Legislature(1995 - 1996)
05/02/1996 08:40 AM FIN
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
SENATE BILL NO. 244 "An Act relating to state foundation aid and supplementary state aid for education; and providing for an effective date." EDDY JEANS, DIVISION OF SCHOOL FINANCE, DEPARTMENT OF EDUCATION testified in support of SB 244. He noted that the legislation would make an adjustment to the regional educational attendance area (REAA) school districts' instructional unit value to allow the state of Alaska to meet the new federal disparity standard which has dropped from 25 to 20 percent. The legislation has a retroactive clause which would make the bill effective in FY 96. The legislation also contains a hold harmless provision for FY 96. The fiscal note is for $311.7 in FY 96 and $20.2 in FY 97. In response to a question by Representative Martin, Mr. Jeans explained that variances between school districts is 2 based on the amount of impact aid each school district receives along with their number of instructional units. He added that all but two school districts apply for and receive federal impact aid funds. These funds are measured for all districts when determining state aid. In Anchorage, Fairbanks and Kodiak the state of Alaska is the applicant for students that reside on a military base. Funds are allocated within 45 days of receipt. Representative Martin referred to deferred maintenance. Mr. Jeans noted that the foundation program provides funding that all school districts should be using for preventative maintenance. Once funds go to the school districts they are discretionary funds allocated by the school board. Co-Chair Hanley noted that the Department of Education does not determine which schools have to be funded in a district. He asked if the federal formula takes into account maintenance in school districts on buildings owned by the military. Mr. Jeans explained that impact aid funds are in lieu of local taxes. He maintained that the foundation formula should provide sufficient revenue to cover annual maintenance. He observed that the rate of reimbursement is established by one half of the statewide expenditures per pupil. Co-Chair Hanley provided members with Amendment 1 (copy on file). He noted that the legislation was amended in the Senate to pay 100 percent of Anchorage's actual cost in pupil transportation. Some of Anchorage's buses are driven by employees and some are on contract. Currently, Anchorage is reimbursed at 67 percent of their actual operations. The Senate amendment would result in a $2 - $2.5 million dollars addition pupil transportion reimbursment for Anchorage. If the additional amount is not funded by the Legislature the cost would be reallocated within all the school districts. An amendment was offered in the House Health Education and Social Services Committee to reimburse school districts at the contract level. This amendment would have cost approximately $200.0 thousand dollars. He noted that the intent of the legislation is to take care of a disparity problem and a potential loss of $40.0 million dollars in federal funds. He stressed that a reevaluation of pupil transportion costs would be appropriate during deliberations to rewrite the entire foundation formula. He explained that Amendment 1 would require that the Department to review both employee and contract transportation costs. Representative Mulder noted that Amendment 1 would allow the Senate title to accompany the legislation. Co-Chair Hanley emphasized that there would not be a dollar impact or reallocation effect on the budget. 3 Mr. Jeans summarized that the amendment would require the Department to review the agreement with the Anchorage School District. Representative Mulder MOVED to adopt Amendment 1. There being NO OBJECTION, it was so ordered. Representative Mulder MOVED to return to the title transmitted by the Senate with CSSB 244 (FIN) am. There being NO OBJECTION, it was so ordered. In response to a question by Representative Martin, Mr. Jeans explained that the impact aid money appropriated to school districts is measured against the instructional unit. He explained that the amount of money that municipalities contribute over and above 4 mils is the source of disparity. Representative Martin asked if it is mandatory that local school districts use impact aid money that they receive. Mr. Jeans stressed that the funds are being spent in the schools. He noted that 10 percent of of the impact aid funding is not deducted in the foundation formula. This 10 percent is counted toward the local contribution. It may also be used in school district's excess contribution. WANDA COOKSEY, SINGLE SITE SCHOOL DISTRICT CONSORTIUM spoke in support of HB 244. She noted that the original legislation called for a permanent fix for the single site school district formula. She stressed that single site school districts would like a permanent fix. She asked that Sections 3 and 4 of SB 244 be reinstated. In response to a question by Co-Chair Hanley Ms. Cooksey confirmed that funding for single site school districts is contained in the school foundation formula. Mr. Jeans explained that the allocation to single site school districts has been based on the formula that the single site consortium is promoting. The amount is based on the actual student counts in K - 12. The amendment that the single site consortium is promoting would put this formula into statute. He noted that a study in 1988 or 1989 determined that single site school districts were not provided with sufficient funding. A table was developed to provide additional funding. This table has been used for a number of years to determine single site funding, but it has not been adopted and placed into statute. Representative Martin questioned if single site pupils would receive the same allocation as a student in Fairbanks or Anchorage. Mr. Jeans explained that they would receive 4 additional instructional units. Representative Martin questioned if the administrative cost is greater for single site school districts. Mr. Jeans noted that funding was reduced from single site school districts. When the issue was revisited a couple of years later it was determined that the adjustment was excessive. He maintained that the legislation would correct the over-adjustment. Representative Martin emphasized the savings in economies of scale. He noted that there are 17 districts in Southeast Alaska. He maintained that the legislation would guarantee more money to single site school districts. Mr. Jeans pointed out that the legislature already makes these appropriations through additional district support. He emphasized that the amendment to add the adjustment to statute would eliminate the need for single site school districts to lobby for the money on an annual basis. Co-Chair Foster MOVED to adopt Amendment 2 (copy on file). Ms. Cooksey explained that the value of the unit would not change. The amount of units would be increased. She spoke in support of Amendment 2. She emphasized that the formula does not generate an adequate amount of funding. Mr. Jeans explained that there would be an additional cost of approximately $3.0 million dollars. Co-Chair Hanley spoke against the amendment. He stressed that some communities have decided not to join school districts. Representative Navarre noted that Craig and Klawock share services between school districts. He spoke in support of additional funding for single site school districts, but pointed out that there are other inequities in the formula. He noted that Kenai receives the same area cost differential as Anchorage, despite the fact that some schools in the Kenai School District must have supplies flown in. He stressed that area cost differentials need to be addressed. A roll call vote was taken on the MOTION to adopt Amendment 2. IN FAVOR: Grussendorf, Kelly, Kohring, Foster OPPOSED: Martin, Mulder, Navarre, Parnell, Therriault, Hanley Representative Brown was absent from the vote. The MOTION FAILED (4-6). WILLIE ANDERSON, NEA-ALASKA spoke in support of SB 244. He expressed concern with Section 5. He noted that Section 5 5 would place a sunset on the foundation funding system. He noted that there has been discussion regarding the disparity in single site districts for more than six years. He cautioned that there could be uncertainty and chaos if the rewrite does not occur before the sunset. He noted that there have been attempts to rewrite the formula in the Senate for the past three years. He urged that Section 5 be deleted. He expressed support for the rewrite of the formula. Representative Martin questioned if the sunset should be changed to 1998. Mr. Anderson stated that 1998 would be better than 1997. He emphasized that a sunset is not needed if there is a commitment to rewrite the formula. Representative Martin noted that the sunset provides pressure to rewrite the formula. He MOVED to delete "1997" and insert "1998". Representative Navarre spoke in support of a sunset. He emphasized that the sunset will provide a catalyst to focus on amending the formula. He pointed out that the Legislature can change the sunset next year. A roll call vote was taken on the MOTION to adopt a sunset date of 1998. IN FAVOR: Kohring, Martin, Foster OPPOSED: Mulder, Navarre, Parnell, Therriault, Grussendorf, Kelly, Hanley Representative Brown was absent from the vote. The MOTION FAILED (3-7). Representative Martin MOVED to report HCSSB 244 (FIN) out of Committee with individual recommendations and with the accompanying fiscal note. There being NO OBJECTION, it was so ordered. HCS CSSB 244 (FIN) was reported out of Committee with a "do pass" recommendation and with a fiscal impact note by the Department of Education, dated 4/11/96.