Legislature(2013 - 2014)CAPITOL 106

02/26/2014 08:00 AM EDUCATION

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08:08:29 AM Start
08:08:54 AM HB278
09:59:45 AM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Scheduled But Not Heard
Heard & Held
+ Bills Previously Heard/Scheduled TELECONFERENCED
         HB 278-EDUCATION: FUNDING/TAX CREDITS/PROGRAMS                                                                     
CHAIR GATTIS announced  that the only order of  business would be                                                               
HOUSE  BILL  NO.  278,  "An   Act  increasing  the  base  student                                                               
allocation  used  in the  formula  for  state funding  of  public                                                               
education;   repealing    the   secondary    student   competency                                                               
examination  and related  requirements; relating  to high  school                                                               
course credit  earned through assessment;  relating to  a college                                                               
and career readiness assessment  for secondary students; relating                                                               
to  charter  school  application  appeals  and  program  budgets;                                                               
relating  to  residential  school  applications;  increasing  the                                                               
stipend  for  boarding  school students;  extending  unemployment                                                               
contributions for  the Alaska technical and  vocational education                                                               
program; relating  to earning high  school credit  for completion                                                               
of   vocational  education   courses   offered  by   institutions                                                               
receiving  technical and  vocational  education program  funding;                                                               
relating to education tax  credits; making conforming amendments;                                                               
and providing for an effective date."                                                                                           
CHAIR GATTIS said the committee  would hear testimony on specific                                                               
sections of HB 278 directly affecting charter schools.                                                                          
8:11:54 AM                                                                                                                    
SUSAN   MCCAULEY,  Director,   Teaching  and   Learning  Support,                                                               
Department  of Education  and Early  Development, explained  that                                                               
the portion of  HB 278 related to charter schools  has three main                                                               
components,  the   first  of  which  clarifies   the  application                                                               
procedure.    In  the  event  a local  school  board  denies  the                                                               
application of a  charter school, the board must  put the reasons                                                               
for the denial in writing and  provide the written denial to EED.                                                               
Currently, at the time of a  denial EED is informed, but specific                                                               
information  is not  required.   The  second  component allows  a                                                               
charter school  that has  been denied to  appeal the  decision to                                                               
the  commissioner [of  EED].   The  commissioner  can uphold  the                                                               
denial, or forward  the application to the Alaska  State Board of                                                               
Education   &  Early   Development   (State   Board)  for   final                                                               
consideration.  The  appeal process ensures that  the reasons for                                                               
denial are substantive and thoroughly  vetted.  Finally, the bill                                                               
clarifies that the funding for  a charter school needs to include                                                               
certain  components   such  as  transportation,   vocational  and                                                               
technical   education,   and   special   services/students   with                                                               
disabilities funding.   Currently, statute dictates  that funding                                                               
includes all  funds generated  by students  that are  enrolled in                                                               
the  charter school,  and  without  further specification,  local                                                               
districts may have interpreted this statute differently.                                                                        
8:14:08 AM                                                                                                                    
REPRESENTATIVE LEDOUX  asked whether  charter schools  will start                                                               
providing transportation to their students.                                                                                     
DR. MCCAULEY explained that the  bill directs that transportation                                                               
funds generated by students enrolled  in a charter school must be                                                               
forwarded to  the charter school.   Currently, a  school district                                                               
could interpret  the applicable statute  to permit  the retention                                                               
at  the  district  level  of   transportation  funds,  which  are                                                               
generated on a student-by-student basis.   However, the bill does                                                               
not   require  that   a  charter   school  use   the  funds   for                                                               
transportation such as home-to-school bus service.                                                                              
REPRESENTATIVE  LEDOUX  provided a  scenario  in  which a  school                                                               
district with  100 students has  50 students attending  a charter                                                               
school.  She asked  if currently,  such a  school district  would                                                               
receive transportation funds for 100 students.                                                                                  
8:16:16 AM                                                                                                                    
LES MORSE, Deputy Commissioner,  Office of the Commissioner, EED,                                                               
indicated yes, and  explained that in the  past, school districts                                                               
had bus  systems with  approved routes  and expenses,  which were                                                               
reimbursed  by the  state.    In about  2005,  in  an attempt  to                                                               
control  costs,  the  legislature  directed  that  transportation                                                               
costs would  be reimbursed determined  by a formula based  on the                                                               
needs of each  school district.  The formula is  based on average                                                               
daily  membership  (ADM)  and has  been  adjusted  regarding  the                                                               
amount allotted.   Mr.  Morse provided an  example of  one middle                                                               
school using  three buses and  another middle school  across town                                                               
that  uses thirteen  buses.   In  this  case, the  transportation                                                               
allowance did  not flow to the  school per ADM, but  was received                                                               
by the district per ADM, and  the district provided funds to each                                                               
school for  its transportation needs.   He said he was  unsure of                                                               
how a  charter would use  transportation funds, but  suggested it                                                               
may  establish  drop-point  transportation rather  than  home-to-                                                               
school  busing.   He  concluded that  the  bill provides  charter                                                               
schools with transportation opportunities.                                                                                      
8:20:03 AM                                                                                                                    
REPRESENTATIVE  LEDOUX  described  a  village where  all  of  the                                                               
students   can  walk   to  school,   but   the  school   receives                                                               
transportation funds through the formula.   She asked whether the                                                               
school can use its transportation funds for other expenses.                                                                     
MR. MORSE responded that generally,  transportation funds are all                                                               
going for transportation.  If the  village in the example did not                                                               
have a reimbursable bus system  in place, no transportation funds                                                               
would be allotted.  Some rural  districts may have a small busing                                                               
system with a  low transportation allotment compared  to an urban                                                               
school  district.   He  expressed doubt  that  a school  district                                                               
without   the   need   for  a   busing   system   would   receive                                                               
transportation funds under the current formula.                                                                                 
REPRESENTATIVE   LEDOUX   expressed   concern  that   funds   for                                                               
transportation fixed  costs may be  taken from a  school district                                                               
and  provided to  a  charter school,  unless  the charter  school                                                               
provides transportation.                                                                                                        
DR. MCCAULEY  opined that the concept  of the bill is  that funds                                                               
that   are   generated   by  charter   school   students   -   as                                                               
transportation  funds are  - should  be used  to benefit  charter                                                               
school students.  On the other  hand, funds that are not student-                                                               
generated can be used to support districtwide operations.                                                                       
8:24:09 AM                                                                                                                    
REPRESENTATIVE  SADDLER  clarified  that   in  the  past,  school                                                               
districts applied for reimbursement of  costs, and then there was                                                               
a switch  to a formula  that allocated transportation funds  on a                                                               
per student basis.  Now, if a district  did not have a need for a                                                               
transportation program, it does not receive funds.                                                                              
MR.  MORSE said  the status  of a  district relates  to when  the                                                               
state  changed  from  the reimbursable  program  to  the  formula                                                               
program.   In some cases,  a district  may have villages  that do                                                               
not  run  buses, but  may  have  one  "hub"  with a  single  bus.                                                               
Therefore, that district's formula is very low.                                                                                 
REPRESENTATIVE   SADDLER  surmised   that   beyond  the   certain                                                               
allocation   for   the  number   of   students,   the  need   for                                                               
transportation is a factor.                                                                                                     
MR. MORSE said there is a historical factor for need.                                                                           
CHAIR  GATTIS asked  for  an  explanation of  the  two ways  that                                                               
transportation is  currently funded,  both within and  outside of                                                               
the formula,  and she  pointed out that  outside of  the formula,                                                               
not  all districts  pay for  transportation  to charter  schools.                                                               
How  the  bill addresses  this  situation  is  also part  of  the                                                               
question.    She   noted  that  villages  that   do  not  provide                                                               
transportation still  receive a portion through  the base student                                                               
allocation (BSA).  In addition,  she asked whether a neighborhood                                                               
school is required  to use its transportation  funding to provide                                                               
8:27:14 AM                                                                                                                    
MR. MORSE said the funds are  based on ADM, and there are certain                                                               
requirements  for  busing  students, depending  on  the  distance                                                               
between neighborhood  schools and  students' homes;  however, the                                                               
need  is based  on the  historical need  at the  time the  system                                                               
switched  from  reimbursable  to  the  current  formula  funding.                                                               
Furthermore, the transportation formula  is separate from the BSA                                                               
CHAIR  GATTIS said  the  main question  is  whether students  are                                                               
benefiting from "the money that was meant for them."                                                                            
REPRESENTATIVE SADDLER observed that  under current law, there is                                                               
no  requirement to  use transportation  funds for  transportation                                                               
purposes.    He  asked  whether school  districts  are  directing                                                               
transportation  funds   to  other   purposes  and  if   so,  have                                                               
objections been raised.                                                                                                         
MR.   MORSE   advised   that  generally   districts   find   that                                                               
transportation funds  meet the  expenses of  transportation, thus                                                               
it is  a rare  case that  transportation funds  are not  used for                                                               
that purpose.                                                                                                                   
8:29:32 AM                                                                                                                    
DR.  MCCAULEY restated  that it  is  possible for  a district  to                                                               
interpret the  current statute  regarding charter  school funding                                                               
to  retain  transportation  funds  generated  by  charter  school                                                               
students.  For example, a  district with charter schools students                                                               
would receive transportation funds for  those students, and it is                                                               
possible that a school district could retain those funds.                                                                       
REPRESENTATIVE   SADDLER   asked   whether   the   aforementioned                                                               
possibility is happening.                                                                                                       
DR. MCCAULEY responded that information  regarding how a district                                                               
relegates funds to  charter schools is not collected by  EED.  In                                                               
further  response to  Representative Saddler,  she said  the bill                                                               
addresses the problem  of a lack of clarity  regarding funds that                                                               
are  generated  by charter  school  students;  the bill  is  more                                                               
specific regarding the distribution of those funds.                                                                             
REPRESENTATIVE SADDLER  inquired whether  the lack of  clarity is                                                               
causing problems.                                                                                                               
DR.  MCCAULEY  said EED  is  aware  of different  practices  from                                                               
district  to  district,  and of  differences  regarding  how  the                                                               
statute  is  interpreted  by  the  eight  school  districts  with                                                               
charter schools,  but is unaware  of specific differences  in the                                                               
distribution of transportation funds.                                                                                           
8:32:00 AM                                                                                                                    
REPRESENTATIVE SADDLER  surmised EED  seeks to forestall  the use                                                               
in  the future  of charter  student-generated funds  for purposes                                                               
other than transportation.                                                                                                      
DR. MCCAULEY opined the problem  is the lack of clarity resulting                                                               
in different  interpretations regarding "what funds  generated by                                                               
students  enrolled in  a charter  school mean  exactly.   Does it                                                               
mean  only  formula  funds?    Does it  mean  funds  outside  the                                                               
formula? This language is intended to clear that up."                                                                           
REPRESENTATIVE  SADDLER asked  whether  districts have  requested                                                               
clarity or if EED seeks clarity.                                                                                                
DR. MCCAULEY  stated the change  to provide clarity is  driven by                                                               
an expectation that charter school  law should be "crystal clear"                                                               
regarding funding, which  is the standard that  has been achieved                                                               
by other states.                                                                                                                
8:33:25 AM                                                                                                                    
REPRESENTATIVE SEATON  reminded the committee that  in 2005 there                                                               
was  100  percent  reimbursable   support  for  approved  student                                                               
transportation systems  in the  state.  In  order to  control the                                                               
growth  [of transportation  expenses], the  legislature converted                                                               
the  reimbursement  based  on  school  districts'  transportation                                                               
costs  at that  time.   This resulted  in a  per student  expense                                                               
formula  that  supported not  the  transportation  cost for  each                                                               
student,  but the  transportation system  of the  district.   The                                                               
problem  today is  that [the  proposed  legislation] will  divert                                                               
funds  from  the  transportation  system  to  individual  charter                                                               
schools, and  the district transportation  system will  no longer                                                               
be  supported.   Thus  a  district such  as  the Kenai  Peninsula                                                               
Borough  School  District,  with   a  robust  number  of  charter                                                               
schools,   will   have   substantial  funds   pulled   from   the                                                               
districtwide transportation system -  which is underfunded anyway                                                               
-  and  will take  the  per  student  funding  - which  has  been                                                               
supporting the district transportation system  - and give it to a                                                               
charter  school,  which  is  receiving  the  same  transportation                                                               
support as any other public school.   He opined this will destroy                                                               
the existing  transportation system,  and asked  for confirmation                                                               
of the accuracy of his statement.                                                                                               
8:37:26 AM                                                                                                                    
DR.  MCCAULEY  advised that  currently  the  majority of  charter                                                               
schools  do not  receive busing  services.   The academic  policy                                                               
committee,  which is  the governing  board of  a charter  school,                                                               
manages  its  own  budget,  and  historically  does  not  provide                                                               
transportation.    This  poses  a  challenge  as  charter  school                                                               
students do not  come from a geographic  area, and home-to-school                                                               
transportation is  impractical.  School districts  are faced with                                                               
the dilemma  of the difficulty  of arranging transportation  to a                                                               
charter  school,  yet  transportation   funds  are  generated  by                                                               
charter school  students who receive  no benefit.  The  intent of                                                               
the  bill  is to  provide  some  funding  to charter  schools  to                                                               
provide basic  transportation services,  so that parents  are not                                                               
exclusively  providing transportation,  thus establishing  equity                                                               
and clarity.                                                                                                                    
REPRESENTATIVE SEATON  pointed out that transportation  funds are                                                               
not  generated on  a per  student basis  in neighborhood  schools                                                               
either, as  there are neighborhood  schools that do not  have bus                                                               
service.    He  observed  that   the  bill  does  not  allow  for                                                               
transportation funds  to be allocated  on a per student  basis to                                                               
all public schools, but just  to charter schools.  Representative                                                               
Seaton suggested that  if HB 278 is passed,  the legislature will                                                               
need to  return to a  reimbursable type of  transportation system                                                               
because  the proposed  legislation will  make the  current busing                                                               
system  financially untenable  throughout  the state.   In  fact,                                                               
money will be taken out of  the classroom to maintain the current                                                               
busing  systems.   He  opined that  rural  school districts  with                                                               
several charter schools will lose  money for their transportation                                                               
8:42:43 AM                                                                                                                    
REPRESENTATIVE  REINBOLD said  that  many  schools have  students                                                               
within  walking distance  and yet  receive transportation  funds.                                                               
She   suggested  that   these  schools   have  slush   funds  for                                                               
transportation.   She said the  bill is brilliant  and equitable,                                                               
and  provides  that  charter schools  are  no  longer  penalized,                                                               
because  they   are  efficient   and  high   performing  schools.                                                               
Representative  Reinbold observed  that  if transportation  costs                                                               
are high, an internal audit is in order to determine the reason.                                                                
REPRESENTATIVE   LEDOUX  agreed   with  Representative   Seaton's                                                               
opinion;   although  charter   schools  should   be  provided   a                                                               
transportation component,  the funds cannot  be taken out  of the                                                               
formula on  a one-to-one basis due  to the fixed costs  that must                                                               
be considered.                                                                                                                  
REPRESENTATIVE P. WILSON agreed  with Representative Seaton as to                                                               
how transportation  funds are  allocated.   She suggested  that a                                                               
simple  solution would  require  districts to  alter routes  and,                                                               
using the  same amount  of money available,  bus students  to all                                                               
8:46:40 AM                                                                                                                    
DR. MCCAULEY said she did not  intend to imply that districts are                                                               
using    transportation   funds    for   purposes    other   than                                                               
transportation.    The problem  is  that  there is  a  difference                                                               
between   districts   regarding  whether   transportation   funds                                                               
generated  by   charter  school   students  benefit   those  same                                                               
students, thus there  is a potential for disparity.   The bill is                                                               
intended  to ensure  that there  are transportation  benefits for                                                               
charter  school  students  since  the  mechanism  that  generates                                                               
transportation funds is per student.                                                                                            
REPRESENTATIVE  P.  WILSON restated  her  suggestion  to bus  all                                                               
REPRESENTATIVE  LEDOUX questioned  the practicality  of busing  a                                                               
student  across  an area  like  Anchorage  to a  charter  school.                                                               
Secondly,  funds  that  are  generated   per  student  should  be                                                               
dispersed  fairly; for  example, students  at the  school in  her                                                               
neighborhood  are  not bused,  and  transportation  funds do  not                                                               
benefit those  students.   She observed that,  if HB  278 passes,                                                               
charter  schools that  are  located  within neighborhood  schools                                                               
will  receive  transportation  funds that  the  "regular  public"                                                               
school will not, which is not fair either.                                                                                      
8:51:24 AM                                                                                                                    
DR.  MCCAULEY responded  that the  feasibility  of providing  bus                                                               
service  is  a  difficult  situation.   She  offered  a  personal                                                               
anecdote of  the busing service  to the charter school  where she                                                               
acted as  principal, and  how a  system was  worked out  with the                                                               
district that  allowed approximately  60 children  out of  300 to                                                               
ride a  school bus  to school.   The intent behind  HB 278  is to                                                               
ensure that  all charter students  receive some benefit,  and she                                                               
acknowledged the dilemma  about how best to do so.   The language                                                               
of  the bill  provides a  mechanism that  provides transportation                                                               
funds  to  charter schools  across  the  state, and  benefits  to                                                               
charter school students, such as those provided to her school.                                                                  
8:54:06 AM                                                                                                                    
REPRESENTATIVE LEDOUX inquired as to  the equity for students who                                                               
walk  to  their  neighborhood  school  without  benefitting  from                                                               
transportation funds.                                                                                                           
DR. MCCAULEY  said districts are  charged with  operating schools                                                               
that  meet  the  needs  within  their area.    She  remarked,  as                                                               
     I  think that  going too  far in  the consideration  of                                                                    
     funds  generated by  students  in neighborhood  schools                                                                    
     benefitting those  students - I don't  personally think                                                                    
     that that  is an appropriate application.   The charter                                                                    
     school structure is entirely  different in terms of how                                                                    
     it  operates.   It is,  'Charter school  here are  your                                                                    
     funds, make it work.'   Everything from trash pickup to                                                                    
     snow plowing  to ... staffing,  facility costs,  all of                                                                    
     it ....                                                                                                                    
DR. MCCAULEY concluded that the  construct of a charter school is                                                               
fundamentally different  from that  of neighborhood  schools thus                                                               
the   "per   pupil   generated  fund   perspective"   cannot   be                                                               
appropriately  applied.   Charter schools  have autonomy  to make                                                               
decisions  that would  otherwise be  made at  the district  level                                                               
such as pupil-teacher  ratios (PTR), extra-curricular activities,                                                               
and  curriculum.     She  stressed   that  charter   schools  and                                                               
neighborhood schools are not interchangeable.                                                                                   
8:56:35 AM                                                                                                                    
REPRESENTATIVE  SEATON  referred  to  the  aforementioned  "slush                                                               
funds for walkers."  He  recalled that the transportation funding                                                               
formula  was  based on  the  busing  systems  in place,  thus  if                                                               
students were  walking to a  local school, the  district received                                                               
no transportation funds for that  school.  He stressed that every                                                               
district has a different formula  for transportation based on its                                                               
historic transportation needs; there is  not a base amount across                                                               
the state  so that each  district receives  the same amount  on a                                                               
per student basis.  He  acknowledged that this formula has skewed                                                               
since 2005, because  bus routes and situations  have changed; for                                                               
example, in one  district a school closed and students  had to be                                                               
flown to  school.  He restated  that the formula is  not the same                                                               
across the state  and noted that in  his district, transportation                                                               
for  all of  the charter  school  students is  accommodated.   He                                                               
suggested  that  the   real  problem  is  when   the  formula  is                                                               
misunderstood that  it is  generated per  student; in  fact, some                                                               
districts get zero  [funding] and some get a lot  because in 2005                                                               
their busing system was expensive.                                                                                              
9:00:20 AM                                                                                                                    
CHAIR GATTIS directed  that a presentation related  to busing and                                                               
transportation costs  will be  forthcoming during  further review                                                               
of the bill.                                                                                                                    
DR. MCCAULEY restated  that the language of the bill  is meant to                                                               
remedy the following situation:  A  student who has been bused to                                                               
a  neighborhood school  and decides  to attend  a charter  school                                                               
near the neighborhood school, and  then the student no longer has                                                               
the opportunity to ride the school bus.                                                                                         
REPRESENTATIVE SADDLER  directed attention to page  7, lines [9]-                                                               
12 of the bill that read, in part:                                                                                              
     and includes funds generated by special needs under AS                                                                   
     14.17.420(a)(1), secondary school vocational and                                                                         
     technical instruction under AS 14.17.420(a)(3), and                                                                      
     pupil transportation under AS 14.09.010.                                                                                 
REPRESENTATIVE SADDLER asked  how the language in  the bill could                                                               
lead a  member of  the committee  to believe  that the  bill will                                                               
destroy the busing system.                                                                                                      
DR.  MCCAULEY   was  unsure.     She  offered  to   provide  more                                                               
information on  the intent  of the bill  and a  full presentation                                                               
regarding current "transportation circumstances."                                                                               
9:02:46 AM                                                                                                                    
REPRESENTATIVE SEATON asked:                                                                                                    
     If we  have the  funding for  a bus system   ...  [in a                                                                    
     district with] a fairly good  proportion that are going                                                                    
     to charter  schools, if we  pull out that  funding from                                                                    
     that  bus system,  how does  the district  maintain the                                                                    
     busing  system when  we've pulled  out the  per student                                                                    
     allocation,  which  is  the  formula  to  support  that                                                                    
     busing system?                                                                                                             
DR. MCCAULEY  restated her offer  to provide more  information on                                                               
how  much  money  is involved,  districts  with  several  charter                                                               
schools, the amount of funding  per pupil, and the overall impact                                                               
of transportation dollars following the charter school students.                                                                
REPRESENTATIVE SEATON then asked Dr.  McCauley if she agreed that                                                               
in  a district  with  a  robust system  of  charter schools,  the                                                               
impact  on its  busing system  would be  much greater  than on  a                                                               
district with no or few charter schools.                                                                                        
DR.  MCCAULEY   confirmed  that   the  bill  structure   is  that                                                               
transportation funds  generated by charter school  students would                                                               
follow  the  charter school  student  and  therefore, more  funds                                                               
would come out of a district with more charter schools.                                                                         
9:05:18 AM                                                                                                                    
REPRESENTATIVE  LEDOUX directed  attention  to section  9 of  the                                                               
bill which read:                                                                                                                
     * Sec. 9. AS 14.03.260(a) is amended to read:                                                                            
          (a) A local school board shall provide an                                                                             
     approved charter school with  an annual program budget.                                                                    
     The budget shall be not  less than the amount generated                                                                    
     by  the students  enrolled in  the charter  school less                                                                    
     administrative  costs  retained  by  the  local  school                                                                    
     district,  determined  by  applying the  indirect  cost                                                                    
     rate approved by the Department  of Education and Early                                                                    
     Development.   The   "amount  generated   by   students                                                                    
     enrolled in the charter school"  is to be determined in                                                                    
     the same manner  as it would be for  a student enrolled                                                                    
     in another  public school in  that school  district and                                                                
     includes  funds generated  by  special  needs under  AS                                                                
     14.17.420(a)(1),   secondary   school  vocational   and                                                                
     technical  instruction  under AS  14.17.420(a)(3),  and                                                                
     pupil  transportation  under  AS  14.09.010.  A  school                                                                
     district shall direct state aid  under AS 14.11 for the                                                                
     construction or  major maintenance of a  charter school                                                                
     facility  to  the  charter school  that  generated  the                                                                
     state  aid, subject  to the  same terms  and conditions                                                                
     that   apply  to   state  aid   under   AS  14.11   for                                                                
     construction or major maintenance  of a school facility                                                                
     that is not a charter school.                                                                                          
REPRESENTATIVE  LEDOUX  said  section   9  relates  not  only  to                                                               
transportation,  but also  to funds  generated  by special  needs                                                               
students.   She gave  an example  of a  school district  with 100                                                               
special  needs students,  none of  which attend  charter schools,                                                               
and asked  if charter schools  in the district would  get funding                                                               
generated by the special needs students.                                                                                        
DR. MCCAULEY explained:                                                                                                         
     The language  here is that,  as part of the  formula in                                                                    
     which  there is  a special  needs factor  of 1.2,  that                                                                    
     that would  be applied  to the  generation of  funds of                                                                    
     the budget  for the  charter school.   It is  to ensure                                                                    
     that  that  special  needs  factor,   as  part  of  the                                                                    
     formula, is applied when a district is determining the                                                                     
     budget for a charter school.                                                                                               
9:06:43 AM                                                                                                                    
REPRESENTATIVE LEDOUX gave  a further example of  a district with                                                               
10 special needs students, each  costing $100,000 and in the same                                                               
district  a  charter  school  that may  not  have  special  needs                                                               
students  due to  its academic  criteria.   However, the  charter                                                               
school may  receive funding, through the  formula, without taking                                                               
on the responsibility of special needs students.                                                                                
DR.  MCCAULEY  pointed out  the  difference  between the  special                                                               
needs  factor in  the  formula of  1.2,  and "intensive  funding,                                                               
which is times  13".  She further explained that  the language in                                                               
the bill does  not include intensive needs funding;  in fact, the                                                               
language in  the bill is  exclusively to ensure the  inclusion of                                                               
the  items  listed in  section  9,  and  limited with  regard  to                                                               
special  education  to  the  special needs  factor  of  1.2,  and                                                               
purposefully   excludes  the   requirement  of   intensive  needs                                                               
funding, which  are the funds  intended to support  students with                                                               
significant disabilities.   Those  funds are  not required  to be                                                               
forwarded to a charter school.                                                                                                  
9:09:03 AM                                                                                                                    
REPRESENTATIVE   LEDOUX  acknowledged   that  transportation   is                                                               
necessary  to  assist   working  parents,  especially  low-income                                                               
working parents, to have the  opportunity for their children to a                                                               
attend charter school; however,  she questioned whether a charter                                                               
school  without special  needs students  should  take funds  away                                                               
from a neighborhood school.                                                                                                     
DR. MCCAULEY  assured the committee  that the  enrollment process                                                               
for  charter schools  does not  permit a  charter school  to deny                                                               
acceptance   to    students   with   IEPs    with   disabilities.                                                               
Furthermore, all  of the charter  schools have  special education                                                               
students in percentages ranging from  2.2 percent to 23.7 percent                                                               
of the  school's population.   The statewide average  of students                                                               
with disabilities in charter schools  is close to that of schools                                                               
in general.                                                                                                                     
REPRESENTATIVE SEATON  reflected on  the wide variety  of special                                                               
needs students attending charter schools.   He suggested it would                                                               
be more  applicable to  have the  1.2 factor  apply based  on the                                                               
number  of students  in the  schools, and  on the  BSA.   The 1.2                                                               
factor equals  a 20  percent increase in  funding and  this would                                                               
fund charter schools  on the percentage of  students enrolled who                                                               
satisfy the criteria.                                                                                                           
DR.  MCCAULEY  said  the  intent  is  to  leverage  the  existing                                                               
formulas through  which districts receive funding  to ensure that                                                               
when they calculate the budget  for a charter school, the funding                                                               
element  of the  number of  special needs  students is  included.                                                               
Representative Seaton's  recommendation would  require 'something                                                               
different'  from EED  in  the  way the  special  needs factor  is                                                               
considered.   The  intent is  just  to clarify  that the  special                                                               
needs factor should  be included in the calculation  of a charter                                                               
school budget.                                                                                                                  
REPRESENTATIVE SEATON stated that  the proposed bill will require                                                               
something different in  that money will flow in  a different way.                                                               
Some charter schools will have  a few students generating special                                                               
needs income  and some will have  more.  He expressed  his belief                                                               
that the percentage  should be tied to that of  the percentage of                                                               
special  needs  students  in the  district,  and  then  requested                                                               
further information  from EED on  how funds would  be implemented                                                               
on a pro  rata basis to the charter schools  that have numbers of                                                               
special needs students.                                                                                                         
9:14:49 AM                                                                                                                    
CHAIR GATTIS discussed the need  for further information from EED                                                               
on the funding formulas.                                                                                                        
REPRESENTATIVE SEATON  asked to  have EED provide  information on                                                               
special  needs funding  under AS  14.17.420(a)(1) and  also on  a                                                               
proportional  distribution within  a school  district by  student                                                               
enrollment.  He remarked:                                                                                                       
     So it's really not  changing anything other than saying                                                                    
     that the funds generated  and applied proportionally to                                                                    
     the  charter school  versus the  rest of  the district.                                                                    
     ...  It  refines  it  so  we  don't  get  these  [real]                                                                    
     discrepancies where  we have a charter  school that has                                                                    
     few special needs students getting  the same money as a                                                                    
     charter  school ...  that has  a lot  of special  needs                                                                    
     students ....                                                                                                              
REPRESENTATIVE P. WILSON  asked to hear testimony  from a variety                                                               
of school districts  on how they will be affected  by the changes                                                               
in transportation funding.                                                                                                      
REPRESENTATIVE SADDLER  directed attention to section  8, on page                                                               
6, line 31 of the bill that read:                                                                                               
     [SECONDARY SCHOOL COMPETENCY TESTING AS PROVIDED IN                                                                        
REPRESENTATIVE  SADDLER asked  whether line  31 deletes  only the                                                               
high  school   graduation  qualifying   exam  (HSGQE)   or  other                                                               
competency testing.                                                                                                             
DR. MCCAULEY answered that this only refers to the HSGQE.                                                                       
REPRESENTATIVE  SADDLER  surmised  that   if  the  HSGQE  is  not                                                               
repealed, charter  schools will  still be required  to administer                                                               
the exam.                                                                                                                       
DR. MCCAULEY said correct.                                                                                                      
9:18:46 AM                                                                                                                    
CHAIR  GATTIS reminded  the committee  that  charter schools  are                                                               
part of the public school system  and fall under all of the state                                                               
requirements for public schools.                                                                                                
REPRESENTATIVE SEATON  returned attention  to section 9,  line 10                                                               
of the  bill [text provided  above], related to  secondary school                                                               
vocational  and  technical instruction.    He  observed that  the                                                               
formula  directs  2  percent  per   pupil  to  the  district  for                                                               
vocational and technical instruction  and asked whether a portion                                                               
of these funds  would be directed to a charter  school whether it                                                               
is an elementary or secondary school.                                                                                           
DR.  MCCAULEY said  in  a  similar manner  to  the special  needs                                                               
factor, the language  in the bill refers to part  of the formula.                                                               
The  career   and  technical  education  factor   is  1.015,  but                                                               
different than the transportation funding  - which is outside the                                                               
formula -  the bill  directs that  the factor  of 1.015  would be                                                               
used  as part  of  the formula  by which  the  funds for  charter                                                               
schools, that  include secondary school students,  are generated.                                                               
In further response to Representative  Seaton, she said the funds                                                               
would  only   apply  to  schools  that   enroll  secondary  level                                                               
students, and offered to provide EED's  answer as to what are the                                                               
grade levels of secondary students.                                                                                             
9:22:11 AM                                                                                                                    
REPRESENTATIVE  SADDLER directed  attention to  section 6  of the                                                               
bill that read:                                                                                                                 
     Sec.  6.  AS 14.03.250  is  repealed  and reenacted  to                                                                  
          Sec.  14.03.250. Application  for charter  school.                                                                  
          (a) A local school board shall prescribe an                                                                         
     application  procedure  for   the  establishment  of  a                                                                    
     charter   school   in   that   school   district.   The                                                                    
     application  procedure must  include provisions  for an                                                                    
     academic  policy  committee  consisting of  parents  of                                                                    
     students  attending the  school,  teachers, and  school                                                                    
     employees and a proposed form  for a contract between a                                                                    
     charter school and the local  school board, setting out                                                                    
     the contract elements required under AS 14.03.255(c).                                                                      
           (b) The decision of the local school board                                                                           
     approving  or denying  the  application  for a  charter                                                                    
     school  must  be  in  writing   and  must  include  all                                                                    
     relevant findings of fact and conclusions of law.                                                                          
          (c) If the local school board approves an                                                                             
     application  for a  charter  school,  the local  school                                                                    
     board shall forward the application  to the state board                                                                    
     for review and approval.                                                                                                   
          (d) If the local school board denies an                                                                               
     application  for a  charter school,  the applicant  may                                                                    
     appeal the  denial to the  commissioner. The  appeal to                                                                    
     the commissioner shall be filed  not later than 60 days                                                                    
     after  the  local  school   board  issues  its  written                                                                    
     decision of  denial. The commissioner shall  review the                                                                    
     local school board's decision  to determine whether the                                                                    
     findings of fact are  supported by substantial evidence                                                                    
     and  whether  the  decision  is contrary  to  law.    A                                                                    
     decision of  the commissioner  upholding the  denial by                                                                    
     the local school board is  a final decision not subject                                                                    
     to appeal to the state board.                                                                                              
          (e) If the commissioner approves a charter school                                                                     
     application,   the  commissioner   shall  forward   the                                                                    
     application  to   the  state   board  for   review  and                                                                    
     approval. The application shall  be forwarded not later                                                                    
     than 30  days after  the commissioner issues  a written                                                                    
     decision.  The state  board shall  exercise independent                                                                    
     judgment in evaluating the application.                                                                                    
REPRESENTATIVE SADDLER asked whether in current law the State                                                                   
Board must approve or deny a charter school application.                                                                        
DR. MCCAULEY said yes.  In further response to Representative                                                                   
Saddler, she explained that another statute clarifies that the                                                                  
State  Board ultimately  determines whether  a charter  school is                                                               
approved or denied.   Section 6 is intended to  connect the State                                                               
Board to the appeal process.                                                                                                    
9:23:51 AM                                                                                                                    
MIKE  HANLEY,  Commissioner,  EED,  said  that  Dr.  McCauley  is                                                               
correct in that currently there  is other statutory language that                                                               
the  State  Board  gives  final  approval  for  charter  schools;                                                               
[section  6 in  the proposed  bill]  provides that  if a  charter                                                               
school  application  is  denied  at  the  local  level,  and  the                                                               
commissioner approves the application,  the decision remains with                                                               
the State  Board. In further response  to Representative Saddler,                                                               
he said he would provide the relevant statutory authorization.                                                                  
REPRESENTATIVE  SEATON directed  attention  to section  7 of  the                                                               
bill which read:                                                                                                                
     Sec. 7. AS 14.03 is amended  by adding a new section to                                                                  
          Sec. 14.03.253. Charter school application appeal                                                                   
     to  commissioner.  In  an appeal  to  the  commissioner                                                                  
     under AS  14.03.250, the commissioner shall  review the                                                                    
     record before the local  school board. The commissioner                                                                    
     may request written supplementation  of the record from                                                                    
     the   applicant  or   the  local   school  board.   The                                                                    
     commissioner may                                                                                                           
          (1) remand the appeal to the local school board                                                                       
     for further review;                                                                                                        
          (2) approve the charter school application and                                                                        
     forward  the application  to the  state  board with  or                                                                    
     without added conditions; or                                                                                               
          (3) uphold the decision denying the application                                                                       
     for the charter school.                                                                                                    
REPRESENTATIVE   SEATON  asked   whether  the   commissioner  was                                                               
required to  act on one of  the three options set  out in section                                                               
COMMISSIONER HANLEY said yes.                                                                                                   
9:25:13 AM                                                                                                                    
REPRESENTATIVE  SEATON inquired  as to  the criteria  under which                                                               
the  commissioner will  review  and either  approve  or deny  the                                                               
application,  questioning whether  the criteria  is based  on the                                                               
charter school's goals, objectives, and plan.                                                                                   
COMMISSIONER HANLEY referred to section  6, subsection (b) of the                                                               
bill [text provided  above].  If the denial is  based on fact and                                                               
the  conclusions  of  law,  for   instance,  the  charter  school                                                               
applicant is not going to  accept special education students, the                                                               
application  would be  denied because  it violates  the law.   He                                                               
acknowledged  that  there  are   no  specific  criteria  for  the                                                               
commissioner to  use, but  it is  anticipated that  the reference                                                               
would  return to  the findings  of  fact, although  there are  no                                                               
specifics  as to  what  the commissioner  would  consider in  the                                                               
REPRESENTATIVE SEATON was  unsure as to the amount  and the basis                                                               
of  discretion  that the  language  of  the  bill provides.    He                                                               
cautioned  that  the  commissioner's  denial or  approval  of  an                                                               
appeal should be on a defined basis.                                                                                            
9:27:57 AM                                                                                                                    
CHAIR GATTIS opened public testimony on HB 278.                                                                                 
9:28:52 AM                                                                                                                    
BARBARA  GERARD,  Principal,  Academy Charter  School,  said  she                                                               
appreciated the  emphasis Governor  Parnell and  legislators have                                                               
placed on improving  education.  Ms. Gerard addressed  one of the                                                               
barriers  to   creating  a  charter  school,   which  is  housing                                                               
students.   Of the six  charter schools in  the Matanuska-Susitna                                                               
(Mat-Su) Valley,  five pay  to lease space  because they  have no                                                               
other  option,  and  this  takes  money  away  from  instruction.                                                               
Another  challenge is  the  start-up cost  to  provide desks  and                                                               
curriculum  materials.    These  are the  two  main  barriers  to                                                               
opening  a   charter  school,  and   she  spoke  in   support  of                                                               
legislation  to address  these two  areas.   Ms. Gerard  said the                                                               
charter  schools in  Mat-Su are  strong  and healthy  due to  the                                                               
leadership of  the superintendent, however, charter  schools need                                                               
to have in law funding  requirements including indirect fees, how                                                               
the  funding  follows the  student,  and  funding facilities,  in                                                               
order  to  grow  and  focus  on instruction.    She  thanked  the                                                               
committee for its support of education and all children.                                                                        
REPRESENTATIVE SEATON  asked whether charter  school applications                                                               
have been denied by the local school board in Mat-Su.                                                                           
MS. GERARD recalled  one or two did not  complete the application                                                               
process,  and one  charter school  closed, but  she did  not have                                                               
further information.                                                                                                            
CHAIR GATTIS, speaking as a  former school board member, said one                                                               
application  was   denied,  but  instead  was   housed  within  a                                                               
neighborhood school.                                                                                                            
9:33:56 AM                                                                                                                    
REPRESENTATIVE  SADDLER asked  how the  requirement to  provide a                                                               
facility  affects the  instructional program  at Academy  Charter                                                               
MS. GERARD explained that Academy  Charter School has a different                                                               
situation,  but to  lease space  the other  charter schools  must                                                               
take as much as $400,000  out of their operational budgets, which                                                               
could be used for teachers or curriculum.                                                                                       
REPRESENTATIVE  SADDLER  asked  how  state  funding  for  charter                                                               
schools should change to eliminate the disparity.                                                                               
MS. GERARD suggested per pupil  funding for charter schools or an                                                               
option  for bonding  at a  70/30 ratio  that would  allow charter                                                               
schools to acquire permanent facilities.                                                                                        
REPRESENTATIVE SADDLER  agreed with  the previous speaker  that a                                                               
charter school should demonstrate a level of success.                                                                           
9:36:23 AM                                                                                                                    
BECKY HUGGINS, Principal, American  Charter Academy, informed the                                                               
committee  that  the  schools in  the  Matanuska-Susitna  Borough                                                               
School District  (MSBSD) enjoy  support from  its superintendent,                                                               
administration, and  the school  board.  However,  her experience                                                               
is  that administrations  change  and support  is not  statewide.                                                               
She expressed  her support  of an  appeals process  with multiple                                                               
authorizers, and expanding the routes  available for Alaskans who                                                               
are  seeking educational  choice.   In addition,  she recommended                                                               
the creation of  a mechanism that moves facility  cost outside of                                                               
discretionary  funds,  which  would  begin  to  equalize  charter                                                               
schools with other public schools.   In addition, there should be                                                               
the  ability for  charter schools  to  bond for  facilities at  a                                                               
better than 70/30 ratio.                                                                                                        
9:38:52 AM                                                                                                                    
MS. HUGGINS  continued, noting that  the existing  charter school                                                               
facilities law needs  further definition to identify  a per pupil                                                               
formula that reflects the district's  capital costs; for example,                                                               
account   for  rent,   construction,  maintenance,   upkeep,  and                                                               
expansions to  compare and clarify  the facility allowance.   She                                                               
also  suggested that  charter schools  should have  the right  of                                                               
first  refusal   for  closed   or  underused   public  buildings.                                                               
Regarding  the  charter  school law,  she  suggested  adding  for                                                               
clarification  that charter  schools  are exempt  from all  laws,                                                               
regulations,  and  requirements   applicable  to  public  schools                                                               
unless the  law states  it applies  to charter  schools.   In the                                                               
same vein, charter schools should  be exempt from all portions of                                                               
negotiated  agreements that  are contrary  to the  charter school                                                               
law.  Regarding funding, Ms.  Huggins said all sources of funding                                                               
should be shared with charter  schools.  In her district, charter                                                               
schools benefit  from the  BSA formula as  do the  local schools,                                                               
including special needs  funds.  Also, the  current indirect rate                                                               
fluctuates, making  budgeting and long-range  planning difficult.                                                               
She  said   that  the  American   Charter  Academy   uses  school                                                               
transportation,  and acknowledged  that  if transportation  funds                                                               
are  directed   to  her   school  she   could  not   provide  the                                                               
transportation   that  the   district  is   currently  providing.                                                               
Therefore,  Ms. Huggins  recommended that  transportation funding                                                               
continue to  the districts, and  that the districts  are required                                                               
to  provide "required/desired  transportation for  charter school                                                               
students at a level equal to  or greater to the services provided                                                               
all students."                                                                                                                  
9:44:27 AM                                                                                                                    
REPRESENTATIVE SADDLER  asked for  clarification on  the school's                                                               
transportation needs.                                                                                                           
MS. HUGGINS explained  that the current system  of regular school                                                               
bus routes  and shuttle  buses to the  charter school  is working                                                               
very  well.    However,  if   the  school  were  given  a  little                                                               
transportation  fund, it  could  not provide  the  same level  of                                                               
REPRESENTATIVE REINBOLD agreed with  granting charter schools the                                                               
right  of  first refusal  to  facilities.   She  paraphrased  the                                                               
transportation  issue,  as  proposed  in HB  278,  and  said  her                                                               
understanding is  that the bill  would allow the money  to follow                                                               
the student going to the charter school, via larger contracts.                                                                  
MS. HUGGINS expressed  her concern about having  the money follow                                                               
the student,  regarding transportation, because  it is not  a per                                                               
pupil  equation.    She  said  the state  needs  to  support  all                                                               
students in all schools in the same manner.                                                                                     
REPRESENTATIVE REINBOLD  asked whether Ms. Huggins  supported the                                                               
proposed transportation language in HB 278.                                                                                     
MS. HUGGINS was unsure, but  stated her support for ensuring that                                                               
transportation for  charter school students  is equal to  what is                                                               
provided to other schools.                                                                                                      
9:48:58 AM                                                                                                                    
COMMISSIONER  HANLEY clarified  that the  intent of  the bill  is                                                               
that  the  amount  generated  by  students  enrolled  in  charter                                                               
schools  is to  be determined  in the  same manner.   However,  a                                                               
district   can   choose  to   supply   a   charter  school   with                                                               
transportation  that provides  the service  "in the  same manner"                                                               
thus  the charter  school  and district  can  determine the  best                                                               
contract for transportation.                                                                                                    
REPRESENTATIVE SEATON  asked Ms. Huggins for  more information on                                                               
the  70/30 bonding  opportunity  that was  missed  in her  school                                                               
MS. HUGGINS  answered that  her school was  originally part  of a                                                               
large  bonding package;  however,  the Matanuska-Susitna  Borough                                                               
Assembly  determined that  the bond  package  would only  include                                                               
projects reimbursed  on a  70/30 ratio.   For an  unknown reason,                                                               
charter  schools are  only authorized  to bond  at a  60/40 ratio                                                               
thus a rare opportunity was missed.                                                                                             
REPRESENTATIVE  SEATON  requested  that  EED  fully  explain  the                                                               
bonding system as it applies to charter schools.                                                                                
CHAIR   GATTIS  informed   EED   the  committee   would  hear   a                                                               
presentation pertaining to charter school facilities.                                                                           
9:53:05 AM                                                                                                                    
ROBERT  BOYLE, Superintendent,  Ketchikan Gateway  Borough School                                                               
District,  informed   the  committee  the  State   Board  is  the                                                               
controlling  factor  that  determines  the  relationship  between                                                               
school districts and  charter schools; in fact,  decisions by the                                                               
State   Board  supersede   those  by   district  superintendents.                                                               
Transportation services  can be  operated by the  school district                                                               
or  contracted,  which  is  the  system  in  Ketchikan,  and  the                                                               
transportation contract  costs the school  district approximately                                                               
$90,000  per bus  route.   Transportation  funds  generated on  a                                                               
daily count  basis do  not cover  this expense;  however, pooling                                                               
funds allows  the district to  operate this service at  a neutral                                                               
cost,  because  not  every   student  needs  transportation,  for                                                               
example,  many high  school students  drive to  school.   Charter                                                               
schools are  offered full access to  transportation, although the                                                               
bus system  is designed around neighborhood  schools, and service                                                               
to  charter  school  students   requires  some  modifications  by                                                               
charter schools  regarding the  start time  of their  school day.                                                               
Mr.  Boyle  agreed  that  the  money  generated  by  the  charter                                                               
schools'  ADM   count  would  be   insufficient  to   operate  an                                                               
independent  bus  system.   He  assured  the committee  that  the                                                               
charter schools  in his school  district are "fully  embraced" in                                                               
all  funding  aspects,   and  a  facility  is   provided,  as  is                                                               
transportation, maintenance, and support.                                                                                       
REPRESENTATIVE  SEATON  asked  whether transportation  costs  are                                                               
deducted from charter school funding.                                                                                           
MR.  BOYLE answered  that transportation  costs are  a systemwide                                                               
component,  and  added that  the  biggest  obstacle to  providing                                                               
adequate funding for  charter schools is the  required ADM count.                                                               
State statute requires 150 students  for a charter school, and he                                                               
suggested  that if  the legislature  desires more  active charter                                                               
schools, it should review the requirement for 150 ADM.                                                                          
9:57:11 AM                                                                                                                    
REPRESENTATIVE  LEDOUX  observed  that the  committee  has  heard                                                               
testimony  that transportation  services  are not  a problem  for                                                               
charter  schools  in Wasilla  and  Ketchikan.   She  asked  which                                                               
districts   do  not   help  charter   schools   with  regard   to                                                               
DR. MCCAULEY  said EED  does not  collect information  related to                                                               
the  level  of  transportation  in each  district.    In  further                                                               
response to  Representative LeDoux,  she said she  would research                                                               
the question.                                                                                                                   
REPRESENTATIVE  SEATON asked  whether charter  schools pay  for a                                                               
transportation   contract  in   areas  where   transportation  is                                                               
coordinated with the school district in the Mat-Su Borough.                                                                     
DR. MCCAULEY responded that in  her experience transportation was                                                               
provided  to the  charter school  as  part of  its indirect  rate                                                               
which pays for services provided by the district.                                                                               
[HB 278 was heard and held.]                                                                                                    

Document Name Date/Time Subjects
HB197 Letter of Support.pdf HEDC 2/26/2014 8:00:00 AM
HB 197
HB197 Support-3rd Grade Literacy.pdf HEDC 2/26/2014 8:00:00 AM
HB 197
HB197 Support-3rd Grade Policies.pdf HEDC 2/26/2014 8:00:00 AM
HB 197
HB197 Support-A State at Risk.pdf HEDC 2/26/2014 8:00:00 AM
HB 197
HB197 Support-ASD Retentions.pdf HEDC 2/26/2014 8:00:00 AM
HB 197
HB197 Support-Ending Social Promotion.pdf HEDC 2/26/2014 8:00:00 AM
HB 197
HB197 Support-New York Retention.pdf HEDC 2/26/2014 8:00:00 AM
HB 197