Legislature(2021 - 2022)ADAMS 519

03/07/2022 01:30 PM House FINANCE

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ HB 272 INCREASE BASE STUDENT ALLOCATION TELECONFERENCED
Heard & Held
+ HB 273 INCREASE BASE STUDENT ALLOC. INFLATION TELECONFERENCED
Scheduled but Not Heard
+ Bills Previously Heard/Scheduled TELECONFERENCED
+= HB 166 ONE LICENSE PLATE PER VEHICLE TELECONFERENCED
Moved CSHB 166(FIN) Out of Committee
+= HB 177 REVISED PROGRAM: APPROPRIATIONS TELECONFERENCED
Moved CSHB 177(STA) Out of Committee
-- Public Testimony --
                  HOUSE FINANCE COMMITTEE                                                                                       
                       March 7, 2022                                                                                            
                         1:35 p.m.                                                                                              
                                                                                                                                
                                                                                                                                
1:35:33 PM                                                                                                                    
                                                                                                                                
CALL TO ORDER                                                                                                                 
                                                                                                                                
Co-Chair Merrick called the  House Finance Committee meeting                                                                    
to order at 1:35 p.m.                                                                                                           
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Neal Foster, Co-Chair                                                                                            
Representative Kelly Merrick, Co-Chair                                                                                          
Representative Dan Ortiz, Vice-Chair                                                                                            
Representative Ben Carpenter                                                                                                    
Representative Bryce Edgmon                                                                                                     
Representative DeLena Johnson                                                                                                   
Representative Andy Josephson                                                                                                   
Representative Bart LeBon                                                                                                       
Representative Sara Rasmussen (via teleconference)                                                                              
Representative Adam Wool                                                                                                        
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Representative Steve Thompson                                                                                                   
                                                                                                                                
ALSO PRESENT                                                                                                                  
                                                                                                                                
Representative Kevin  McCabe, Sponsor;  Representative Chris                                                                    
Tuck,   Sponsor;  Alexei   Painter,  Director,   Legislative                                                                    
Finance Division; Representative  Andi Story, Sponsor; Ariel                                                                    
Svetlik, Staff, Representative Andi Story, Sponsor.                                                                             
                                                                                                                                
PRESENT VIA TELECONFERENCE                                                                                                    
                                                                                                                                
Jeffery  Schmitz,  Director,  Division  of  Motor  Vehicles,                                                                    
Department  of   Administration;  Dayna  Jean   DeFeo,  PhD,                                                                    
Director,  Center  for   Alaska  Education  Policy  Research                                                                    
(CAEPR)  and  Institute  of  Social  and  Economic  Research                                                                    
(ISER),   University  of   Alaska;   Dr.  Diane   Hirshberg,                                                                    
Director,  Professor  of   Education  Policy,  Institute  of                                                                    
Social and   Economic Research (ISER),  University of Alaska                                                                    
Anchorage, Anchorage; Andy  DeGraw, Chief Operating Officer,                                                                    
Fairbanks    North    Star    Borough;    Scott    MacManus,                                                                    
Superintendent, Alaska Gateway School District, Tok.                                                                            
                                                                                                                                
SUMMARY                                                                                                                       
                                                                                                                                
HB 166    ONE LICENSE PLATE PER VEHICLE                                                                                         
                                                                                                                                
          CSHB 166(FIN)  was REPORTED out of  committee with                                                                    
          three  "do  pass"  recommendations,  one  "do  not                                                                    
          pass"     recommendation,     and    three     "no                                                                    
          recommendation" recommendations  and with  one new                                                                    
          fiscal   impact   note   by  the   Department   of                                                                    
          Administration.                                                                                                       
                                                                                                                                
HB 177    REVISED PROGRAM: APPROPRIATIONS                                                                                       
                                                                                                                                
          CSHB 177(STA)  was REPORTED out of  committee with                                                                    
          four "do  pass" recommendations and with  four "no                                                                    
          recommendation" recommendations  and with  one new                                                                    
          zero impact note by the Office of the Governor.                                                                       
                                                                                                                                
HB 272    INCREASE BASE STUDENT ALLOCATION                                                                                      
                                                                                                                                
          HB  272  was  HEARD  and  HELD  in  committee  for                                                                    
          further consideration.                                                                                                
                                                                                                                                
HB 273    INCREASE BASE STUDENT ALLOC. INFLATION                                                                                
                                                                                                                                
          HB 272 was SCHEDULED but not HEARD.                                                                                   
                                                                                                                                
Co-Chair Merrick reviewed the agenda for the meeting. The                                                                       
committee would hold second hearings for HB 166 and HB 177.                                                                     
                                                                                                                                
HOUSE BILL NO. 166                                                                                                            
                                                                                                                                
     "An Act relating to the issuance of vehicle                                                                                
     registration plates."                                                                                                      
                                                                                                                                
1:36:27 PM                                                                                                                    
                                                                                                                                
Co-Chair Merrick indicated there was one amendment.                                                                             
                                                                                                                                
Representative Josephson had heard from the representative                                                                      
that the Anchorage Police Department did not support the                                                                        
bill. He asked if it was true.                                                                                                  
                                                                                                                                
REPRESENTATIVE  KEVIN  MCCABE,  SPONSOR,  responded  in  the                                                                    
affirmative.                                                                                                                    
                                                                                                                                
1:37:21 PM                                                                                                                    
                                                                                                                                
Representative Johnson MOVED to  ADOPT Amendment 1 ((copy on                                                                    
file):                                                                                                                          
                                                                                                                                
     Page 1, line 1 following "plates"                                                                                          
          Insert ";and providing for an effective date"                                                                         
                                                                                                                                
     Page 4, following line 30:                                                                                                 
          Insert a new bill section to read:                                                                                    
          "*Sec. 11. This Act takes effect immediately                                                                          
          under AS 01.10.070(c)."                                                                                               
                                                                                                                                
Co-Chair Merrick OBJECTED for discussion.                                                                                       
                                                                                                                                
Representative Johnson reviewed the  amendment. The bill did                                                                    
not have an effective date. The amendment corrects that.                                                                        
                                                                                                                                
Co-Chair Merrick WITHDREW her OBJECTION.                                                                                        
                                                                                                                                
There being NO OBJECTION, Amendment 1 was ADOPTED.                                                                              
                                                                                                                                
Representative Wool  asked if there had  been any discussion                                                                    
about a sunset provision.                                                                                                       
                                                                                                                                
Representative McCabe  replied that  it was a  good thought.                                                                    
He had not  thought about it. He commented  that anyone with                                                                    
only 1 license plate would have to get another one.                                                                             
                                                                                                                                
Representative Wool  was under  the impression at  one point                                                                    
vehicles only had to have one plate.                                                                                            
                                                                                                                                
1:39:33 PM                                                                                                                    
                                                                                                                                
JEFFERY  SCHMITZ,  DIRECTOR,  DIVISION  OF  MOTOR  VEHICLES,                                                                    
DEPARTMENT OF  ADMINISTRATION (via teleconference),  was not                                                                    
aware that  there was a  time that Alaska only  required one                                                                    
plate.                                                                                                                          
                                                                                                                                
Representative Wool suggested he could be mistaken.                                                                             
                                                                                                                                
Representative  McCabe indicated  the  Department of  Public                                                                    
Safety (DPS) was  in the building if there was  a need for a                                                                    
response urgently.                                                                                                              
                                                                                                                                
1:40:35 PM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
1:41:28 PM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                
Representative Josephson stated that  he would object to the                                                                    
passage of the bill.                                                                                                            
                                                                                                                                
Vice-Chair  Ortiz  MOVED  to report  CSHB  166(FIN)  out  of                                                                    
Committee   with   individual    recommendations   and   the                                                                    
accompanying fiscal note.                                                                                                       
                                                                                                                                
Representative Josephson OBJECTED.                                                                                              
                                                                                                                                
Representative  Josephson  indicated   his  hometown  police                                                                    
department did  not support  the bill  and felt  the trooper                                                                    
who  testified was  lukewarm about  the bill.  He knew  when                                                                    
cars were  coming at him,  he could identify the  state they                                                                    
were from. He thought the  second plate was of assistance to                                                                    
the state.                                                                                                                      
                                                                                                                                
A roll call vote was taken on the motion.                                                                                       
                                                                                                                                
IN FAVOR: LeBon, Edgmon, Johnson, Ortiz, Merrick                                                                                
OPPOSED: Josephson, Wool                                                                                                        
                                                                                                                                
The MOTION PASSED (5/2).                                                                                                        
                                                                                                                                
CSHB 166(FIN) was  REPORTED out of committee  with three "do                                                                    
pass"  recommendations, one  "do  not pass"  recommendation,                                                                    
and three  "no recommendation" recommendations and  with one                                                                    
new fiscal impact note by the Department of Administration.                                                                     
                                                                                                                                
1:43:41 PM                                                                                                                    
At EASE                                                                                                                         
                                                                                                                                
1:45:13 PM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                
HOUSE BILL NO. 177                                                                                                            
                                                                                                                                
     "An Act relating to an increase of an appropriation                                                                        
     due to additional federal or other program receipts;                                                                       
     and providing for an effective date."                                                                                      
                                                                                                                                
1:45:34 PM                                                                                                                    
                                                                                                                                
Co-Chair Merrick indicated no  amendments had been submitted                                                                    
for HB 177.                                                                                                                     
                                                                                                                                
Representative  Josephson  was  disinclined to  support  the                                                                    
bill.   He  explained   that  the   bill  could   be  viewed                                                                    
differently depending  on whether the governor  was liked or                                                                    
not. He  felt that  the bill swung  the pendulum,  and would                                                                    
result in the pendulum being swung the other direction.                                                                         
                                                                                                                                
REPRESENTATIVE CHRIS  TUCK, SPONSOR, appreciated  the topic.                                                                    
He  reported  that  until  Medicaid  expansion,  there  were                                                                    
underfunded RPLs. He  stated that the intention  of the bill                                                                    
was to strike  a balance in dealing  with Legislative Budget                                                                    
and Audit. He  remarked that the governor  could withdraw an                                                                    
RPL if  it was not approved  by the committee. He  felt that                                                                    
the   legislature   was  taken  advantage  of    during  the                                                                    
pandemic, because the money needed quick appropriation.                                                                         
                                                                                                                                
1:49:43 PM                                                                                                                    
                                                                                                                                
Co-Chair Merrick  indicated Representative  Rasmussen joined                                                                    
the meeting via teleconference.                                                                                                 
                                                                                                                                
Vice-Chair Ortiz asked Representative  Tuck to expand on the                                                                    
change of RPLs if the bill were to pass.                                                                                        
                                                                                                                                
Representative Tuck responded that  currently it was a take-                                                                    
it or leave-it situation within  45 days, therefore it would                                                                    
provide the legislature time to  reconvene or negotiate with                                                                    
the governor in  a more amenable way. t would  also break up                                                                    
the RPLs in smaller chunks to strike a balance.                                                                                 
                                                                                                                                
Vice-Chair Ortiz asked about how  the bill changes the power                                                                    
of the Legislative Budget and Audit Committee.                                                                                  
                                                                                                                                
Representative  Tuck  responded,  "Not   a  whole  lot."  He                                                                    
expanded  that it  slowed the  process down  for the  larger                                                                    
funding increments.                                                                                                             
                                                                                                                                
Representative Josephson noted  that the legislature's power                                                                    
of appropriation must be universal  in the country. He asked                                                                    
how other legislatures handle similar situations.                                                                               
                                                                                                                                
Representative Tuck  did not know,  as he had  not discussed                                                                    
it with other states.                                                                                                           
                                                                                                                                
Co-Chair Merrick invited Mr. Painter to comment.                                                                                
                                                                                                                                
ALEXEI  PAINTER,  DIRECTOR,  LEGISLATIVE  FINANCE  DIVISION,                                                                    
relayed  that  some  states  did   not  require  a  separate                                                                    
appropriation. Other states, in  dealing with federal funds,                                                                    
had to meet certain requirements.                                                                                               
                                                                                                                                
1:55:29 PM                                                                                                                    
                                                                                                                                
Representative  Edgmon   commended  the  bill   sponsor.  He                                                                    
thought   it  was   necessary.  He   shared  concerns   with                                                                    
Representative  Josephson about  the  pendulum swinging  too                                                                    
far.  He would  likely support  the bill.  He had  been very                                                                    
much involved with  the appropriations in 202  which he felt                                                                    
had been very one-sided.                                                                                                        
                                                                                                                                
Representative  Tuck indicated  RPL  was simply  a code.  He                                                                    
thought it should be called Revised Program Receipts.                                                                           
                                                                                                                                
Representative Edgmon did not like the term RPL.                                                                                
                                                                                                                                
1:58:24 PM                                                                                                                    
                                                                                                                                
Co-Chair Merrick OPENED public testimony.                                                                                       
                                                                                                                                
Co-Chair Merrick CLOSED public testimony.                                                                                       
                                                                                                                                
Co-Chair  Foster  MOVED  to  report  CSHB  177(STA)  out  of                                                                    
Committee   with   individual    recommendations   and   the                                                                    
accompanying fiscal note.                                                                                                       
                                                                                                                                
Representative Johnson OBJECTED.                                                                                                
                                                                                                                                
A roll call vote was taken on the motion.                                                                                       
                                                                                                                                
IN FAVOR: Ortiz,  Wool, Edgmon,  Josephson, LeBon,  Merrick,                                                                    
Foster                                                                                                                          
OPPOSED: Johnson                                                                                                                
                                                                                                                                
The MOTION PASSED (7/1).                                                                                                        
                                                                                                                                
CSHB 177(STA)  was REPORTED out  of committee with  four "do                                                                    
pass"  recommendations  and  with four  "no  recommendation"                                                                    
recommendations and  with one  new zero  impact note  by the                                                                    
Office of the Governor.                                                                                                         
                                                                                                                                
2:00:34 PM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
2:04:49 PM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                
HOUSE BILL NO. 272                                                                                                            
                                                                                                                                
     "An  Act relating  to  education;  increasing the  base                                                                    
     student  allocation;  and  providing for  an  effective                                                                    
     date."                                                                                                                     
                                                                                                                                
2:05:05 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE ANDI  STORY, SPONSOR, reported that  the base                                                                    
student allocation  (BSA) had been  flat since FY  17, which                                                                    
had put  downward pressure on the  states  school districts.                                                                    
She   introduced  the   Power   Point  Presentation:   "Base                                                                    
Allocation  for  Student Excellence."  Representative  Story                                                                    
began with slide 2: Bound by our Constitution:                                                                                  
                                                                                                                                
     Article 7 - Health, Education and Welfare                                                                                  
     ? 1. Public Education                                                                                                      
     "The  legislature shall  by general  law establish  and                                                                    
     maintain a system of                                                                                                       
   public schools open to all children of the State..."                                                                         
                                                                                                                                
Representative  Story turned  to  slide  3,  Basic  Economic                                                                    
Investment:                                                                                                                     
                                                                                                                                
     ? As Alaska retains and attracts families, businesses,                                                                     
     prospective  employers,  potential residents  look  for                                                                    
     good                                                                                                                       
     schools.                                                                                                                   
     ? Like  other infrastructure, lack of  support leads to                                                                    
     reduced                                                                                                                    
     capacity.                                                                                                                  
     ?  Alaska's  aging  workforce   requires  a  stream  of                                                                    
     graduates                                                                                                                  
                                                                                                                                
Representative Story  continued to slide 4,   Sustains Basic                                                                    
Student Services:                                                                                                               
                                                                                                                                
     ? Two-year bump in per pupil funding to help offset                                                                        
     inflation.                                                                                                                 
     ? Immediate partial relief for uncontrollable rising                                                                       
     fixed costs.                                                                                                               
     ? Frees funds to sustain direct student service.                                                                           
     ? Provides two-year predictability and mitigates lay-                                                                      
     off cycles                                                                                                                 
                                                                                                                                
2:10:35 PM                                                                                                                    
                                                                                                                                
Representative  Story advanced  to  slide  5,  Inflation  is                                                                    
Failing Our Students:                                                                                                           
                                                                                                                                
     ? Over the last decade overall BSA funding has been                                                                        
    adjusted by only a quarter of one percent per year.                                                                         
     ? In that period, the inflation-adjusted value of BSA                                                                      
     funding dropped nearly ten percent, from $6,344 to                                                                         
     $5,695 in FY21 dollars.                                                                                                    
                                                                                                                                
Representative Johnson was unclear  about slide 5. She asked                                                                    
about the adjustment.                                                                                                           
                                                                                                                                
Representative Story deferred to Mr. Painter.                                                                                   
                                                                                                                                
Mr.  Painter   responded  that  the  amount   reflected  the                                                                    
Anchorage CPI.                                                                                                                  
                                                                                                                                
Representative Wool asked for an  explanation of the bars on                                                                    
the slide.                                                                                                                      
                                                                                                                                
Mr. Painter indicated the red line represented the BSA.                                                                         
                                                                                                                                
Representative Wool He asked if  any graph would reflect the                                                                    
same point as the red line.                                                                                                     
                                                                                                                                
Mr.  Painter indicated  the legislature  could  set the  BSA                                                                    
through statute.  He thought  it was  important to  focus on                                                                    
the  rate of  inflation to  costs, because  the BSA  had not                                                                    
kept up with inflation.                                                                                                         
                                                                                                                                
2:14:04 PM                                                                                                                    
                                                                                                                                
Representative Story  continued to  slide 6,   Necessary and                                                                    
Fair:                                                                                                                           
                                                                                                                                
     ? The BSA has been flat funded for six years, since                                                                        
     FY17.                                                                                                                      
     ? Alaska Inflation has grown 8 percent in that period,                                                                     
     and almost 15 percent in the last ten years.                                                                               
     ? FY23 adjustment of $223 ($6,153 per pupil)  Less                                                                         
     than a 4 percent increase.                                                                                                 
     ? FY24 adjustment of $55 ($6,208 per pupil)  Less                                                                          
     than a 1 percent increase                                                                                                  
                                                                                                                                
Representative LeBon  asked about  the fixed  cost category.                                                                    
He  suggested  she use  the  Juneau  School District  as  an                                                                    
example.                                                                                                                        
                                                                                                                                
Representative Story  had a slide later  in the presentation                                                                    
that spoke to his question.                                                                                                     
                                                                                                                                
2:16:20 PM                                                                                                                    
                                                                                                                                
Representative  Wool thanked  the sponsor  for bringing  the                                                                    
bill  forward. He  asked about  her decisions  regarding the                                                                    
step up in increases. He  wondered what number she was using                                                                    
for inflation.  He thought the  increase would be  5 percent                                                                    
over 7 years.                                                                                                                   
                                                                                                                                
Representative Story  would be discussing how  inflation was                                                                    
calculated.  She  looked  out  FY  20.  Districts  had  been                                                                    
receiving $30 million  outside of the formula.  She had been                                                                    
using  Callans  formula.  She shifted  to  LFD, because  LFD                                                                    
thought it was more indicative of Alaska's economy.                                                                             
                                                                                                                                
Representative Johnson  asked if  the sponsor had  looked at                                                                    
other options like pooling teacher health care.                                                                                 
                                                                                                                                
Representative  Story did  not  consider pooling  healthcare                                                                    
costs. She  stated that  there were  three cost  drivers for                                                                    
districts, healthcare  being one of  them. There had  been a                                                                    
proposal to  pool healthcare,  but at the  time with  all of                                                                    
the different components  the state did not  go forward with                                                                    
the idea.                                                                                                                       
                                                                                                                                
2:20:26 PM                                                                                                                    
                                                                                                                                
Representative Story advanced to  slide 7,  Alaska Costs are                                                                    
Comparable to the National Average:                                                                                             
                                                                                                                                
     ?  According to  the Institute  of Social  and Economic                                                                    
     Research,  when unique  expenses of  cost-of-living and                                                                    
     remote  geography  are  factored in,  Alaska's  average                                                                    
     annual per pupil costs are about $12,000 per student                                                                       
     according to the last US Census (2016)*.                                                                                   
     ? This is slightly below the national average.                                                                             
                                                                                                                                
Representative Edgmon  appreciated the  bill. He  noted that                                                                    
when comparing  Alaska to other  states it was not  what was                                                                    
spent,  rather it  was spending  from  savings. He  stressed                                                                    
that there was  a difference from what was spent  out of the                                                                    
state coffers  rather than  from revenue.  He had  posed the                                                                    
question about  what Alaska  was getting  for the  money. He                                                                    
supported a  BSA increase, but  thought the bill  would meet                                                                    
resistance  because   things  were  declining   even  though                                                                    
spending was increasing.                                                                                                        
                                                                                                                                
Representative Story  would address  Representative Edgmon's                                                                    
question  later  in  the   presentation.  She  continued  to                                                                    
address slide 8.                                                                                                                
                                                                                                                                
2:25:09 PM                                                                                                                    
                                                                                                                                
Representative Story moved to slide 9, What Drives Costs:                                                                       
                                                                                                                                
     ? 58 schools have less than 25 students.                                                                                   
     ? Hootch v. Alaska (1975) affirmed that boarding                                                                           
     schools are inadequate proxies for local schools.                                                                          
     ? Highest healthcare costs in the US.                                                                                      
     ? Geographic costs                                                                                                         
     ? The price of goods is higher in remote places.                                                                           
     ? Fuel and Electricity                                                                                                     
     ? Costs more in remote places.                                                                                             
     ? Schools don't benefit from the Power Cost                                                                                
     Equalization (PCE) program.                                                                                                
     ? Rural districts must offer competitive pay to                                                                            
     attract educators.                                                                                                         
                                                                                                                                
Representative  Edgmon thought  more could  be added  to the                                                                    
list.  He also  spoke  about the  large  issue of  disparity                                                                    
regarding energy  costs and schools, especially  those using                                                                    
diesel fuel.                                                                                                                    
                                                                                                                                
Representative Johnson noted  that administrative costs were                                                                    
the other items.                                                                                                                
                                                                                                                                
Representative Story deferred to ISER.                                                                                          
                                                                                                                                
Representative Johnson felt that  people thought it drove up                                                                    
the  price  because  the schools  negotiated  the  price  of                                                                    
energy.                                                                                                                         
                                                                                                                                
Representative Story  discussed the  pie chart on  slide 10.                                                                    
She  indicated that  75 percent  of expenses  were spent  on                                                                    
instruction.  She  was  aware the  percentages  varied  from                                                                    
district-to-district.                                                                                                           
                                                                                                                                
Representative   Story  continued   to  address   slide  10,                                                                    
 Funding Goes to Kids:                                                                                                          
      ? Districts dedicate nearly 75 percent of funding to                                                                      
     direct student instruction, student services, and                                                                          
     student activities.                                                                                                        
     ? 15 percent is consumed by maintenance and utilities.                                                                     
     ? Less than 15 percent is spent on administration and                                                                      
     management.                                                                                                                
                                                                                                                                
2:33:45 PM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
2:34:20 PM                                                                                                                    
RECONVENNED                                                                                                                     
                                                                                                                                
Representative  Josephson had  a  number  of questions.  She                                                                    
wondered if there was any  documentation that school funding                                                                    
was connected with  student outcomes. In the  ISER study, it                                                                    
was recommended  that Alaska take  a look at the  moving the                                                                    
needle for student improvement.  It had been well documented                                                                    
that the  size of the  classroom was an  important component                                                                    
of student improvement.                                                                                                         
                                                                                                                                
Representative  Johnson asked  how  the  state could  ensure                                                                    
accountability.  She noted  hearing  about  problems in  the                                                                    
classroom  and the  time lost  with COVID.  She argued  that                                                                    
accountability was missing from the picture.                                                                                    
                                                                                                                                
Representative Story  noted that  school board  members were                                                                    
to target  dollars to specific  programs to help  with gaps.                                                                    
She  advised   remembering  that  people  were   working  on                                                                    
improvement.  She was  aware that  everyone  was looking  at                                                                    
costs wanted to see money go to kids in the classroom.                                                                          
                                                                                                                                
Representative Johnson  wondered if  the BSA  increase would                                                                    
be a stand-alone item.                                                                                                          
                                                                                                                                
Representative  Story was  asking for  4 percent,  which was                                                                    
nominal,  gut  left  room  in the  budget  for  things  like                                                                    
reading.                                                                                                                        
                                                                                                                                
2:40:59 PM                                                                                                                    
                                                                                                                                
Representative Wool  was trying to understand  the inflation                                                                    
number. He was confused of the time period.                                                                                     
                                                                                                                                
Representative Story  believe the  15 percent came  from the                                                                    
LFD chart.                                                                                                                      
                                                                                                                                
Representative  Josephson wondered  what would  occur if  HB
273  was  unlikely  to  pass,  which  was  the  inflationary                                                                    
adjustment bill.                                                                                                                
                                                                                                                                
Representative Story  replied that if the  legislature would                                                                    
pass  inflation-proofing  which  was  why  she  offered  two                                                                    
separate  bills.  She  thought  HB  272  took  care  of  the                                                                    
immediate needs whereas HB 273 addressed expanded needs.                                                                        
                                                                                                                                
2:45:55 PM                                                                                                                    
                                                                                                                                
ARIEL SVETLIK,  STAFF, REPRESENTATIVE  ANDI STORY,  would go                                                                    
through  the  sectional  analysis. She  read  the  sectional                                                                    
analysis:                                                                                                                       
                                                                                                                                
     Section 1: Amends AS 14.17.470, increasing the Student                                                                     
     Base Allocation from $5930 by $223 to $6,153.                                                                              
                                                                                                                                
     Section 2: Amends AS 14.17.470, increasing the Student                                                                     
     Base Allocation from $6,153 by $55 to $6,208.                                                                              
                                                                                                                                
     Section 3: Sets an effective date for Section 1 of                                                                         
     July 1, 2022.                                                                                                              
                                                                                                                                
     Section 4: Sets an effective date for Section 2 of                                                                         
     July 1, 2023.                                                                                                              
                                                                                                                                
Ms. Svetlik explained the fiscal notes.                                                                                         
                                                                                                                                
2:48:28 PM                                                                                                                    
                                                                                                                                
DAYNA  JEAN   DEFEO,  PHD,   DIRECTOR,  CENTER   FOR  ALASKA                                                                    
EDUCATION POLICY  RESEARCH (CAEPR)  AND INSTITUTE  OF SOCIAL                                                                    
AND  ECONOMIC RESEARCH  (ISER),  UNIVERSITY  OF ALASKA  (via                                                                    
teleconference),  was joined  by two  of her  colleagues //.                                                                    
She  was  prepared  to  talk about  three  aspects  of  cost                                                                    
drivers to  education funding. Alaska remained  in 6th place                                                                    
because  the  national  economy   was  growing  faster  that                                                                    
Alaska's.                                                                                                                       
                                                                                                                                
2:50:43 PM                                                                                                                    
                                                                                                                                
Dr.  DeFeo posed  the question  whether  Alaska really  paid                                                                    
more for  education compared to  other states. She  made two                                                                    
adjustments to consider the buying power of Alaska dollars.                                                                     
                                                                                                                                
Dr. DeFeo continued that   Alaska had many small schools and                                                                    
Alaska  was  responsible  for providing  an  education.  The                                                                    
second  unique  cost  was  healthcare  which  puts  downward                                                                    
pressure on  school districts. Fuel costs  different amounts                                                                    
in different places within the  state, based on whether that                                                                    
community   had  road   and  water   access.  In   addition,                                                                    
electricity costs  in rural Alaska  had to be  considered in                                                                    
funding.                                                                                                                        
                                                                                                                                
Dr. DeFeo continued that she wanted  to look at how much was                                                                    
being  spent  and  whether that  spending  reflected  better                                                                    
outcomes. She was available for questions.                                                                                      
                                                                                                                                
2:55:44 PM                                                                                                                    
                                                                                                                                
Representative  Edgmon  asked  about an  education  adequacy                                                                    
study. He asked for her to comment further.                                                                                     
                                                                                                                                
Dr.  DeFeo responded  that the  adequacy study  was done  in                                                                    
2017,  to  determine  investment  of  resources  for  public                                                                    
education based on best outcome data.                                                                                           
                                                                                                                                
Representative Edgmon  asked if  it was  a byproduct  of the                                                                    
Moore case.                                                                                                                     
                                                                                                                                
Dr. DeFeo deferred to Dr. Hirshberg.                                                                                            
                                                                                                                                
2:57:07 PM                                                                                                                    
                                                                                                                                
DR.  DIANE  HIRSHBERG,   DIRECTOR,  PROFESSOR  OF  EDUCATION                                                                    
POLICY, INSTITUTE  OF SOCIAL AND   ECONOMIC RESEARCH (ISER),                                                                    
UNIVERSITY    OF    ALASKA   ANCHORAGE,    ANCHORAGE    (via                                                                    
teleconference), stated  that she would  provide information                                                                    
at a later  date as to whether the Moore  case addressed the                                                                    
study.                                                                                                                          
                                                                                                                                
Vice-Chair  Ortiz   queried  the  benefit  of   health  care                                                                    
pooling.                                                                                                                        
                                                                                                                                
Dr. DeFeo responded that she  had not looked at it directly.                                                                    
She  stated that  insurance between  districts was  variable                                                                    
due to various factors.                                                                                                         
                                                                                                                                
3:00:48 PM                                                                                                                    
                                                                                                                                
Representative  Rasmussen queried  the  specific measure  of                                                                    
success, and asked for some defined student outcomes.                                                                           
                                                                                                                                
Dr.  DeFeo thought  the representative  was asking  a tricky                                                                    
question.  She noted  another  member  asking about  student                                                                    
outcomes.  She  argued  that investments  in  education  had                                                                    
delayed outcomes. One of the  outcomes she hoped for was for                                                                    
better teachers coming to the state                                                                                             
                                                                                                                                
Representative  Rasmussen thought  Alaska wanted  to attract                                                                    
the  best teachers  to the  state. She  spoke of  a personal                                                                    
experience  regarding  her  some   and  his  education.  She                                                                    
advocated  for more  specific  goals in  mind.  She did  not                                                                    
think  it  benefited  the  state  to  put  more  money  into                                                                    
education without seeing outcomes.                                                                                              
                                                                                                                                
Dr.  DeFeo thought  it  was most  important  to spend  money                                                                    
wisely to improve improvement measures.                                                                                         
                                                                                                                                
3:05:29 PM                                                                                                                    
                                                                                                                                
Representative  LeBon  commented   that  accountability  was                                                                    
needed  and  started  at  the   local  school  board  level.                                                                    
Accountability  took  parental   involvement  as  well.  The                                                                    
curriculum  was also  important  and engaging.  He asked  if                                                                    
there was  competition among districts for  talent. He asked                                                                    
if Alaska was competitive.                                                                                                      
                                                                                                                                
Dr. DeFeo  responded that the  state competed  for teachers.                                                                    
Many rural  districts attracted teachers from  out of state,                                                                    
but it  was not just getting  a teacher into a  district but                                                                    
keeping them in a district.                                                                                                     
                                                                                                                                
Representative  LeBon commented  that  he  recalled his  own                                                                    
participation  in a  labor agreement.  He  stressed that  80                                                                    
percent of school district costs  were  people related,  and                                                                    
there  was  always  upward pressure  to  keep  the  salaries                                                                    
competitive.                                                                                                                    
                                                                                                                                
3:10:30 PM                                                                                                                    
                                                                                                                                
Representative Wool  asked if  Dr. DeFeo had  a copy  of the                                                                    
chart.                                                                                                                          
                                                                                                                                
Dr. DeFeo stated that she had created that chart.                                                                               
                                                                                                                                
Representative  Wool   wondered  where   Alaska's  teacher's                                                                    
salaries when it came to inflation.                                                                                             
                                                                                                                                
Dr.  DeFeo  responded that  thought  she  had a  chart,  and                                                                    
Alaska fell at the rank of 23 in the country.                                                                                   
                                                                                                                                
Vice-Chair  Ortiz  asked  if retirement  benefits  had  been                                                                    
considered at the time.                                                                                                         
                                                                                                                                
Dr. DeFeo  responded she  would love to  do the  analysis on                                                                    
the retirement benefits.                                                                                                        
                                                                                                                                
Representative  Edgmon thought  it would  be interesting  to                                                                    
see  the movement  over the  years as  a result  of removing                                                                    
defined benefits.                                                                                                               
                                                                                                                                
Dr. DeFeo corrected herself that  the state ranked  slightly                                                                    
lower  after the  first adjustment.  She agreed  that Alaska                                                                    
made a complete shift from  defined benefits, and would love                                                                    
to  do  the  analysis  on the  impact  of  removing  defined                                                                    
benefits.                                                                                                                       
                                                                                                                                
3:16:32 PM                                                                                                                    
                                                                                                                                
Representative Wool asked about  more information related to                                                                    
the states ranking.                                                                                                             
                                                                                                                                
Dr. Defeo  stressed that Anchorage was  considered the base,                                                                    
and compared to as a source of cost of living.                                                                                  
                                                                                                                                
Representative Wool surmised that  the numerical average was                                                                    
compared to the rest of the country.                                                                                            
                                                                                                                                
Dr. DeFeo agreed.                                                                                                               
                                                                                                                                
3:19:00 PM                                                                                                                    
                                                                                                                                
ANDY DEGRAW,  CHIEF OPERATING OFFICER, FAIRBANKS  NORTH STAR                                                                    
BOROUGH  (via  teleconference),  stated  that  there  was  a                                                                    
current  deficit of  $19  million in  the  district. He  had                                                                    
heard remarks  that districts  had their  hand out  and just                                                                    
wanted more money. He shared  that the district in Fairbanks                                                                    
was doing its  part to hold the line and  was running out of                                                                    
options  to save  money. He  stressed  class reductions  and                                                                    
other things that  would impact students in  a negative way.                                                                    
He urged support for the bill.                                                                                                  
                                                                                                                                
3:27:27 PM                                                                                                                    
                                                                                                                                
Representative Wool  asked how much relief  the BSA proposed                                                                    
in the bill would provide.                                                                                                      
                                                                                                                                
Mr.  DeGraw replied  that in  FY 23  the bill  would provide                                                                    
Fairbanks   an   additional   $5.3  million.   He   believed                                                                    
Representative  Johnson and  others had  some concerns  with                                                                    
attaching  increased revenues  to accountability.  He shared                                                                    
that any increase would go  straight to instructional staff.                                                                    
The district  was currently  supporting regular  teachers on                                                                    
Coronavirus Aid,  Relief, and Economic Security  (CARES) Act                                                                    
funds.  Any   additional  revenue   would  go   straight  to                                                                    
instructional staff.                                                                                                            
                                                                                                                                
Representative  Wool asked  whether  it was  due to  certain                                                                    
parameters on funding uses of the CARES Act funding.                                                                            
                                                                                                                                
3:31:13 PM                                                                                                                    
                                                                                                                                
Mr. DeGraw  replied that Fairbanks had  received $33 million                                                                    
in federal  pandemic relief funds,  and there was  an option                                                                    
to request reimbursement monthly  or quarterly. The district                                                                    
had requested  funds quarterly  and there  appeared to  be a                                                                    
significant  lag in  receiving  the funds.  He relayed  that                                                                    
COVID  burdens  and  needs  had  far  exceeded  the  funding                                                                    
received.                                                                                                                       
                                                                                                                                
Representative LeBon  asked what  percentage was  built into                                                                    
the schedule.                                                                                                                   
                                                                                                                                
Mr. DeGraw asked for clarification on the question.                                                                             
                                                                                                                                
Representative LeBon  believed the district must  have built                                                                    
some additional money into the steps and columns.                                                                               
                                                                                                                                
Mr.   DeGraw  answered   the  district   was  currently   in                                                                    
negotiations.                                                                                                                   
                                                                                                                                
Representative LeBon asked if  the BSA increase would impact                                                                    
the negotiation.                                                                                                                
                                                                                                                                
Mr.   DeGraw  replied   that  the   dollar  amount   he  had                                                                    
articulated  that the  $5 million  increase  the bill  would                                                                    
bring compared to  the $19 million deficit  likely spoke for                                                                    
itself. He stressed the great teachers in the district.                                                                         
                                                                                                                                
Representative  LeBon referenced  the local  contribution to                                                                    
teachers.  He asked  if the  district  was competitive  with                                                                    
Juneau, Kenai, Mat-Su, and Anchorage.                                                                                           
                                                                                                                                
3:38:02 PM                                                                                                                    
                                                                                                                                
Mr. DeGraw could follow up with the information.                                                                                
                                                                                                                                
Representative  Josephson asked  if the  deficit was  net of                                                                    
the COVID dollars.                                                                                                              
                                                                                                                                
Mr. DeGraw  replied that  the deficit was  net of  the COVID                                                                    
dollars. He clarified the impact  of the bill; it would give                                                                    
Fairbanks an additional $5.3 million in FY 23.                                                                                  
                                                                                                                                
Representative   Josephson    asked   if   the    bill   was                                                                    
undershooting  the mark.  He stated  the state  treasury was                                                                    
more robust than in FY 22,  but there was still a structural                                                                    
deficit.                                                                                                                        
                                                                                                                                
Mr. DeGraw  responded that he  would not complain  about any                                                                    
additional dollars to the school  district's bottom line. He                                                                    
relayed it  did not completely eliminate  the shortfall, but                                                                    
it would be a big help to the district.                                                                                         
                                                                                                                                
Representative Josephson disagreed.                                                                                             
                                                                                                                                
3:41:56 PM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
3:42:27 PM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                
SCOTT  MACMANUS,   SUPERINTENDENT,  ALASKA   GATEWAY  SCHOOL                                                                    
DISTRICT,  TOK (via  teleconference), provided  a PowerPoint                                                                    
presentation titled  "The Cost of Inflation:  Alaska Gateway                                                                    
School  District  FY17  to FY21."  He  provided  information                                                                    
about  the  school district.  The  district  was a  Regional                                                                    
Educational Attendance Area (REAA)  and did not have ability                                                                    
to  raise  funds   for  its  schools  beyond   the  BSA  and                                                                    
legislative appropriation.                                                                                                      
                                                                                                                                
3:46:25 PM                                                                                                                    
                                                                                                                                
Mr. MacManus discussed maintenance costs on slide 2:                                                                            
                                                                                                                                
     ? The above fixed costs at the time of the last BSA                                                                        
     Increase were $4,120,293.00 (FY17) and increased                                                                           
     $797,727.00 by FY21 or 19 percent                                                                                          
     ? With CPI Index of 7 percent in FY22, these costs                                                                         
     will skyrocket further.                                                                                                    
                                                                                                                                
Mr. MacManus  addressed heat and power  electricity costs on                                                                    
slide 3. He moved to insurance  costs on slide 6, and health                                                                    
insurance on  slide 7. He  remarked on the  teacher salaries                                                                    
on slide  8, and stressed that  the district had done  a lot                                                                    
of work to  try to address cost savings.  The district would                                                                    
actively continue to seek solutions.  He was concerned about                                                                    
a potential  spike in  heating cost due  to the  increase in                                                                    
oil prices.                                                                                                                     
                                                                                                                                
3:52:46 PM                                                                                                                    
                                                                                                                                
Representative Wool  asked how  many problems would  go away                                                                    
for the district if the bill passed.                                                                                            
                                                                                                                                
Mr.  MacManus  answered  that  $250,000  of  the  district's                                                                    
problems would go away.                                                                                                         
                                                                                                                                
Representative Wool observed that  it was about one-third of                                                                    
the amount.                                                                                                                     
                                                                                                                                
HB  272  was  HEARD  and   HELD  in  committee  for  further                                                                    
consideration.                                                                                                                  
                                                                                                                                
HB 273 was was SCHEDULED but not HEARD.                                                                                         
                                                                                                                                
Co-Chair Merrick  noted that amendments  to HB 158  were due                                                                    
to  her at  5:00  p.m.  She reviewed  the  schedule for  the                                                                    
following day.                                                                                                                  
                                                                                                                                
ADJOURNMENT                                                                                                                   
3:54:50 PM                                                                                                                    
                                                                                                                                
The meeting was adjourned at 3:54 p.m.                                                                                          

Document Name Date/Time Subjects
HB 272 ISER suporting document.pdf HFIN 3/7/2022 1:30:00 PM
HB 272
HB 272 AGSD Presentation.pdf HFIN 3/7/2022 1:30:00 PM
HB 272
HB 272 organization support 022422.pdf HFIN 3/7/2022 1:30:00 PM
HB 272
HB 272 Presentation.pdf HFIN 3/7/2022 1:30:00 PM
HB 272
HB 272 Sectional.pdf HFIN 3/7/2022 1:30:00 PM
HB 272
HB 272 Sponsor Statement.pdf HFIN 3/7/2022 1:30:00 PM
HB 272
HB 272 Support 021122.pdf HFIN 3/7/2022 1:30:00 PM
HB 272
HB 272 Support 022422.pdf HFIN 3/7/2022 1:30:00 PM
HB 272
273 Oppose.pdf HFIN 3/7/2022 1:30:00 PM
HB 273
HB 273 BSA Chart for ASD.pdf HFIN 3/7/2022 1:30:00 PM
HB 273
HB 273 presentation.pdf HFIN 3/7/2022 1:30:00 PM
HB 273
HB 273 Sectional.pdf HFIN 3/7/2022 1:30:00 PM
HB 273
HB 273 Sponsor Statement.pdf HFIN 3/7/2022 1:30:00 PM
HB 273
HB 273 Summary of Changes.pdf HFIN 3/7/2022 1:30:00 PM
HB 273
HB 273 Support 021122.pdf HFIN 3/7/2022 1:30:00 PM
HB 273
HB 273 Support 022422.pdf HFIN 3/7/2022 1:30:00 PM
HB 273
HB 166 am 1 Johnson.pdf HFIN 3/7/2022 1:30:00 PM
HB 166
HB 166 am 1 Johnson with Action.pdf HFIN 3/7/2022 1:30:00 PM
HB 166
HB 272 HB 273 Public Testimony Rec'd by 030722.pdf HFIN 3/7/2022 1:30:00 PM
HB 272
HB 273