Legislature(2013 - 2014)CAPITOL 106

03/18/2013 08:00 AM EDUCATION

Download Mp3. <- Right click and save file as

* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Moved CSHB 120(EDC) Out of Committee
+ Bills Previously Heard/Scheduled TELECONFERENCED
Heard & Held
Scheduled But Not Heard
              HB 120-PUPIL TRANSPORTATION FUNDING                                                                           
8:04:28 AM                                                                                                                    
CHAIR GATTIS announced that the  first order of business would be                                                               
HOUSE  BILL  NO.  120  "An  Act  adjusting  pupil  transportation                                                               
funding; and providing for an effective date."                                                                                  
8:04:30 AM                                                                                                                    
ERICK  CORDERO-GIORGANA,   Staff,  Representative   Lynn  Gattis,                                                               
Alaska State  Legislature, stated the  bill, HB 120,  contains an                                                               
adjustment   to  the   consumer  price   index  (CPI)   on  pupil                                                               
transportation for school districts.   The reason for the bill is                                                               
to ensure that  school districts don't need  to use instructional                                                               
funding for pupil transportation.   Historically, the funding for                                                               
pupil transportation  has been derived  from funding  outside the                                                               
instructional  funding.     In  2012,  Senate   Bill  182,  [27th                                                               
Legislature], recalibrated  the amount of funds  school districts                                                               
received for pupil  transportation.  That bill included  a CPI to                                                               
help ensure  that school districts  could cover the  full amounts                                                               
of  the  contracts.   However,  the  final  version of  the  bill                                                               
reduced the annual  CPI adjustment to a  1.5 percent inflationary                                                               
adjustment for 2014 and 2015.   Thus funding would revert back to                                                               
a  level  requiring use  of  instructional  funds to  fund  pupil                                                               
transportation.  This  bill would bring back  the full adjustment                                                               
so school districts  would not need to  spend instructional funds                                                               
for pupil transportation.                                                                                                       
MR.  CORDERO-GIORGANA   explained  that  Senate  Bill   182  also                                                               
included language to allow the EED  to help school districts.  He                                                               
read proposed AS 14.09.010(d), as follows:                                                                                      
     The  department shall  adopt  regulations that  provide                                                                    
     for  oversight of  and support  to school  districts in                                                                    
     achieving   a    safe   and    cost-effective   student                                                                    
     transportation system.  The regulations must  include a                                                                    
     requirement for  contract terms of not  less than three                                                                    
     years,  if feasible,  standardized  conditions and  bid                                                                    
      periods, and standards that ensure cost efficiencies                                                                      
     and exclusions.                                                                                                            
MR.  CORDERO-GIORGANA  said  he  reviewed the  history  of  pupil                                                               
transportation and  discovered that prior to  2004 the department                                                               
had a  larger role.   In 2004,  individual school  districts were                                                               
negotiating  their  contracts  for pupil  transportation  but  it                                                               
wasn't effective  to do so.   At  the time, the  Senate Education                                                               
committee included the  language to allow the  department to take                                                               
on  a  larger  role  and   to  ensure  the  pupil  transportation                                                               
reimbursement program will pay,  as intended, to safely transport                                                               
students between home and school.                                                                                               
8:07:54 AM                                                                                                                    
REPRESENTATIVE  P. WILSON  asked  whether  school districts  were                                                               
aware  at  the  time  they   finalized  the  contracts  that  the                                                               
contracts  did  not include  adjustments  to  the consumer  price                                                               
index (CPI).   She further  asked why the school  districts would                                                               
do so since it was not a state policy.                                                                                          
8:08:54 AM                                                                                                                    
REPRESENTATIVE GATTIS suggested this  question should be held for                                                               
the school districts.                                                                                                           
8:09:29 AM                                                                                                                    
REPRESENTATIVE SEATON noted  that HB 120 puts in  place an annual                                                               
increase,  [the CPI],  but the  bill  does not  contain a  sunset                                                               
provision.  He questioned why a  sunset review is not included in                                                               
the bill.                                                                                                                       
MR. CORDERO-GIORGANA answered that  the school districts can come                                                               
forward  with   recommendations  in  2016  and   will  promulgate                                                               
regulations.   He understood  the EED has  hired a  consultant to                                                               
survey the school districts to  obtain their recommendations.  In                                                               
the meantime, this  bill could still help  school districts until                                                               
the recommendations are finalized.                                                                                              
REPRESENTATIVE SEATON  asked whether the recommendation  could be                                                               
brought  forward with  a  corresponding sunset  date.   He  asked                                                               
whether that would be problematic for the bill.                                                                                 
8:11:09 AM                                                                                                                    
ELIZABETH   SWEENEY  NUDELMAN,   Director,  School   Finance  and                                                               
Facilities   Section,   Department   of   Education   and   Early                                                               
Development (EED),  explained that  the bill  does not  contain a                                                               
sunset  provision,  which  would  be a  policy  decision  by  the                                                               
legislature.    She  said  the   EED  is  amenable  to  a  sunset                                                               
REPRESENTATIVE SEATON asked when the review would be completed.                                                                 
MS.  NUDELMAN suggested  that the  department will  work on  this                                                               
issue  over the  summer and  it  would likely  be several  months                                                               
before the review would be available.                                                                                           
REPRESENTATIVE SEATON  asked whether the recommendations  are due                                                               
in 2016.                                                                                                                        
MS. NUDELMAN answered  that there is not a specific  due date but                                                               
many contracts  span multiple years  with the final term  year in                                                               
2016.   After 2016,  many school districts  will sign  new multi-                                                               
year contracts.                                                                                                                 
REPRESENTATIVE SEATON confirmed dates  to be considered, that the                                                               
school districts would need to know by January 2016.                                                                            
MS. NUDELMAN confirmed the date for the 2016 contract.                                                                          
8:13:16 AM                                                                                                                    
REPRESENTATIVE  DRUMMOND  remarked   that  the  Anchorage  School                                                               
District (ASD) spent years coordinating  their contracts in order                                                               
to  achieve  efficiencies.    She asked  whether  the  EED  would                                                               
research  the  history  of  the   funding,  including  using  the                                                               
Anchorage system as a contract model.                                                                                           
MS. NUDELMAN responded that the EED  will review and will work to                                                               
have the major contracts on the  same cycle.  She agreed that the                                                               
state has  grappled with this  in the  past.  She  commented that                                                               
this is a  good piece to consider in terms  of restraining costs.                                                               
She  suggested  that historically  there  hasn't  been any  exact                                                               
cause and  effect for reduced  costs.  Thus, the  department will                                                               
consider   multiple   efforts,  including   aligning   contracts,                                                               
considering other contract language,  including items such as how                                                               
fuel is purchased in an attempt to achieve cost savings.                                                                        
8:15:18 AM                                                                                                                    
DEENA  PARAMO, Ed.D.,  Superintendent, Matanuska-Susitna  Borough                                                               
School District (MSBSD), read a prepared statement, as follows:                                                                 
     I  am testifying  on  behalf  of the  Matanuska-Susitna                                                                    
     Borough School  District in support of  House Bill 120,                                                                    
     an  Act adjusting  pupil  transportation funding.  Last                                                                    
     session  Senate Bill  182, which  has been  referenced,                                                                    
     addressed pupil  transportation funding for  the fiscal                                                                    
     years 2013-2015.   However, the  year-to-year increases                                                                    
     established  within  this  measure were  based  upon  a                                                                    
     standardized increase  of 1.5  percent for  both fiscal                                                                    
     years 2014  and 2015.  To our  knowledge, there  are no                                                                    
     current  transportation contracts  within the  State of                                                                    
     Alaska that are limited to  only a 1.5 percent increase                                                                    
     in their cost escalation language.                                                                                         
     In  actuality, the  vast majority  of contracts  around                                                                    
     the state refer  to the annual percent  increase in the                                                                    
     Anchorage Consumer Price Index  for All Urban Consumers                                                                    
     (Anchorage CPI-U)  as determined  by the  United States                                                                    
     Department of Labor, Bureau of  Labor Statistics.   The                                                                    
     CPI-U  has  averaged  2.6 percent  over  the  last  six                                                                    
     years.   This  creates funding  shortfalls that  reduce                                                                    
     the amount  of instructional dollars that  can be spent                                                                    
     in the classroom.  Using  current language from [Senate                                                                    
     Bill 182],  just to give  you an example, the  MSBSD is                                                                    
     preparing to  subsidize transportation  operations from                                                                    
     its general  fund by approximately  $1.5 million  in FY                                                                    
     2014.   This, in turn,  will impact MSBSD's  ability to                                                                    
     fund instructional  programs and pay for  teachers.  In                                                                    
     fact, a $1.5 million shortfall  is the equivalent of 15                                                                    
     teaching positions  that would need to  be reduced from                                                                    
     our  general operating  budget.  While  House Bill  120                                                                    
     will not erase  the shortfall in its  entirety, it will                                                                    
     serve to reduce the deficit by approximately $500,000.                                                                     
DR.  PARAMO  then  provided recent  contract  history  for  pupil                                                               
transportation  that has  been cost  prohibitive.   For  example,                                                               
during  the MSBSD's  transportation  contract  process, when  the                                                               
contract went  out to  bid only two  responses were  received and                                                               
the MSBSD took the lowest bid.   However, the next higher bid was                                                               
for a  $10 million increase  over five years.   Subsequently, the                                                               
MSBSD suggested  to the EED  that these contracts were  too great                                                               
for  individual  school  districts  to negotiate.    In  summary,                                                               
school  districts  are  joining  together  to  align  contractual                                                               
agreements  for  cost  saving   purposes.    She  concurred  with                                                               
Representative Drummond that the  MSBSD works to achieve contract                                                               
dates ending at the same  time to potentially allow for statewide                                                               
bids  in  order  to  save  money.   She  emphasized  that  school                                                               
districts cannot do this alone any more.                                                                                        
8:18:28 AM                                                                                                                    
REPRESENTATIVE  P. WILSON  commented that  the legislature  is no                                                               
longer able to  approve, fund, or sustain expenses  that are tied                                                               
to the CPI due to declining  oil revenues.  She asked whether the                                                               
transportation contracts are union contracts.                                                                                   
DR.  PARAMO answered  it would  depend on  the individual  school                                                               
district; however,  the MSBSD's transportation  contractor became                                                               
unionized through the Teamsters.                                                                                                
REPRESENTATIVE  P. WILSON  asked  whether the  MSBSD noticed  any                                                               
difference in the negotiation process.                                                                                          
DR. PARAMO  stated her  belief that statute  requires when  a new                                                               
contract is  bid that  the actual  employees' salaries  are twice                                                               
the minimum wage.  She  offered to provide the statute reference.                                                               
She added that companies are  not eager to provide transportation                                                               
in Alaska.  The majority of  the contracts are for 187 buses with                                                               
First Student Inc.                                                                                                              
REPRESENTATIVE  P. WILSON  related the  legislature's frustration                                                               
since it has  traditionally not tied these contracts  to the CPI.                                                               
She asked for  further clarification for the reason  to have this                                                               
tied to the CPI.                                                                                                                
DR.  PARAMO answered  that the  CPI  provision is  an attempt  to                                                               
achieve a transportation contract.   She recalled the regulations                                                               
require the  bus temperature  must be  maintained at  45 degrees.                                                               
Thus buses must  be outfitted with additional  heaters in Alaska.                                                               
She remarked that  of course the school district  wants the buses                                                               
to be warm.   In some areas buses must be  kept in heated garages                                                               
in   order  to   maintain  daytime   temperatures  to   meet  the                                                               
regulation.   Thus individual school districts  have some issues.                                                               
The  MSBSD travels  greater distances  with  fewer students  than                                                               
Anchorage.  In conclusion, the  CPI component is to attract Lower                                                               
48 bus companies to provide transportation.                                                                                     
REPRESENTATIVE P.  WILSON confirmed  that contracts are  from the                                                               
Lower 48.                                                                                                                       
DR. PARAMO answered that yes,  the larger companies come from the                                                               
Lower  48.   Alaska  does  not have  a  company  large enough  to                                                               
provide services.   One company  is out of England,  which causes                                                               
some  difficulties.   She  related  that  ASD uses  Reliant,  but                                                               
everyone else uses First Students,  Inc.  She understood that the                                                               
budgets are tight  but individual school districts  have lost the                                                               
ability to negotiate  and have contracts end at the  same time to                                                               
allow the whole state to negotiate a contract.                                                                                  
8:23:49 AM                                                                                                                    
REPRESENTATIVE  SEATON  asked  whether the  multi-year  contracts                                                               
have a built in increase or if they are open ended.                                                                             
DR.  PARAMO answered  that she  believed they  were based  on the                                                               
CPI, although the ASD  may base it on a set  amount.  She related                                                               
her understanding that  the problem exists due to the  tie to the                                                               
REPRESENTATIVE SEATON was unsure of the contract provisions.                                                                    
CHAIR GATTIS recapped  the question, which is if  the bill passes                                                               
whether it would provide a raise to the bus companies.                                                                          
8:26:23 AM                                                                                                                    
LUKE  FULP,  Chief  Business  Official,  Business  &  Operations,                                                               
Matanuska-Susitna Borough  School District (MSBSD),  answered no,                                                               
if the  bill passes  it would  cover the  current costs  that the                                                               
school district  has been experiencing.   He reiterated  that the                                                               
costs are  true costs  and the current  contract runs  through FY                                                               
2016.   The increase in  the contract each  year is based  on the                                                               
Anchorage  CPI-U.   Thus, the  contract  specifies the  Anchorage                                                               
CPI-U and the  MSBSD hopes the state funding  contract will match                                                               
8:27:36 AM                                                                                                                    
REPRESENTATIVE DRUMMOND asked whether the  MSBSD runs some of its                                                               
own district buses as well as contract buses.                                                                                   
DR. PARAMO answered  that the MSBSD outsources all  of its buses;                                                               
however, the  contract is  limited to home  to school  busing and                                                               
not for other programs.                                                                                                         
REPRESENTATIVE  DRUMMOND  related  the ASD  had  about  one-third                                                               
school district  owned buses and provided  two-thirds service via                                                               
contracts, although she  was uncertain if that has  changed.  She                                                               
stated that some school districts operate their own buses in                                                                    
order to provide competition for contracts.                                                                                     
8:29:09 AM                                                                                                                    
TERRY SNYDER spoke in support of HB 120 paraphrasing from a                                                                     
prepared statement, which read [original punctuation provided]:                                                                 
     First I want to let you  know that Dr. Deena Paramo and                                                                    
     Chief Business  Officer Luke  Fulp through  their solid                                                                    
     leadership  are  good  stewards  of  the  MatSu  School                                                                    
     District budget  and of the  state and  taxpayer monies                                                                    
     for  education.   According  to a  chart  in the  March                                                                    
     meeting packet  of the Alaska State  Board of Education                                                                    
     the district  although only required to  meet a minimum                                                                    
     of 70  percent of its school  operating expenditures in                                                                    
     the  instructional  component  of the  district  budget                                                                    
     actually invests closer  to 80 percent which  is one of                                                                    
     the highest  percentages in the  state.  If  our school                                                                    
     district were  an Alaskan business that  made that kind                                                                    
     of monetary  reinvestment in their  business operations                                                                    
     we would  consider it a phenomenal  successful business                                                                    
     strategy. Well  I would  like to  sing praises  for our                                                                    
     district  for doing  just  that  by re-investing  every                                                                    
     dollar they  can in  kids. The  district has  made some                                                                    
     painful  cuts and  great strides  at efficiencies  over                                                                    
     the past  several years and  they continue to  look for                                                                    
     cost savings diligently. But they  have always put kids                                                                    
     Providing  transportation to  40 plus  schools over  an                                                                    
     area the size  of Scotland is a daunting  task. Just to                                                                    
     get around  the Big  Lake area  buses must  travel over                                                                    
     roads that over  80% are substandard.   Pure and simple                                                                    
     transportation is challenging and expensive.                                                                               
     Passage of House Bill 120  will allow the Mat Su School                                                                    
     District to  put approximately  $500,000 back  into the                                                                    
     classroom  and  toward  everyone's goal  of  successful                                                                    
     outcomes for students our future workforce.                                                                                
     I would like to  thank Valley Representative Gattis for                                                                    
     sponsoring the bill.  I  look forward to the passage of                                                                    
     HB  120  out of  committee  and  your continued  common                                                                    
     sense financial  support for obligations to  our public                                                                    
     educational   system.  Thank   you   for  allowing   my                                                                    
     testimony and your service to the committee and state.                                                                     
8:31:21 AM                                                                                                                    
DAVE  JONES,   Assistant  Superintendent  of   Operations,  Kenai                                                               
Peninsula Borough  School District  (KPBSD), spoke in  support of                                                               
HB  120.   He  said  that Senate  Bill  182,  enacted last  year,                                                               
provided significant relief  to the KPBSD.  The KPBSD  was at the                                                               
point of  subsidizing a little  over $2 million from  the general                                                               
fund annually  for pupil transportation  prior to passage  of the                                                               
bill.    He  stated  the  KPBSD's  contracts  were  tied  to  the                                                               
Anchorage CPI  in its contract;  however, if the 1.5  percent CPI                                                               
adjustment  in the  bill  falls below  the  Anchorage CPI-U  that                                                               
amount would  come from  general classroom  funding.   He offered                                                               
his understanding of  how the CPI factor was  introduced into the                                                               
contract,  which  was  an effort  to  standardize  contracts  and                                                               
provide contract  incentives.  The  goal was to  attract multiple                                                               
vendors from out  of state.  Historically, single  vendors have a                                                               
monopoly since  the company set  its own prices.   The adjustment                                                               
to the  CPI was added  to all  contracts to provide  vendors with                                                               
the  assurance  that  if  they  came to  Alaska,  they  would  be                                                               
compensated for  inflation.  He  described prior  KPBSD contracts                                                               
that  did not  contain  an  adjustment for  the  CPI, which  were                                                               
heavily  front-loaded.    Ultimately,  the  contracts  cost  more                                                               
without the adjustment to the CPI.                                                                                              
8:34:36 AM                                                                                                                    
REPRESENTATIVE  SADDLER asked  how accurate  the Anchorage  CPI-U                                                               
escalator  is  as an  indication  of  transportation costs.    He                                                               
understood that  the CPI adjustment includes  other factors, such                                                               
as housing  costs and food,  as well  as fuel and  space heating.                                                               
Again, he  asked how accurate  the Anchorage CPI-U  adjustment is                                                               
in terms of bus costs.                                                                                                          
MR. JONES  answered that  the KPBSD  bids out  the contract  as a                                                               
separate contract.   The  current vendor  is First  Student, Inc.                                                               
and  the   company  employs  its   drivers  as  employees.     He                                                               
acknowledged  that since  wages are  involved the  cost increases                                                               
are  not  limited  to  fuel  increases.    Initially,  the  First                                                               
Students, Inc. drivers were not part  of a union.  Referring to a                                                               
previous comment that a school  district might be able to operate                                                               
buses at  a savings, he  offered he spent considerable  time last                                                               
year  costing  out  the  services.    However,  once  the  school                                                               
district  operates  the  buses,   it  must  also  cover  employee                                                               
salaries  and  benefit costs  as  well  as bus  operating  costs.                                                               
Ultimately he  found it  would not  be cheaper  for the  KPBSD to                                                               
offer pupil transportation.                                                                                                     
8:37:22 AM                                                                                                                    
REPRESENTATIVE SADDLER wondered if the  CPI escalator was part of                                                               
the  formula  whether any  mechanism  exists  to create  downward                                                               
pressure on the KPBSD's transportation costs.                                                                                   
MR.  JONES  answered that  competition  would  likely arise  with                                                               
multiple vendors, which has not  historically happened.  He hoped                                                               
the state would  have more leverage by contracting  with a multi-                                                               
national  company on  a single  contract or  by issuing  multiple                                                               
contracts simultaneously.  He thought  this process could attract                                                               
multiple vendors.                                                                                                               
REPRESENTATIVE  SADDLER asked  what provision  in the  bill would                                                               
attract multiple bidders.                                                                                                       
MR. JONES responded that Alaska  currently has one vendor besides                                                               
the multi-national  company in  Anchorage.   This bill  would not                                                               
attract  additional vendors  on  the existing  contracts, but  it                                                               
would  be  a vital  aspect  of  the  request for  proposal  (RFP)                                                               
8:39:57 AM                                                                                                                    
REPRESENTATIVE  SEATON  asked  how much  flexibility  the  school                                                               
districts  have  in  determining  bus routes  and  the  level  of                                                               
service the district will provide.                                                                                              
MR. JONES said the contracts are  negotiated to meet the level of                                                               
service the school district would  like to offer.  Typically, the                                                               
RFPs  are  based on  existing  routes,  which are  adjusted  each                                                               
school term  based on  the number  of students.   He  pointed out                                                               
Homer considered  changing its service  last year similar  to the                                                               
Kenai process.  This would have  reduced the number of buses, but                                                               
it  also affected  the  timeframe for  students  and teachers  so                                                               
ultimately changes weren't made.                                                                                                
REPRESENTATIVE SEATON  understood that the school  districts have                                                               
some scheduling  flexibility, but  the overall  cost is  based on                                                               
the number of buses being used per day.                                                                                         
MR. JONES concurred.                                                                                                            
8:42:21 AM                                                                                                                    
REPRESENTATIVE P. WILSON  asked whether there is  any other means                                                               
to attract additional vendors.                                                                                                  
MR. JONES  reiterated his belief  that having the  state contract                                                               
on  behalf of  all  school  districts at  one  time  will make  a                                                               
difference.    He suggested  that  bus  companies would  have  an                                                               
opportunity to provide service in  numerous communities, thus the                                                               
additional   volume   of   services  would   be   an   incentive.                                                               
Additionally, facility  arrangements such as providing  bus barns                                                               
would be  attractive.  He suggested  the state could build  a bus                                                               
barn in  each district and  lease the facilities  to contractors,                                                               
which would remove a major inhibitor.                                                                                           
REPRESENTATIVE  P.  WILSON  agreed.   She  understood  incentives                                                               
would   exist  if   the  state   negotiated  the   contracts  for                                                               
transportation and  fuel, noting  perhaps school  districts could                                                               
also own their buses.  She  asked whether any vendors would lease                                                               
buildings if they were available.                                                                                               
MR.  JONES  answered that  leasing  the  buildings could  be  one                                                               
aspect of the RFP.                                                                                                              
REPRESENTATIVE  DRUMMOND   reported  that  one   neighborhood  in                                                               
Anchorage is adjacent to a bus  lot so having a building would be                                                               
an improvement.                                                                                                                 
8:46:07 AM                                                                                                                    
DAVID  MEANS, Director,  Administrative  Services, Juneau  School                                                               
District (JSD), testified in support of  HB 120.  He said much of                                                               
the testimony today  highlight the reasons that  the JSD supports                                                               
the bill.  He pointed out  the JSD has a cost-of-living clause in                                                               
its contract  based on the  Anchorage CPI-U.   He stated  that as                                                               
this funding runs  out the JSD will use  instructional funding to                                                               
support pupil transportation.                                                                                                   
8:47:03 AM                                                                                                                    
AMY  LUJAN,  Executive  Director, Alaska  Association  of  School                                                               
Business  Officials (ALASBO),  testified  in support  of HB  120.                                                               
She  reiterated that  the organization  as a  whole supports  the                                                               
bill.   The intent of  Senate Bill 182  last year was  to provide                                                               
additional pupil transportation  funding so instructional funding                                                               
would not be  used to support pupil transportation.   Yet, if the                                                               
CPI  adjustment is  limited to  1.5 percent,  instructional funds                                                               
would be used.  He said  using the Anchorage CPI-U adjustment was                                                               
an effort to standardize contracts.                                                                                             
8:48:16 AM                                                                                                                    
BRUCE  JOHNSON,  Executive  Director, Alaska  Council  of  School                                                               
Administrators (ACSA), testified  in support of HB 120.   He said                                                               
this  issue  is  one  that  was discussed  in  a  joint  position                                                               
statement  resolution that  was developed  collectively with  the                                                               
business officials, superintendents, and  principals.  In 2006, a                                                               
task  force  brought up  multi-year  funding  and added  the  CPI                                                               
inflationary protection for school  districts since the districts                                                               
are required by law to offer pupil transportation.                                                                              
8:49:01 AM                                                                                                                    
REPRESENTATIVE SEATON  asked whether the clause  is an adjustment                                                               
for Anchorage CPI-U for inflation or is it simply an increase.                                                                  
MR. JOHNSON said he wasn't the  best person to respond.  However,                                                               
he  suggested  it  would  be  another thing  to  consider  so  if                                                               
inflation didn't exist, it would fall back.                                                                                     
8:49:45 AM                                                                                                                    
REPRESENTATIVE P.  WILSON asked for any  suggestions to encourage                                                               
potential vendors.                                                                                                              
MR. JOHNSON  said the  members would like  to see  an opportunity                                                               
for competition.  It's expensive  to operate and mobilize the bus                                                               
industry.  He offered his belief  that the larger scale RFP could                                                               
likely  to  yield the  best,  cost  effective approach  to  pupil                                                               
transportation in Alaska.                                                                                                       
REPRESENTATIVE P.  WILSON asked  whether the construction  of bus                                                               
barns would be helpful.                                                                                                         
MR. JOHNSON suggested that the concept  is very good and if it is                                                               
legal  to  do so  could  be  built  into  the statewide  bid  for                                                               
providing pupil transportation.                                                                                                 
8:51:32 AM                                                                                                                    
CHAIR  GATTIS, after  first  determining no  one  else wished  to                                                               
testify, closed public testimony on HB 120.                                                                                     
8:51:55 AM                                                                                                                    
REPRESENTATIVE SEATON referred to page 2  of the fiscal note.  He                                                               
asked whether  the figures would  double or be compounded  in the                                                               
outer years.                                                                                                                    
MS. NUDELMAN explained  that the fiscal note uses  2.5 percent as                                                               
an estimate of the annual CPI.   She referred to the final column                                                               
of page 2 of the fiscal  note, entitled "Annual Increase in State                                                               
Costs."  She  agreed that the increases are compounded.   Thus if                                                               
the  CPI  were higher  in  a  given  year  than the  2.5  percent                                                               
calculated at $1.9 million, then the cost would be increased.                                                                   
8:53:18 AM                                                                                                                    
REPRESENTATIVE  SADDLER asked  for the  effect if  the impact  is                                                               
limited  to two  years to  allow  the department  and the  school                                                               
districts to work  out regulations and recommendations  on how to                                                               
negotiate  transportation deals.    He restated  his question  on                                                               
whether any downside exists if it is limited to two years.                                                                      
MS. NUDELMAN  said she did  not envision any immediate  effect in                                                               
the next  two years,  given the  CPI would be  in effect  and the                                                               
department would  have information for additional  discussions in                                                               
FY 2015-2016.                                                                                                                   
REPRESENTATIVE  SADDLER asked  whether  it  is her  understanding                                                               
that if the  CPI were to go  down by a half or  full percent then                                                               
the transportation costs via contract would also decrease.                                                                      
MS.  NUDELMAN  responded that  she  didn't  see the  language  to                                                               
decrease  the  amount.    She suggested  that  perhaps  the  bill                                                               
sponsor could address that question.                                                                                            
8:54:38 AM                                                                                                                    
CHAIR  GATTIS  said  she  would  not have  any  problem  with  an                                                               
increase or a decrease.  She welcomed an amendment.                                                                             
REPRESENTATIVE SADDLER referred to page  1, line 5, which read, "                                                               
... shall be adjusted annually  on October 1 according to changes                                                               
in  the Consumer  Price  Index ...."   He  suggested  that if  it                                                               
fluctuates up or down it could be adjusted.                                                                                     
CHAIR GATTIS said she thought it addresses change.                                                                              
8:55:01 AM                                                                                                                    
REPRESENTATIVE  DRUMMOND   referred  to   the  fiscal   note  and                                                               
expressed  concern that  the  costs appear  to  be doubling  each                                                               
MS. NUDELMAN  answered that  there are two  fiscal notes  the way                                                               
the  public education  fund operates.   One  fiscal note  has the                                                               
backup  for the  K-12 pupil  transportation.   The second  fiscal                                                               
note  places  that money  in  the  public  education fund.    She                                                               
referred   to  the   calculation   on  page   2   of  the   pupil                                                               
transportation fund  fiscal note.   In the first year,  since 1.5                                                               
percent  increase  is already  in  current  law, the  first  year                                                               
increase is  calculated at 1 percent  or $ 0.7 million,  which is                                                               
shown as  the annual  increase in  state costs on  page 2  of the                                                               
fiscal note from K-12 Support; Pupil Transportation allocation.                                                                 
REPRESENTATIVE SADDLER  stated his understanding of  how the cost                                                               
is calculated.   In current law, 1.5 percent  exists, and raising                                                               
it 1 percent totals $0.7 million.                                                                                               
MS. NUDELMAN  responded that  in 2015 there  is also  an existing                                                               
1.5 percent increase,  so the increase is  $0.7 million; however,                                                               
since it  compounds from one year  to the next, the  final amount                                                               
is $1.5  million.  Thus,  the public education  funding compounds                                                               
from one year to  the next since what is added  into the base one                                                               
year remains there, but the CPI  is increased the next year.  She                                                               
then referred to  FY 16, noting the increase  is approximately $2                                                               
million so  adding the totals  from FY 14-FY 16  increases totals                                                               
$3.4 million,  which is the cost  of the CPI increases  in FY 16.                                                               
To repeat this  process for FY 17, the calculation  would be $2.5                                                               
percent on  the existing  base and the  cumulative total  of $5.4                                                               
million.    She  explained  that  FY 18-FY  19  follow  the  same                                                               
methodology.   She  further explained  that  considering the  2.5                                                               
percent increase just  by considering what was added  to the base                                                               
each year,  which is $2  million.  The  process is taking  the $2                                                               
million, retaining it, and adding the CPI.                                                                                      
REPRESENTATIVE  DRUMMOND noted  the  point is  that this  doesn't                                                               
remove funding from the classroom for pupil transportation.                                                                     
8:59:26 AM                                                                                                                    
REPRESENTATIVE SEATON asked for  clarification that these are not                                                               
annual, but cumulative.                                                                                                         
MS. NUDELMAN agreed that cumulative  would be the correct heading                                                               
for that column, instead of "Annual Increase in State Costs."                                                                   
9:00:12 AM                                                                                                                    
REPRESENTATIVE SEATON  moved to  adopt Conceptual Amendment  1 to                                                               
add a  Section 4  to provide  a sunset date  of January  1, 2016.                                                               
The purpose of  the amendment is to avoid rolling  in and rolling                                                               
out the program, thereby readdressing it each cycle.                                                                            
9:01:30 AM                                                                                                                    
CHAIR GATTIS  suggested checking with other  contractors of pupil                                                               
transportation on the language.                                                                                                 
9:02:27 AM                                                                                                                    
REPRESENTATIVE   SEATON  restated   the   intent  of   Conceptual                                                               
Amendment 1.   He explained that  a sunset clause is  being added                                                               
for  January  1,  2016.   This  would  mean  future  negotiations                                                               
wouldn't be "set in stone."   He understood the desire is to have                                                               
a statewide  contract, with  the state  being involved  in multi-                                                               
school districts.                                                                                                               
CHAIR GATTIS asked whether that  January 1, 2016 is plausible and                                                               
if the date works.                                                                                                              
MR.  FULP responded  that January  1,  2016 would  get the  MSBSD                                                               
through its  contract.   The CPI  increase from  year to  year is                                                               
currently  built into  the contract  terms.   He said  the sunset                                                               
would work with  the current contract and the  sunset time period                                                               
aligns appropriately for subsequent contracts.                                                                                  
CHAIR GATTIS asked whether another date is more appropriate.                                                                    
MR. FULP  answered the school  fiscal year  ends June 30  so June                                                               
30, 2016 would also work.                                                                                                       
REPRESENTATIVE  SEATON  offered  his  belief that  it  is  better                                                               
aligned with  the legislative session  dates.  The  adjustment is                                                               
October 1.   He suggested that it is important  for the state and                                                               
the school  districts to be aware  of the situation.   He pointed                                                               
out it wouldn't affect the bus  routes on January 1, but would be                                                               
in place prior  to contract negotiations.  He  suggested the date                                                               
could also  be October 1,  2015 since the adjustment  takes place                                                               
on that date.                                                                                                                   
9:07:30 AM                                                                                                                    
REPRESENTATIVE  P.   WILSON  asked   about  the  length   of  the                                                               
negotiation period, and  whether it would be helpful  to have the                                                               
counts in November.                                                                                                             
MR. FULP agreed it would be  better to have the sunset align with                                                               
the  legislative  session  and  January 1  or  earlier  would  be                                                               
workable.   He said  the district would  be involved  in contract                                                               
negotiations nearly a year prior  to the contract to work through                                                               
the bid process.  It's helpful to  work as far out as possible to                                                               
make sure the contract was in place with acceptable terms.                                                                      
9:09:12 AM                                                                                                                    
REPRESENTATIVE P. WILSON asked what date would be best.                                                                         
MR. FULP deferred to Dr. Paramo.                                                                                                
DR. PARAMO said the date of  November 1, 2015 would be good since                                                               
the pupil counts would be known.                                                                                                
9:10:21 AM                                                                                                                    
REPRESENTATIVE SEATON  moved to amend Conceptual  Amendment 1, to                                                               
change the sunset date to November 1, 2015.                                                                                     
MR.  JONES  agreed  with  the  proposed  date  since  the  FY  16                                                               
escalator would  be triggered  on October 1.   He  suggested that                                                               
the November  1, 2015  date is  acceptable.  It  would be  a good                                                               
incentive  for school  districts to  work together  to solve  the                                                               
problem  and  it   would  give  the  school   districts  and  the                                                               
department an opportunity  to consider the full  spectrum for the                                                               
new contract.                                                                                                                   
CHAIR GATTIS  said the  intent is to  help the  school districts,                                                               
but also to align the contract.                                                                                                 
9:11:40 AM                                                                                                                    
REPRESENTATIVE SADDLER said he is  fundamentally leery of placing                                                               
inflation-proofing  in   an  education  funding  formula.     The                                                               
legislature  needs flexibility  to meet  unforeseen circumstances                                                               
and  having that  formulaic inflation  escalator eliminates  that                                                               
flexibility there  is no guarantee  that the state's  income will                                                               
rise  by  2.5 percent  each  year.    However he  understood  the                                                               
situation the  sponsor is trying  to address  with the bill.   He                                                               
said it would  give the department an opportunity to  let this go                                                               
forth,  which is  good.   He  stated his  support for  Conceptual                                                               
Amendment 1 and with the amendment,  he can support the bill.  He                                                               
cautioned  against   legislative  finance  considering   this  as                                                               
support for inflation-proofing for education.                                                                                   
9:12:52 AM                                                                                                                    
REPRESENTATIVE P. WILSON objected for the purpose of discussion.                                                                
CHAIR GATTIS said  the committee agreed with November  1, 2015 as                                                               
the  date the  legislature  could agree  to  sunset the  proposed                                                               
statute and to readdress the issue at that time.                                                                                
9:13:07 AM                                                                                                                    
REPRESENTATIVE  P. WILSON  removed  her  objection to  Conceptual                                                               
Amendment  1.    There  being no  further  objection,  Conceptual                                                               
Amendment 1 was adopted.                                                                                                        
9:13:52 AM                                                                                                                    
REPRESENTATIVE P. WILSON emphasized that  the intent of HB 120 is                                                               
to allow the  DEED to consider pupil transportation.   First, the                                                               
state will work to negotiate  the pupil transportation contracts.                                                               
Second,  the state  will  attempt to  obtain  fuel contracts  for                                                               
pupil  transportation   at  a  lower   rate.     Third,  building                                                               
facilities or  bus barns will be  considered by the state  or the                                                               
school  districts to  provide incentives.    Finally, the  school                                                               
districts  will consider  owning the  buses.   As the  bill moves                                                               
forward, the legislature  would need to consider  funding for the                                                               
bus  barns  so the  facilities  will  be available  for  contract                                                               
REPRESENTATIVE SEATON  recalled a  statutory requirement  to have                                                               
the  bus temperatures  set  at  45 degrees.    He suggested  that                                                               
perhaps  this  could also  be  considered  as the  measure  moves                                                               
forward since  the cost of maintaining  a 40 degree bus  and a 45                                                               
degree bus could have a significant financial impact.                                                                           
9:16:33 AM                                                                                                                    
REPRESENTATIVE DRUMMOND  said that the Municipality  of Anchorage                                                               
(MOA) has  a mass transit bus  barn.  She recalled  this facility                                                               
was  built  in  the  1980s.   She  suggested  this  needs  to  be                                                               
considered carefully, based on community  needs.  She offered her                                                               
belief that the MOA  would be delighted to have a  bus barn.  She                                                               
pointed  out  that  there  are   contractor's  buses  and  school                                                               
district's buses to consider.                                                                                                   
9:17:53 AM                                                                                                                    
REPRESENTATIVE REINBOLD moved  to report HB 120,  as amended, out                                                               
of   committee   with    individual   recommendations   and   the                                                               
accompanying fiscal  notes.  There  being no objection,  the CSHB
120(EDC)  was   reported  from   the  House   Education  Standing                                                               
9:18:13 AM                                                                                                                    
The committee took an at-ease from 9:18 a.m. to 9:21 a.m.                                                                       

Document Name Date/Time Subjects
12 HB 120 Bill Text.pdf HEDC 3/18/2013 8:00:00 AM
HB 120
13 HB 120 Sponsor Statement.pdf HEDC 3/18/2013 8:00:00 AM
HB 120
14 HB 120 Fiscal Note - EED-K12.pdf HEDC 3/18/2013 8:00:00 AM
HB 120
15 HB 120 Fiscal Note - EED-PEF.pdf HEDC 3/18/2013 8:00:00 AM
HB 120
16 HB 120 Backup - Leg Research History of Transportation of Pupils 2013.pdf HEDC 3/18/2013 8:00:00 AM
HB 120
17 HB 120 Letter Support - Anchorage School District 2-28-2013.pdf HEDC 3/18/2013 8:00:00 AM
HB 120
18 HB 120 Letter Support - Saddler 2-27-2013.pdf HEDC 3/18/2013 8:00:00 AM
HB 120
19 HB 120 Letter Support - Kenai Peninsula Borough School Dist.pdf HEDC 3/18/2013 8:00:00 AM
HB 120
20 HB 120 Letter Support - North Slope Borough 2-18-2013.pdf HEDC 3/18/2013 8:00:00 AM
HB 120
21 HB 120 Letter support - Fairbanks 2-22-2013.pdf HEDC 3/18/2013 8:00:00 AM
HB 120
22 HB 120 Letter Support - MatSu 2-19-2013.PDF HEDC 3/18/2013 8:00:00 AM
HB 120
01 HB 133 Bill Text.pdf HEDC 3/11/2013 8:00:00 AM
HEDC 3/18/2013 8:00:00 AM
HEDC 3/20/2013 8:00:00 AM
HB 133
02 HB 133 Sponsor Statement.pdf HEDC 3/11/2013 8:00:00 AM
HEDC 3/18/2013 8:00:00 AM
HEDC 3/20/2013 8:00:00 AM
HB 133
03 HB 133 Sectional Summary.pdf HEDC 3/11/2013 8:00:00 AM
HEDC 3/18/2013 8:00:00 AM
HEDC 3/20/2013 8:00:00 AM
HB 133
04 HB 133 ADMs and Full Values.pdf HEDC 3/11/2013 8:00:00 AM
HEDC 3/18/2013 8:00:00 AM
HEDC 3/20/2013 8:00:00 AM
HB 133
05 HB 133 Kasayulie v. Alaska Consent Decree and Settlement Agreement.pdf HEDC 3/11/2013 8:00:00 AM
HEDC 3/18/2013 8:00:00 AM
HEDC 3/20/2013 8:00:00 AM
HB 133
06 HB 133 DEED FY14 School Construction Grant Fund List.pdf HEDC 3/11/2013 8:00:00 AM
HEDC 3/18/2013 8:00:00 AM
HEDC 3/20/2013 8:00:00 AM
HB 133
07 HB 133 PowerPoint.pdf HEDC 3/18/2013 8:00:00 AM
HEDC 3/20/2013 8:00:00 AM
HB 133
08 HB 133 Fiscal Note - EED-FundTransfer-3-13-13.pdf HEDC 3/18/2013 8:00:00 AM
HEDC 3/20/2013 8:00:00 AM
HB 133
01 HB 151 Sponsor Statement v. A.pdf HEDC 3/15/2013 8:00:00 AM
HEDC 3/18/2013 8:00:00 AM
HEDC 3/20/2013 8:00:00 AM
HEDC 3/22/2013 8:00:00 AM
HEDC 3/25/2013 8:00:00 AM
HEDC 4/3/2013 8:00:00 AM
HB 151
02 HB 151 v. A Bill Text.pdf HEDC 3/15/2013 8:00:00 AM
HEDC 3/18/2013 8:00:00 AM
HEDC 3/20/2013 8:00:00 AM
HEDC 3/22/2013 8:00:00 AM
HEDC 3/25/2013 8:00:00 AM
HEDC 4/3/2013 8:00:00 AM
HB 151
03 HB 151 Sectional v. A.pdf HEDC 3/15/2013 8:00:00 AM
HEDC 3/18/2013 8:00:00 AM
HEDC 3/20/2013 8:00:00 AM
HEDC 3/22/2013 8:00:00 AM
HEDC 3/25/2013 8:00:00 AM
HEDC 4/3/2013 8:00:00 AM
HB 151
04 HB 151 Fiscal Note v. A - EED-TLS-3-8-13.pdf HEDC 3/15/2013 8:00:00 AM
HEDC 3/18/2013 8:00:00 AM
HEDC 3/20/2013 8:00:00 AM
HEDC 3/22/2013 8:00:00 AM
HEDC 3/25/2013 8:00:00 AM
HEDC 4/3/2013 8:00:00 AM
HB 151
05 CS HB 151 ver. O.PDF HEDC 3/15/2013 8:00:00 AM
HEDC 3/18/2013 8:00:00 AM
HEDC 3/20/2013 8:00:00 AM
HEDC 3/22/2013 8:00:00 AM
HEDC 3/25/2013 8:00:00 AM
HEDC 4/3/2013 8:00:00 AM
HB 151
06 HB 151 Information Packet.pdf HEDC 3/15/2013 8:00:00 AM
HEDC 3/18/2013 8:00:00 AM
HEDC 3/20/2013 8:00:00 AM
HEDC 3/22/2013 8:00:00 AM
HEDC 3/25/2013 8:00:00 AM
HEDC 4/3/2013 8:00:00 AM
HB 151
07 CSHB 151 Fiscal Note - EED-TLS-3-14-13.pdf HEDC 3/18/2013 8:00:00 AM
HEDC 3/20/2013 8:00:00 AM
HEDC 3/22/2013 8:00:00 AM
HEDC 3/25/2013 8:00:00 AM
HEDC 4/3/2013 8:00:00 AM
HB 151