district is not protected due to the
greater than three percent student count change. In those
instances the school district could apply to the department. He
related a scenario in which one school district has a $26,000
reserve, which is five percent of their operating budget so the
most this school district could have in reserve is not enough to
cover hiring a single intensive need aide. This school district
would need to have some type of assistance in order to exist in
that unique situation. He agreed the language should only apply
to school districts with student count changes.
REPRESENTATIVE SEATON agreed the new subparagraph (I) goes
beyond the sponsor's intent.
The committee took a brief at-ease.
REPRESENTATIVE FEIGE withdrew Conceptual Amendment 2.
10:14:14 AM
REPRESENTATIVE FEIGE moved to adopt Conceptual Amendment 3,
which incorporates language in subsection (c), on page 5, lines
8-9, such that it would read:
The assembly may not reallocate or reappropriate for
another purpose the amount appropriated from local
sources to the district for school purposes unless the
unrestricted portion of its year end fund balance in
the school operating fund exceeds the amount set in AS
14.17.505(a).
10:15:42 AM
REPRESENTATIVE P. WILSON objected for the purpose of discussion.
REPRESENTATIVE FEIGE stated that this addresses Representative
Seaton's earlier concern. He explained that if the school
district is at its maximum reserve amount then it can reallocate
funds.
REPRESENTATIVE P. WILSON pointed out that some school districts
don't have a reserve account.
REPRESENTATIVE FEIGE explained that funds cannot be withdrawn by
the assembly. He further explained that what has happened in
some school districts is they have a surplus at the end of the
year. The local government, such as a borough assembly,
reallocates the surplus to a project, such as a sidewalk.
Conceptual Amendment 3 would prevent that from happening.
Furthermore, it prevents a shell game from happening. The
borough would announce it is spending $27 million on education,
but in reality reappropriates the funding at the end of the
year.
REPRESENTATIVE P. WILSON clarified that Conceptual Amendment 2
is not being rewritten. She withdrew her objection to
Conceptual Amendment 3. There being no further objection,
Conceptual 3 was adopted.
10:17:26 AM
REPRESENTATIVE FEIGE suggested passage of the bill and redraft
the language attempted for Conceptual Amendment 2 for
consideration by the Finance Committee.
10:17:45 AM
The committee took an at-ease from 10:17 a.m. to 10:19 a.m.
MS. NUDELMAN offered to answer any questions.
CHAIR DICK asked whether the department has specific concerns
with the proposed legislation.
MS. NUDELMAN responded that she shared the concern with
Conceptual Amendment [2], as withdrawn, since it would allow
school districts to simply ask for funds. She agreed with the
discussion that the committee is having on that count. She
referred to the fiscal note with this bill. She explained that
when school districts receive funding because the count has gone
up, it increases the funding level under the old system. She
advised that the department will revisit the fiscal note at
three percent to reflect the increase.
10:20:04 AM
REPRESENTATIVE SEATON asked whether she could estimate how the
fiscal note of $1 million at five percent would change.
MS. NUDELMAN answered that the fiscal note was estimate and it
could be scrutinized especially based on some of the amendments.
REPRESENTATIVE P. WILSON agreed the three percent is a
significant change.
10:20:45 AM
REPRESENTATIVE FEIGE asked for an estimate of the current amount
that is spent on education per year.
MS. NUDELMAN responded that the state entitlement represents
approximately $1 billion as a rough figure.
REPRESENTATIVE FEIGE asked whether the change would be $2
million at three percent.
MS. NUDELMAN said she would not disagree, but she wanted to
calculate the amount.
REPRESENTATIVE FEIGE highlighted that the committee is
considering $2 million in a potential $1 billion funding stream.
MS. NUDELMAN acknowledged she understood his logic.
REPRESENTATIVE FEIGE pointed out that the percentage is
negligible.
10:21:57 AM
REPRESENTATIVE SEATON asked whether placing the Conceptual
Amendment 2 under (H) would that be more appropriate and not
relate to the ADM calculation.
MS. NUDELMAN responded that would be appropriate for schools who
fall into the three to five percent category, but she has not
given any thought to those schools that have a change in
enrollment that do not fall into the three or five percent
categories.
REPRESENTATIVE FEIGE pointed out the amendments are in response
to the public testimony as well as conversations with the
parties that manage the funds.
10:23:41 AM
REPRESENTATIVE FEIGE offered Conceptual Amendment 4 using the
previous language of Conceptual Amendment 2, as a subsection of
AS 14.17.410 (b) (1) (H), which read:
If a district is unable to meet current year funding
because of change in student counts and is not
protected by the provisions of AS 14.17.410(b) (1)
(H), the district may apply to the department for
supplemental funding for the current fiscal year.
There being no objection, Conceptual Amendment 4 was
adopted.
10:24:03 AM
REPRESENTATIVE P. WILSON moved to report the proposed committee
substitute (CS) for HB 313, labeled 27-LS1223\M, Kirsch/Mischel,
3/1/12, as amended, out of committee with individual
recommendations and the accompanying fiscal note. There being
no objection, the CSHB 313(EDC), as amended, was reported from
the House Education Standing Committee.
| Document Name | Date/Time | Subjects |
|---|---|---|
| CSHB 256 Version X.pdf |
HEDC 3/2/2012 8:00:00 AM |
HB 256 |
| CS HB 256 V. X AM 1.docx |
HEDC 3/2/2012 8:00:00 AM |
HB 256 |
| CS HB 256 V. X AM 2.docx |
HEDC 3/2/2012 8:00:00 AM |
HB 256 |
| CS HB 256 V. X AM 3.docx |
HEDC 3/2/2012 8:00:00 AM |
HB 256 |