Legislature(2005 - 2006)HOUSE FINANCE 519

04/19/2006 09:00 AM FINANCE


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09:42:13 AM Start
09:46:48 AM HB362
10:20:12 AM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
-- Time Change --
+ HB 29 HEALTH CARE INSUR./COMP HEALTH INS. ASSN TELECONFERENCED
<Bill Hearing Postponed to 1:30 PM today>
+= HB 362 INCREASE BASE STUDENT ALLOCATION TELECONFERENCED
Moved CSHB 362(FIN) Out of Committee
-- Testimony <Invitation Only> --
+ Bills Previously Heard/Scheduled TELECONFERENCED
                  HOUSE FINANCE COMMITTEE                                                                                       
                       April 19, 2006                                                                                           
                         9:42 a.m.                                                                                              
                                                                                                                                
CALL TO ORDER                                                                                                                 
                                                                                                                                
Co-Chair Meyer called the House  Finance Committee meeting to                                                                   
order at 9:42:13 AM.                                                                                                          
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Mike Chenault, Co-Chair                                                                                          
Representative Kevin Meyer, Co-Chair                                                                                            
Representative Bill Stoltze, Vice-Chair                                                                                         
Representative Richard Foster                                                                                                   
Representative Mike Hawker                                                                                                      
Representative Jim Holm                                                                                                         
Representative Reggie Joule                                                                                                     
Representative Mike Kelly                                                                                                       
Representative Beth Kerttula                                                                                                    
Representative Carl Moses                                                                                                       
Representative Bruce Weyhrauch                                                                                                  
                                                                                                                                
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
None                                                                                                                            
                                                                                                                                
ALSO PRESENT                                                                                                                  
                                                                                                                                
                                                                                                                                
PRESENT VIA TELECONFERENCE                                                                                                    
                                                                                                                                
                                                                                                                                
SUMMARY                                                                                                                       
                                                                                                                                
HB 362    "An  Act  increasing  the base  student  allocation                                                                   
          used in the formula for state financing of public                                                                     
          education; and providing for an effective date."                                                                      
                                                                                                                                
          CS HB 362 (FIN) was REPORTED OUT of Committee with                                                                    
          two    new    fiscal     notes    and    individual                                                                   
          recommendations.                                                                                                      
HOUSE BILL NO. 362                                                                                                              
                                                                                                                                
"An Act  increasing the base  student allocation used  in the                                                                   
formula  for   state  financing  of  public   education;  and                                                                   
providing for an effective date."                                                                                               
                                                                                                                                
Co-Chair Meyer  noted that public testimony had  concluded in                                                                   
the previous  week, on April  7.  He  noted that  since there                                                                   
had  been a  considerable  amount  of testimony,  no  further                                                                   
information would be taken.                                                                                                     
                                                                                                                                
Representative Chenault  MOVED  Amendment #1,  24-GH2038\A.2,                                                                   
Mischel, 4/5/06. Representative Stoltze OBJECTED.                                                                               
                                                                                                                                
Representative Chenault  spoke  to the  amendment.   He noted                                                                   
that area  cost factors had been  a major issue for  a number                                                                   
of years in his  school district, as well as Statewide.    He                                                                   
discussed the  impact of  SB 36, and  noted that  the numbers                                                                   
may  have  been   speculative  at  the  time   the  bill  was                                                                   
introduced.   He pointed  out that over  the past  ten years,                                                                   
studies had  been completed by  the Department  of Education.                                                                   
The results  of these studies  seem to indicate  that initial                                                                   
calculations were  in fact flawed from  various perspectives.                                                                   
He proposed that the time had  come to take right action.  He                                                                   
noted  that the  amendment  was  based on  a  portion of  the                                                                   
Eischer  study.    He  expressed   his  discomfort  with  the                                                                   
accuracy  of  the  study,  but  pointed  out  that  districts                                                                   
Statewide had  been hurt by SB  36.  He stated that  over the                                                                   
past two  years, he had  discussed this problem  with various                                                                   
legislators, and  stressed that it must be  addressed at this                                                                   
time.  He commented  that to add more foundation  funding did                                                                   
not   address   the   problem,   but   rather   widened   the                                                                   
discrepancies between  cost differential numbers  and thereby                                                                   
exacerbated the problem.                                                                                                        
                                                                                                                                
9:46:48 AM                                                                                                                    
                                                                                                                                
Representative Chenault  stated   his  intention  to  promote                                                                   
contention  with  the cost  differential.    He WITHDREW  the                                                                   
amendment, citing the current  ongoing negotiations toward an                                                                   
appropriate  compromise.    He  reiterated  his  belief  that                                                                   
simply placing  more money into schools would  not ultimately                                                                   
remedy the cost differential.   He noted that all options had                                                                   
drawbacks, and  that discussions were ongoing.   He expressed                                                                   
that he  did not  wish to hold  up the  bill, but to  address                                                                   
this issue  through another  avenue, creating  a remedy  that                                                                   
would ultimately  solve the  problem.   He stated his  belief                                                                   
that the amendment  would pass on the House  Floor, but noted                                                                   
that it depended  in the long run on support  from the Senate                                                                   
as well.   He stressed the  importance of efforts to  reach a                                                                   
compromise  that would be  acceptable to  both the  House and                                                                   
Senate.                                                                                                                         
                                                                                                                                
9:48:51 AM                                                                                                                    
                                                                                                                                
Representative Chenault  suggested  that legislators have the                                                                   
courage to address the cost differential,  which he commended                                                                   
as right action.                                                                                                                
                                                                                                                                
Representative Kelly suggested  that if in the negotiations a                                                                   
compromise  was  reached  to address  all  districts,  a  cap                                                                   
should  also  be implemented,  as  well  as a  hold  harmless                                                                   
clause for certain  areas.  He suggested that  the underlying                                                                   
issues were less clear than simply the numbers.                                                                                 
                                                                                                                                
Representative Foster    thanked  the Co-Chair  for his  work                                                                   
on the amendment, and expressed support.                                                                                        
                                                                                                                                
Representative Joule also  expressed his support  and thanked                                                                   
the Co-Chair  for raising  important issues.   He noted  that                                                                   
the issues facing schools since  SB 36 were not always raised                                                                   
and discussed on  the Floor.  He acknowledged  that the court                                                                   
system  might ultimately  solve the  question, but  suggested                                                                   
that discussion of the issues was necessary.                                                                                    
                                                                                                                                
9:52:15 AM                                                                                                                    
                                                                                                                                
Co-Chair Meyer commented  that  his  office had  worked  with                                                                   
Representative Chenault  for  two years to create  a solution                                                                   
for  all districts  Statewide,  and had  reached  a point  of                                                                   
exhaustion.   He acknowledged that Representative  Chenault's                                                                   
district  had  lost  students,   and  therefore  lost  money.                                                                   
However, he  stressed that a  long-term solution  was needed,                                                                   
and expressed a desire to resolve  this legislatively and not                                                                   
through the courts.                                                                                                             
                                                                                                                                
9:53:20 AM                                                                                                                    
                                                                                                                                
Co-Chair Meyer MOVED   Conceptual   Amendment  #2a   (Meyer).                                                                   
Representative Chenault OBJECTED.                                                                                               
                                                                                                                                
Co-Chair  Meyer discussed  the amendment.   He expressed  the                                                                   
desire to  address not only  the cost differential,  but also                                                                   
to add to the  foundation formula.  He pointed  out that even                                                                   
with  the  Governor's   proposed  $90  million   increase  in                                                                   
funding, most schools were falling  short.  He noted that his                                                                   
own district was currently $2  million short of meeting basic                                                                   
needs.   He explained that the  Amendment would result  in an                                                                   
overall  increase of  $6 million,  increasing the  Governor's                                                                   
proposed amount to  $96 million.   The Amendment  changes the                                                                   
foundation formula  amount from  $5,352 to $5,380.   Co-Chair                                                                   
Meyer proposed  that it would  benefit all districts  with an                                                                   
increase.                                                                                                                       
                                                                                                                                
9:54:56 AM                                                                                                                    
                                                                                                                                
Representative Chenault REMOVED his OBJECTION.                                                                                  
                                                                                                                                
9:56:12 AM                                                                                                                    
                                                                                                                                
Representative Kelly MAINTAINED  an OBJECTION.   He expressed                                                                   
concern over the  significant increases in the  State budget.                                                                   
While  he acknowledged  the legitimate  need  of schools,  he                                                                   
pointed  out Committee  concern  over escalating  costs,  and                                                                   
suggested that  the State budget could not  support continued                                                                   
increases.                                                                                                                      
                                                                                                                                
Co-Chair Meyer pointed  out that the University  had received                                                                   
a fifteen  percent increase,  and suggested  that parity  was                                                                   
needed  between  higher education  and  K-12  education.   He                                                                   
proposed  that K-12  education  should be  the first  funding                                                                   
priority.                                                                                                                       
                                                                                                                                
9:57:19 AM                                                                                                                    
                                                                                                                                
Representative Foster    expressed  support of the amendment,                                                                   
and pointed out  that, between the expense of  the retirement                                                                   
system  and  increased  energy   costs,  the  Governor's  $90                                                                   
million did not actually represent  much of a budget increase                                                                   
for schools.                                                                                                                    
                                                                                                                                
Representative Stoltze   stated  that  his  school  districts                                                                   
needed an increase  to meet their shortfalls,  and noted that                                                                   
the proposed increase was still not adequate.                                                                                   
                                                                                                                                
Representative Joule     stated  that  he would  support  the                                                                   
amendment, but  did not  find it adequate.   He stressed  the                                                                   
need to  support all  districts, and  expressed that  to take                                                                   
care of  just one district when  others were in  similar need                                                                   
was unsettling.   He acknowledged  the Amendment as  a small,                                                                   
positive step forward.                                                                                                          
                                                                                                                                
9:59:18 AM                                                                                                                    
                                                                                                                                
Representative Kerttula  commented    that    with    smaller                                                                   
districts such  as Juneau, the  gap that needed to  be filled                                                                   
was  more  significant.    She   expressed  support  for  the                                                                   
Amendment.                                                                                                                      
                                                                                                                                
                                                                                                                                
A ROLL CALL VOTE was taken on the MOTION:                                                                                       
                                                                                                                                
FAVOR:  Joule, Kertulla,  Moses,  Stoltze, Weyrauch,  Foster,                                                                   
Hawker, Meyer.                                                                                                                  
                                                                                                                                
OPPOSE: Kelly, Holm, Chemault.                                                                                                  
                                                                                                                                
The Amendment PASSED on a Vote of 3 to 8.                                                                                       
                                                                                                                                
10:01:18 AM                                                                                                                   
                                                                                                                                
Representative Weyhrauch MOVED  Amendment #2,  24-GH2038\A.4,                                                                   
Mischel, 4/5/06.  Co-Chair Meyer     OBJECTED.                                                                                  
                                                                                                                                
Representative Weyhrauch referred    to    the    need    for                                                                   
incremental  adjustments.   He  recalled earlier  discussions                                                                   
surrounding    long-term   solutions    and   commented    on                                                                   
overcrowding in classrooms.   He proposed that  the amount in                                                                   
Amendment  #2  was  identical  to  the  amount  contained  in                                                                   
Amendment #1  if one were to  add the changes to  the funding                                                                   
formula.   He pointed  out that the  funds needed  for larger                                                                   
metropolitan areas were being  addressed, but not for smaller                                                                   
areas.                                                                                                                          
                                                                                                                                
Representative Chenault  for   clarification  on   the  total                                                                   
dollar  amount of  the increase  proposed  by the  amendment.                                                                   
Representative  Weyrauch stated that  it totaled  $24 million                                                                   
over the current proposed budget.                                                                                               
                                                                                                                                
10:02:57 AM                                                                                                                   
                                                                                                                                
Representative Hawker    expressed  that he had been prepared                                                                   
to support  Amendment #1,  and stated  that he would  support                                                                   
Amendment #2.                                                                                                                   
                                                                                                                                
Co-Chair Meyer called an AT EASE.                                                                                               
                                                                                                                                
10:03:48 AM                                                                                                                   
10:11:25 AM                                                                                                                   
                                                                                                                                
Co-Chair Meyer RECONVENED the Committee.                                                                                        
                                                                                                                                
Representative Weyhrauch explained   that  his   calculations                                                                   
were inaccurate,  and would have  led to an increase  of $370                                                                   
million  and  not  $24  million.    He  MOVED  TO  AMEND  his                                                                   
amendment to the amount of $5,474.   Responding to a question                                                                   
by  Co-Chair Meyer,  Representative  Weyrauch confirmed  that                                                                   
the revised Amendment  would result in an  aggregate increase                                                                   
of $24 million.                                                                                                                 
                                                                                                                                
There  being  NO  OBJECTION, the  Amendment  was  changed  to                                                                   
reflect  the  new  amount.   Co-Chair  Meyer  MAINTAINED  his                                                                   
OBJECTION to the Amendment.                                                                                                     
                                                                                                                                
Representative Hawker    maintained  his previous  support of                                                                   
the  amendment,  but noted  that  he  was  not privy  to  all                                                                   
executive discussions between  bodies.  He strongly urged the                                                                   
Committee to add some amount to address costs and equities.                                                                     
                                                                                                                                
Co-Chair Meyer  expressed support of the amendment,  but also                                                                   
stated his  concern that  passage may hurt  the chances  of a                                                                   
change  to  cost  differential.   He  stated  he  would  vote                                                                   
against the amendment.                                                                                                          
                                                                                                                                
Representative Kelly     noted  that he was still against the                                                                   
amendment.                                                                                                                      
                                                                                                                                
10:14:22 AM                                                                                                                   
                                                                                                                                
Representative Joule stated  that the amendment was  the only                                                                   
increment under  discussion, but  compared it to  the process                                                                   
over  the PPT  and gas  pipeline.   He expressed  uncertainty                                                                   
over the  end result,  but a desire  for a positive  outcome.                                                                   
He understood  concern  over the Co  chairs not  implementing                                                                   
the cost differential, but suggested  that a simple amendment                                                                   
would  remedy the  problem.  He  stated that  at this  point,                                                                   
with  negotiations underway,  he  might  support the  current                                                                   
steps being made,  in the hope that the ultimate  goals would                                                                   
be accomplished.                                                                                                                
                                                                                                                                
10:16:14 AM                                                                                                                   
                                                                                                                                
Representative Joule acknowledged   the   pressure  for   all                                                                   
legislators to find  a common ground, and in  the interest of                                                                   
allowing negotiations, he might defer to that process.                                                                          
                                                                                                                                
Co-Chair Meyer assured the Committee  that the Co-chair would                                                                   
be undeterred in his efforts.                                                                                                   
                                                                                                                                
A ROLL CALL VOTE was taken on Amendment #2.                                                                                     
                                                                                                                                
FAVOR:  Kertulla; Moses; Weyrauch.                                                                                              
                                                                                                                                
OPPOSE:  Kelly; Stoltze; Foster;  Hawker; Holm; Joule; Meyer;                                                                   
Chemault.                                                                                                                       
                                                                                                                                
The AMENDMENT FAILED on a VOTE of 3 to 8.                                                                                       
                                                                                                                                
10:18:56 AM                                                                                                                   
                                                                                                                                
Representative Chenault  commented   that  the   process  was                                                                   
ongoing and would  be arduous.  He restated the  issue of the                                                                   
cost differential, and the desire  of some to formulate a new                                                                   
study.   He  proposed  that this  would  continue the  equity                                                                   
problem  in the State,  and that  at some  point there  would                                                                   
need  to be  right  action.   He stated  that  waiting for  a                                                                   
perfect formula  did not help school districts,  and proposed                                                                   
that now was the time for action.                                                                                               
                                                                                                                                
10:20:12 AM                                                                                                                   
                                                                                                                                
Representative Kelly     reiterated  the  idea  of  a  budget                                                                   
cap,  and  requested  that  if   an  adjustment  such  as  in                                                                   
Amendment  #1 occurred,  that it  not be in  addition to  the                                                                   
cap.  He raised the issue of sustainability.                                                                                    
                                                                                                                                
Representative Foster    MOVED   TO  REPORT  HB  362  out  of                                                                   
Committee  as Amended,  with individual  recommendations  and                                                                   
two new fiscal notes:  DEED, Component  #141; DEED, Component                                                                   
2735.  There being NO OBJECTIONS it was SO ORDERED.                                                                             
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
The meeting was adjourned at 10:21 AM                                                                                           
                                                                                                                                
                                                                                                                                

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