Legislature(2017 - 2018)HOUSE FINANCE 519

01/30/2018 09:00 AM FINANCE

Note: the audio and video recordings are distinct records and are obtained from different sources. As such there may be key differences between the two. The audio recordings are captured by our records offices as the official record of the meeting and will have more accurate timestamps. Use the icons to switch between them.

Download Mp3. <- Right click and save file as
Download Video part 1. <- Right click and save file as

* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
-- Please Note Time Change --
+= HB 287 APPROP: EDUCATION/STUDENT TRANSPORTATION TELECONFERENCED
Heard & Held
+= HB 213 PUBLIC SCHOOL TRUST FUND TELECONFERENCED
Heard & Held
-- Public Testimony --
+ Bills Previously Heard/Scheduled TELECONFERENCED
HOUSE BILL NO. 287                                                                                                            
                                                                                                                                
     "An Act making appropriations  for public education and                                                                    
     transportation   of  students;   making  appropriations                                                                    
     under art.  IX, sec.  17(c), Constitution of  the State                                                                    
     of  Alaska,  from  the  constitutional  budget  reserve                                                                    
     fund; and providing for an effective date."                                                                                
                                                                                                                                
9:10:05 AM                                                                                                                    
                                                                                                                                
Co-Chair  Foster relayed  that his  office had  not received                                                                    
any amendments from committee members.                                                                                          
                                                                                                                                
ARNOLD   LIEBELT,   STAFF,   REPRESENTATIVE   PAUL   SEATON,                                                                    
introduced himself.                                                                                                             
                                                                                                                                
ALEXEI  PAINTER,  ANALYST,   LEGISLATIVE  FINANCE  DIVISION,                                                                    
introduced himself.                                                                                                             
                                                                                                                                
Co-Chair  Foster noted  the  testifiers  were available  for                                                                    
questions.                                                                                                                      
                                                                                                                                
9:11:23 AM                                                                                                                    
                                                                                                                                
Representative Thompson  stated the bill concept  was a good                                                                    
idea, but he  believed it had not  been sufficiently vetted.                                                                    
He thought it was premature  to force the legislature into a                                                                    
three-quarter  vote  to  use Constitutional  Budget  Reserve                                                                    
(CBR) funds  before the legislature  had determined  what it                                                                    
wanted to  do with  the entire budget.  He stated  there had                                                                    
not been many  meetings on the bill where  the committee had                                                                    
been able to hear from the  entire public. He noted the only                                                                    
testimony had been invited,  such as school superintendents.                                                                    
He thought the bill usurped  the budget process. He asked if                                                                    
the committee was doing the  finance subcommittee's work. He                                                                    
reiterated that  it was a good  idea, but it was  too early.                                                                    
He asked for the current CBR balance.                                                                                           
                                                                                                                                
Mr. Painter replied that that  the CBR balance was projected                                                                    
to be $2.146 billion at the end of FY 18.                                                                                       
                                                                                                                                
Representative   Thompson  reiterated   that   he  was   not                                                                    
comfortable  with considering  the legislation  so early  in                                                                    
the legislative  session, which would force  a three-quarter                                                                    
vote [by the legislature].                                                                                                      
                                                                                                                                
Representative  Pruitt believed  the funding  amount in  the                                                                    
bill was the same amount  proposed by the governor. He asked                                                                    
for the accuracy of his statement.                                                                                              
                                                                                                                                
Mr. Liebelt replied in the affirmative.                                                                                         
                                                                                                                                
Representative Pruitt  asked if  anyone had spoken  with the                                                                    
Senate to determine if the amount was a bone of contention.                                                                     
                                                                                                                                
Co-Chair Seaton replied  that he had spoken  with members of                                                                    
the  other   body,  including   finance  members,   who  had                                                                    
indicated they did not plan  further cuts to K-12 education.                                                                    
He stated  that the amount  in the legislation was  the same                                                                    
funding level as the prior  year. He remarked that the other                                                                    
body had  not taken any action  on the issue because  it had                                                                    
not  received the  budget. The  charts  in member's  packets                                                                    
showed a slight  drop in the budget from  the preceding year                                                                    
due  to lower  than projected  pupil enrollment.  The FY  18                                                                    
management plan  was estimated to  be the  governor's number                                                                    
and the number  in HB 287 based on the  actual amount funded                                                                    
in FY  17. The charts  showed a slight  dip, but it  did not                                                                    
represent a real  dip because it was the  actual number paid                                                                    
out based on the precise student count.                                                                                         
                                                                                                                                
Representative  Pruitt did  not  propose  cuts to  education                                                                    
either. He  believed the  only argument  for the  passage of                                                                    
the  bill  was  related  to expectation  there  would  be  a                                                                    
failure   in  understanding   the  amount   that  would   be                                                                    
available.  He   stated  the  committee   had  heard   in  a                                                                    
presentation the  prior week that  there were  several dates                                                                    
associated with  education budgets,  including May  15 (pink                                                                    
slip  deadline for  nontenured teachers)  and  May 31  (pink                                                                    
slip  deadline for  tenured teachers).  He thought  the bill                                                                    
represented an expectation of failure  by the legislature to                                                                    
get a budget passed in 90  days. Yet, the legislature had an                                                                    
understanding on education. He  agreed that the budget could                                                                    
be planned  on the data  in the  bill. He also  believed the                                                                    
legislature would  finish its work  in 90 days.  He believed                                                                    
the  bill  was  unnecessary.  He  thought  the  bill  merely                                                                    
bifurcated the budget and he wondered was next.                                                                                 
                                                                                                                                
Representative  Pruitt questioned  whether other  items such                                                                    
as  health  and  public  safety would  be  pulled  from  the                                                                    
overall  budget for  separate consideration.  He noted  that                                                                    
the   budget  would   be  piecemeal.   He  added   that  the                                                                    
[Department  of   Revenue]  spring  forecast,   which  would                                                                    
provide a better representation  of the state's full revenue                                                                    
source would not come out  until April. He noted the release                                                                    
date also  depended on whether  the administration  chose to                                                                    
hold onto the  forecast longer as it had  the previous year.                                                                    
He  asked what  the need  for the  bill was  at present.  He                                                                    
stated that  if there  was alignment  he did  not understand                                                                    
the need for the bill.                                                                                                          
                                                                                                                                
Co-Chair  Seaton discussed  early  funding  of education  in                                                                    
order for  municipalities and school districts  to construct                                                                    
their  budgets.  He  did  not  believe  there  was  complete                                                                    
agreement  on all  budgetary items,  knowledge  of what  the                                                                    
spring forecast would  be, or agreement on the  amount to be                                                                    
taken  from the  [Permanent Fund]  Earnings Reserve  Account                                                                    
(ERA).   He   did   not   believe   school   districts   and                                                                    
municipalities could  plan their  budgets around  the belief                                                                    
that the  House and  Senate and the  governor all  agreed on                                                                    
what the number would be.  He compared the unknown situation                                                                    
to a scenario  where the legislature passed a  bill that was                                                                    
signed  by the  governor. He  noted that  signed legislation                                                                    
was security that  had not been provided  by the legislature                                                                    
in the past, which had been a problem.                                                                                          
                                                                                                                                
9:19:15 AM                                                                                                                    
                                                                                                                                
Co-Chair   Seaton   continued  to   address   Representative                                                                    
Pruitt's question.  There had always been  the insecurity of                                                                    
leaving  the  education  budget  to the  last  item  [to  be                                                                    
negotiated].  He  stated that  unless  a  separate bill  was                                                                    
passed  with money  attached that  the governor  could sign,                                                                    
the  legislature  would  not  be  early  funding  education.                                                                    
Assuming there would  be agreement on the  amount that would                                                                    
be passed  was not  the same  thing as  a passed  budget. He                                                                    
stated that until legislators voted  on something it was not                                                                    
possible to know what would  happen. The purpose of the bill                                                                    
was to take  the issue off the table and  prevent layoffs or                                                                    
districts  from  having  to construct  two  budgets  because                                                                    
things  changed   in  midstream.  He  stated   that  if  the                                                                    
legislature  wanted to  early  fund  education, they  should                                                                    
early  fund it;  if not,  education  should be  left in  the                                                                    
regular  budget.  He  believed  education  should  be  early                                                                    
funded. He stated that education  funding was vital, and the                                                                    
bill would fund it at the last year's level.                                                                                    
                                                                                                                                
9:21:12 AM                                                                                                                    
                                                                                                                                
Representative Pruitt  surmised that  it sounded  like there                                                                    
was  a  failure to  communicate.  He  clarified he  had  not                                                                    
stated there was  alignment on everything, but  from what he                                                                    
understood,  there was  alignment on  education funding.  He                                                                    
did not understand the need  to push the bill from committee                                                                    
at  present when  it sounded  like there  had been  multiple                                                                    
conversations  with  members  from the  Senate  about  their                                                                    
alignment  on the  topic.  He did  not  understand why  they                                                                    
could not  wait a  few days to  determine whether  there was                                                                    
alignment in the Senate as a  whole. He cited May 15 and May                                                                    
31  as  failure   dates,  which  were  30   days  after  the                                                                    
legislature was supposed to be finished with its work.                                                                          
                                                                                                                                
Representative  Pruitt remarked  the  bill  would pull  $800                                                                    
million more from the CBR  than the estimate provided in the                                                                    
initial presentations. He stated  that it would mean pulling                                                                    
more money  out of an  account than was  potentially needed.                                                                    
He stated that on July 1  it would mean pulling $1.2 billion                                                                    
out of an  account that earned 1.86 percent  in 2017 instead                                                                    
of using money from the  General Fund, which could be pulled                                                                    
out over  the course  of the year.  He detailed  the General                                                                    
Fund had  made 1.56  percent in 2017.  He remarked  that the                                                                    
difference  may  not  seem substantial,  but  1  percent  of                                                                    
billions  was  significant.  He thought  they  were  pushing                                                                    
forward on  something without  communicating with  the other                                                                    
body.  He reasoned  that  if there  was  alignment the  bill                                                                    
reflected an  expectation of failure.  He requested  to hold                                                                    
off  on  taking action  for  several  days  in order  for  a                                                                    
discussion to take place with the Senate.                                                                                       
                                                                                                                                
9:23:30 AM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
9:26:51 AM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                
Co-Chair Foster noted there were  several questions and that                                                                    
a  slide had  been  put up  on the  screen.  He relayed  his                                                                    
intent was to hold the bill  a couple of days to hear public                                                                    
testimony  on Thursday.  He wanted  to allow  extra time  to                                                                    
communicate any concerns.                                                                                                       
                                                                                                                                
Vice-Chair   Gara    stated   that   the    most   important                                                                    
professionals in  the state were becoming  demoralized. They                                                                    
were  leaving   positions  with   the  University   and  the                                                                    
education  system because  they  did not  know whether  they                                                                    
would have  jobs the  following year.  He remarked  that the                                                                    
past few  years there  had been  legislators asking  for $67                                                                    
million in  education cuts at  the last minute.  He believed                                                                    
if legislators were all agreeable  that no one would do that                                                                    
during  the  current  session, they  should  deal  with  the                                                                    
education  budget at  present. He  spoke to  the concept  of                                                                    
passing  a  budget  on  time. He  supported  that  goal  but                                                                    
pointed  out that  there had  not  been a  great history  of                                                                    
passing a  budget on time in  recent years. He did  not want                                                                    
to send  pink slips  to teachers. He  stressed that  some of                                                                    
the best teachers  were leaving the state.  He reasoned that                                                                    
when  those  individuals  were lost  it  meant  the  state's                                                                    
education system suffered.                                                                                                      
                                                                                                                                
Vice-Chair Gara  lauded Co-Chair Seaton for  filing the bill                                                                    
because it  reflected a discussion the  legislature had been                                                                    
having  for  a  long  time.  He  spoke  about  threats  that                                                                    
individuals would  lose their jobs.  He supported  the bill.                                                                    
He  stated that  unfortunately with  the differing  opinions                                                                    
about a fiscal  plan something had not  passed. He supported                                                                    
a  fiscal  plan.  He  pointed   to  decisions  made  by  the                                                                    
legislature the  previous year when the  savings account had                                                                    
been drawn down substantially.  He stated that the remaining                                                                    
sources of revenue were very  controversial. He believed the                                                                    
bill had  to pass. He was  glad to hear that  others did not                                                                    
want  to further  cut education.  He supported  an inflation                                                                    
adjustment for the losses in  education funding. He believed                                                                    
the bill was something all legislators could agree on.                                                                          
                                                                                                                                
9:31:28 AM                                                                                                                    
                                                                                                                                
Co-Chair Foster  repeated that he  planned to hold  the bill                                                                    
until  Thursday for  more  public  testimony. The  committee                                                                    
would hear  public testimony during  the current  meeting as                                                                    
well.                                                                                                                           
                                                                                                                                
Representative  Neuman  thanked   Co-Chair  Foster  for  the                                                                    
opportunity  to ask  questions. He  asked how  to prioritize                                                                    
funding of  teachers over state troopers  and everyone else.                                                                    
He spoke  about decisions  that needed  to be  made included                                                                    
what funds  to use to  fund a  budget. He detailed  that the                                                                    
previous year  there had been  a decision made by  the House                                                                    
Majority not to fund any budgets  until taxes and use of the                                                                    
Permanent  Fund Dividend  bills were  passed. He  stated the                                                                    
legislature  could pass  a bill  like  HB 287  and it  would                                                                    
still not matter. He asked  about how to utilize the current                                                                    
fund. He agreed that giving  industry and schools an idea of                                                                    
what the  funding would be  would be  helpful as soon  as it                                                                    
was possible to  do so; however, the  state was experiencing                                                                    
difficult financial times and  the decisions were difficult.                                                                    
He thought  tying up  the available  funds in  the different                                                                    
pots of money  could be very difficult  for the legislature.                                                                    
He wanted to get more information on the topic.                                                                                 
                                                                                                                                
Representative Neuman  spoke about personnel costs  - it had                                                                    
been mentioned  that the bill  was highly supported  by many                                                                    
members.  He  was  not  able  to support  the  bill  due  to                                                                    
questions  he had.  He stated  there was  no reason  why the                                                                    
Senate and  House could  not get together  early on  to give                                                                    
the education  industry an  idea of  what the  funding would                                                                    
be. He  reiterated his thanks  for the time to  consider the                                                                    
bill.                                                                                                                           
                                                                                                                                
Co-Chair Foster  reiterated that  public testimony  would be                                                                    
reopened later in the meeting and on Thursday.                                                                                  
                                                                                                                                
9:35:01 AM                                                                                                                    
                                                                                                                                
Representative   Tilton   echoed   comments  made   by   her                                                                    
colleagues. She  wondered about  the funding  priorities for                                                                    
the different  departments and  agencies. She  mentioned the                                                                    
education  subcommittee process  and questioned  whether the                                                                    
bill  put  the cart  before  the  horse.  She spoke  to  the                                                                    
remaining  CBR balance  and available  funding and  asked if                                                                    
figures accounted for increased oil prices.                                                                                     
                                                                                                                                
Mr. Painter replied in the  negative. The projections of the                                                                    
CBR balance at  the end of FY 18 assumed  the [Department of                                                                    
Revenue] fall  forecast, which  he believed  used a  $56 per                                                                    
barrel price in FY 18.                                                                                                          
                                                                                                                                
Representative Tilton  remarked that  the projection  was at                                                                    
$56 per  barrel, but the  other day  the price was  $70. She                                                                    
asked if her statement was accurate.                                                                                            
                                                                                                                                
Mr. Painter replied in the affirmative.                                                                                         
                                                                                                                                
Representative Tilton surmised there  was an opportunity for                                                                    
some increased balances in state savings accounts.                                                                              
                                                                                                                                
Mr.  Painter answered  that if  prices held  at $70  for the                                                                    
remainder of  the fiscal year  there would be  an additional                                                                    
$200 million in  the CBR; the balance would  be $2.3 billion                                                                    
instead of $2.1 billion.                                                                                                        
                                                                                                                                
Co-Chair Seaton  spoke to an earlier  question about whether                                                                    
the legislation  was taking over  the responsibility  of the                                                                    
finance  subcommittee. The  portions  included  in the  bill                                                                    
were in statute including  the Base Student Allocation (BSA)                                                                    
and pupil  transportation, which were not  considered by the                                                                    
finance  subcommittee. He  clarified that  the bill  did not                                                                    
fund the  entire education  budget including  pre-K, teacher                                                                    
mentor programs,  and the Department of  Education and Early                                                                    
Development  (DEED)  -  those items  were  still  under  the                                                                    
purview of the education subcommittee.                                                                                          
                                                                                                                                
Co-Chair  Seaton furthered  that  the  bill also  considered                                                                    
other portions where people were  required to receive layoff                                                                    
notices by  state law including  boarding schools  and Mount                                                                    
Edgecumbe. The  bill funded basic K-12  education, which was                                                                    
where  the  agreement  resided.   He  stated  there  was  no                                                                    
agreement  on  things  like   bond  debt  reimbursement  for                                                                    
schools.  The bill  addressed the  portion of  education and                                                                    
employees  that  were  different  than  state  troopers.  He                                                                    
detailed that  state troopers were  not required  to receive                                                                    
layoff  notices May  15  through June.  Troopers  may go  on                                                                    
furlough on  July 1 if  a budget  was not finished,  but the                                                                    
bill  pertained  to the  only  segment  of government  where                                                                    
there  was  a law  requiring  advanced  layoff notices.  The                                                                    
bill's  purpose  was  to ensure  the  school  districts  and                                                                    
municipalities  working  to  fulfill   state  law  were  not                                                                    
negatively impacted.                                                                                                            
                                                                                                                                
Co-Chair Seaton clarified there  were four groups within the                                                                    
legislature (two  in the  Senate and two  in the  House). He                                                                    
elaborated that  no caucus had  a three-quarter  vote within                                                                    
its membership. He explained that  if the items were left in                                                                    
the operating  budget they would need  agreement between the                                                                    
four groups without a vote. He  did not know that the option                                                                    
was a  secure way to  ensure the funding for  education. The                                                                    
purpose was  to identify a  funding source and agree  or not                                                                    
agree to  fund education early.  He explained it  would mean                                                                    
the education funding  would be a known  amount, which would                                                                    
be attached to the funds  identified in the budget bill. The                                                                    
way to gain full knowledge and  security was to have a vote.                                                                    
He appreciated Co-Chair Foster reopening public testimony.                                                                      
                                                                                                                                
9:41:18 AM                                                                                                                    
                                                                                                                                
Representative Ortiz responded to  an earlier question about                                                                    
whether the bill bypassed the  subcommittee. He relayed that                                                                    
the  subcommittee had  discussed the  issue and  had already                                                                    
heard  all portions  of the  sections included  in the  bill                                                                    
with the exception of Mount  Edgecumbe. The subcommittee was                                                                    
scheduled to  hear about Mount Edgecumbe  the following day.                                                                    
He relayed the subcommittee had not been bypassed.                                                                              
                                                                                                                                
Representative    Neuman   stated    that   generally    the                                                                    
supplemental  budget could  get rolled  into the  capital or                                                                    
operating  budget. He  asked if  the bill  was a  standalone                                                                    
appropriations bill.                                                                                                            
                                                                                                                                
Co-Chair Seaton replied  in the affirmative. The  bill was a                                                                    
complete budget  bill that  identified the  funding sources.                                                                    
He explained that  if it passed it would go  to the governor                                                                    
for his  signature. The bill's  passage would result  in the                                                                    
removal of the sections in  the general operating budget. He                                                                    
detailed that HB 287 was  an operating budget bill for basic                                                                    
K-12 education. The bill was a way to fund education early.                                                                     
                                                                                                                                
Representative  Neuman  stated   that  the  legislature  was                                                                    
statutorily required  to pass an operating  budget. He noted                                                                    
there  were  ways  to  interrupt the  bill  if  desired.  He                                                                    
elaborated  that the  legislature  had statutorily  required                                                                    
budgets it  had to  pass every  year. He  asked if  the bill                                                                    
would fall under the same statutory requirement.                                                                                
                                                                                                                                
Co-Chair Seaton answered in the  affirmative. The bill was a                                                                    
portion  of the  operating budget  and would  have the  same                                                                    
qualifications as any other.                                                                                                    
                                                                                                                                
9:44:10 AM                                                                                                                    
                                                                                                                                
Vice-Chair Gara  remarked that the committee  was not really                                                                    
supposed  to talk  about what  the Senate  would do  per the                                                                    
Mason's Manual.  He emphasized that individuals  impacted by                                                                    
the  legislature's failure  to pass  a budget  on time  were                                                                    
angry.  He  stated  that  for  three  years  in  a  row  the                                                                    
legislature had  told teachers they would  possibly face $67                                                                    
million   in  education   cuts.  The   legislature  had   an                                                                    
opportunity to  tell teachers  they would  not face  cuts in                                                                    
the  current  year. He  shared  that  a teacher  friend  was                                                                    
leaving the state because he was  fed up with the threats of                                                                    
cuts and  receiving pink slip  notices. He  underscored that                                                                    
the state  was losing  its best  teachers. He  detailed that                                                                    
state  employees   receiving  pink  slips  took   the  issue                                                                    
seriously. The  bill provided an opportunity  to communicate                                                                    
to the  education system  that they would  not face  cuts in                                                                    
the current year.  He underscored that the  state was losing                                                                    
its teachers.  The bill  was an attempt  to ensure  that the                                                                    
best teachers  remained in Alaska. He  hoped the legislature                                                                    
could  come  together  in agreement  that  further  cuts  to                                                                    
education were not appropriate.                                                                                                 
                                                                                                                                
9:46:25 AM                                                                                                                    
                                                                                                                                
Representative  Guttenberg remarked  that the  committee had                                                                    
ample opportunity to have discussions.  He requested to hear                                                                    
public testimony if people were waiting.                                                                                        
                                                                                                                                
Representative Grenn asked about the  timing and need to get                                                                    
the bill passed and to the  governor as soon as possible. He                                                                    
stated  that May  15 was  the  statutory deadline  regarding                                                                    
nontenured teachers.  He relayed  that the  Anchorage School                                                                    
District had  to report  its budget  to the  municipality by                                                                    
March 1.  He believed securing  funding by that  point would                                                                    
provide morale for the district  to know the legislature was                                                                    
focused on education  as a priority for  Alaska. He detailed                                                                    
that  due to  years of  pink slips  the morale  was low.  He                                                                    
believed  the  bill would  go  a  long  way in  showing  the                                                                    
legislature's support.  He supported moving  the legislation                                                                    
quickly.                                                                                                                        
                                                                                                                                
Representative Pruitt  spoke to  a comment about  an earlier                                                                    
statement about trying to get  the four caucuses together on                                                                    
a CBR  vote. He thought  the bill  appeared to be  trying to                                                                    
take the CBR  discussion off the table at  present, which he                                                                    
viewed as a usurpation of the  power of the Minority in some                                                                    
cases. He recalled  a letter written on May  20, 2015 signed                                                                    
by several members including  the co-chairs, which indicated                                                                    
that  five days  after  the pink  slip  date for  nontenured                                                                    
teachers they  wanted to continue the  negotiations with the                                                                    
Minority  caucus to  obtain the  number of  votes needed  to                                                                    
access the CBR  instead of using the ERA. He  noted that the                                                                    
ERA would  be utilized  without the vote  of the  people for                                                                    
which they requested.                                                                                                           
                                                                                                                                
Representative  Pruitt continued  that even  then there  had                                                                    
been an  argument from  members of  the House  that usurping                                                                    
the power of  the Minority was not something  they wanted to                                                                    
go forward with. He believed what  he had heard about HB 287                                                                    
was the desire  to get the issue off the  table so there was                                                                    
an  ability in  the  long  run to  (after  $800 million  was                                                                    
pulled  from the  CBR -  more  than was  necessary based  on                                                                    
prior testimony)  go forward without  the need  or necessity                                                                    
of having the voices of  the people that may find themselves                                                                    
not in  the Majority. He  believed the issue should  be laid                                                                    
on the  table if it was  a concern from the  past. He stated                                                                    
that  the  House Majority  [in  2015]  had taken  the  other                                                                    
members' concerns into account  and had allowed the Minority                                                                    
to  continue to  play  the role  everyone  would expect.  He                                                                    
believed  it was  important to  take into  consideration. He                                                                    
reiterated the current discussion  seemed like an attempt to                                                                    
eliminate  the House  Minority's ability  to participate  in                                                                    
the full budget process.                                                                                                        
                                                                                                                                
9:50:31 AM                                                                                                                    
                                                                                                                                
Co-Chair Seaton spoke  to the $800 million  and reminded the                                                                    
committee that they were talking  about a potential ERA draw                                                                    
that was  unsustainable, which was  based on a  6.95 percent                                                                    
annual return. He elaborated that  the Alaska Permanent Fund                                                                    
Corporation  (APFC)  Board  of   Trustees  had  adopted  the                                                                    
actuarial amount  of 6.5 percent, which  was essentially 0.5                                                                    
percent down  in the board's long-term  projection in return                                                                    
on  investment.  He  wanted  to  make  sure  the  issue  was                                                                    
considered.                                                                                                                     
                                                                                                                                
Representative Pruitt  stated that Co-Chair Seaton  had just                                                                    
highlighted  why the  issue  was  challenging. He  continued                                                                    
that  the bill  tried to  put  together pieces  of a  puzzle                                                                    
without knowing  what the puzzle  looked like.  He explained                                                                    
that  going  forward  with  the   bill  would  make  certain                                                                    
assumptions and force certain things  to be the reality when                                                                    
it came time to put the  budget together. It was part of the                                                                    
reason  he  believed  the  budget  needed  to  move  forward                                                                    
together  instead of  in pieces.  He reasoned  they did  not                                                                    
know exactly what the revenue  or spending pictures would be                                                                    
all at  the same time, which  made it very difficult  to put                                                                    
the whole thing together.                                                                                                       
                                                                                                                                
9:52:23 AM                                                                                                                    
                                                                                                                                
Representative Thompson remarked on  a statement made by Co-                                                                    
Chair Seaton that if the  bill passed, the sections would be                                                                    
removed from the full budget.  He wondered what would happen                                                                    
if the  legislature decided it  needed to add more  money to                                                                    
the    education   budget    for   something    like   pupil                                                                    
transportation.  He  reasoned it  would  mean  the need  for                                                                    
another standalone bill. He  stated the subcommittee process                                                                    
had not  been completed  to determine whether  changes would                                                                    
be needed.  He was  concerned about  pulling the  items from                                                                    
the budget.                                                                                                                     
                                                                                                                                
Co-Chair Seaton clarified that  nothing precluded the budget                                                                    
from  having additional  money on  the topics.  For example,                                                                    
the  legislature  could  choose   to  add  additional  pupil                                                                    
transportation funding if it chose  to do so. The bill would                                                                    
fund  the BSA  and pupil  transportation at  the prior  year                                                                    
levels.  He   explained  that  the  legislature   could  put                                                                    
something else in  the budget if decided to do  so. The bill                                                                    
would be  signed by  the governor  as the  specific amounts,                                                                    
but  nothing prevented  additional  funds  in the  operating                                                                    
budget.                                                                                                                         
                                                                                                                                
Representative Neuman  had heard  from the sponsor  that the                                                                    
bill  would be  a standalone  operating appropriations  bill                                                                    
that  would be  required statutorily  just as  the operating                                                                    
budget was. He asked for verification of his understanding.                                                                     
                                                                                                                                
Co-Chair  Seaton  answered  that   the  bill  had  the  same                                                                    
parameters  as  a supplemental  bill.  He  explained that  a                                                                    
supplemental  could change  or add  additional money.  There                                                                    
was  no  constitutional  or statutory  requirement  for  the                                                                    
operating budget to be passed as one piece.                                                                                     
                                                                                                                                
Representative  Neuman  believed  a statutory  change  would                                                                    
require  a three-quarter  vote  on the  floor  and a  public                                                                    
vote.  Alternatively,  he  wondered   if  the  bill  was  an                                                                    
operating  budget bill  that  was  statutorily required.  He                                                                    
believed Co-Chair  Seaton had  answered in  the affirmative.                                                                    
He  stated that  if the  bill was  like a  supplemental that                                                                    
rolled into another  budget or was included  in an operating                                                                    
budget, the legislature  could decide to fund it  or not (as                                                                    
had  occurred the  previous year  with other  appropriations                                                                    
bills in the operating budget).  He stated that the governor                                                                    
could  decide to  fund the  bill at  a lesser  value as  had                                                                    
happened with  the Permanent Fund  Dividend in the  past. He                                                                    
did not know if it was possible and requested to find out.                                                                      
                                                                                                                                
Co-Chair Seaton  clarified that  it would  be a  budget bill                                                                    
just like the fast  track supplemental the legislature could                                                                    
pass. He  did not mean  that the legislature could  not pass                                                                    
an appropriation  without a statutory  requirement. However,                                                                    
the  bill under  consideration  in the  Senate  looked at  a                                                                    
statutory  requirement  that  future  legislatures  to  pass                                                                    
budgets by certain  times. He explained that HB  287 was the                                                                    
mechanism to accomplish the goal in the current year.                                                                           
                                                                                                                                
Co-Chair Foster recognized  that Representative Kawasaki had                                                                    
joined the meeting.                                                                                                             
                                                                                                                                
Mr. Liebelt clarified  there was an error on  the last slide                                                                    
of  a  presentation  [slide  8] he  had  provided  ["HB  287                                                                    
Education  and Pupil  Transportation:  An  Early and  Stand-                                                                    
alone Appropriation  Bill" dated  January 25, 2018  (copy on                                                                    
file)].  He  corrected  that  the  slide  should  read  that                                                                    
nontenured teachers  had to  receive notices  by May  15 and                                                                    
tenured teachers  had to be  notified the end of  the school                                                                    
year.                                                                                                                           
                                                                                                                                
9:58:10 AM                                                                                                                    
                                                                                                                                
Co-Chair  Foster OPENED  public testimony  [public testimony                                                                    
had also been heard the preceding week].                                                                                        
                                                                                                                                
TIM PARKER,  PRESIDENT, NEA  ALASKA, spoke  in favor  of the                                                                    
legislation. He thanked the co-chairs  and bill sponsors for                                                                    
the  opportunity   to  express   support.  He   stated  that                                                                    
educators in Alaska  cared a lot about  student learning, it                                                                    
was the  driving force  that pushed  educators. He  spoke to                                                                    
the positive motivation in the  classroom. He argued that HB                                                                    
287  was poised  to fix  some problems  with the  particular                                                                    
situation.  He recalled  the delay  in funding  the previous                                                                    
year and how  it had impacted school  districts and specific                                                                    
schools.  Districts  had handed  out  pink  slips in  record                                                                    
numbers, with the thought that  unfortunately the pink slips                                                                    
would be rescinded, which they had been.                                                                                        
                                                                                                                                
Mr. Parker detailed  that between the time  they issued pink                                                                    
slips  and rescinded  them many  of the  best and  brightest                                                                    
teachers had left  the state. He noted  the ramifications of                                                                    
passing out those  slips. He wanted to see the  focus on the                                                                    
necessary  things  that  were  important  to  education.  He                                                                    
mentioned  the Alaska  Education Challenge  and noted  there                                                                    
would  be a  press  conference  later in  the  day with  the                                                                    
commissioner; NEA was trying to  lean into things that would                                                                    
help districts  make better decisions about  how to increase                                                                    
and  maximize   student  learning.  Delayed   funding  meant                                                                    
districts were not focused on  what they should be. He spoke                                                                    
to  the  importance  of   providing  funding  stability.  He                                                                    
reiterated NEA's support for HB 287.                                                                                            
                                                                                                                                
10:01:57 AM                                                                                                                   
                                                                                                                                
Representative  Grenn  stated   that  the  Anchorage  School                                                                    
District submitted  its budget to the  municipality by March                                                                    
1.  He asked  if it  was  a common  deadline throughout  the                                                                    
state.                                                                                                                          
                                                                                                                                
Mr. Parker  responded that that  deadlines were not  all the                                                                    
same, but it  was common for budgets to be  submitted by the                                                                    
districts early  and then funding mechanisms  were addressed                                                                    
with  their  boroughs.  There   had  been  discussion  about                                                                    
whether  April   1st  was  the   right  date.   Experts  had                                                                    
communicated  that  going  anywhere  after  April  1  risked                                                                    
putting schools  in positions of  providing pink  slips. Due                                                                    
to the various steps required  in the school budget process,                                                                    
NEA had  been told  that April  1 was  an important  date to                                                                    
make sure  the legislature had  acted by that time.  In past                                                                    
years education  funding had  been passed  a bit  later than                                                                    
April 1 and districts had managed to avoid pink slips.                                                                          
                                                                                                                                
Co-Chair Seaton remarked that there  had been some confusion                                                                    
on  when  tenured  and  nontenured  teachers  needed  to  be                                                                    
notified  about  layoff.  He believed  tenured  [nontenured]                                                                    
teachers had to  be notified by May 15. He  asked if many of                                                                    
the contracts required that nontenured  teachers be laid off                                                                    
prior  to tenured  teachers. He  surmised that  new teachers                                                                    
were laid off prior to laying off tenured teachers.                                                                             
                                                                                                                                
Mr.  Parker replied  in the  affirmative.  He detailed  that                                                                    
different  districts had  different contracts,  but the  net                                                                    
result was the same in  most districts. The other factor was                                                                    
the number  of nontenured  teachers versus  tenured teachers                                                                    
in a particular district - it varied by district.                                                                               
                                                                                                                                
10:05:14 AM                                                                                                                   
                                                                                                                                
PAUL KENDALL, SELF, ANCHORAGE  (via teleconference), did not                                                                    
believe   the  past   speaker  should   qualify  as   public                                                                    
testimony.  He  addressed  the concept  of  pink  slips.  He                                                                    
thought it  was malfeasance  or corruption. He  stated there                                                                    
were  secret negotiations  of public  employees. He  did not                                                                    
support unions.  He stated that  the legislature  had stolen                                                                    
the  dividend  from  residents. He  believed  the  education                                                                    
industry was  corrupt. He  thought wages  should be  cut. He                                                                    
thought the entire system was mismanaged.                                                                                       
                                                                                                                                
Co-Chair  Foster asked  testifiers  to  not disparage  other                                                                    
testifiers and to stick to the legislation.                                                                                     
                                                                                                                                
10:09:51 AM                                                                                                                   
                                                                                                                                
CHRIS BENSHOOF, TEACHER, FAIRBANKS,  spoke in support of the                                                                    
legislation. He  shared that a fellow  teacher had routinely                                                                    
been given  pink slips  - she  had been  teaching for  11 or                                                                    
more  years and  the routine  pink slips  were demoralizing.                                                                    
The uncertainty  meant teachers and students  were uncertain                                                                    
about   the  following   year.   The   uncertainty  led   to                                                                    
significant testimony  to the local school  board - teachers                                                                    
were concerned  about their positions and  programs and then                                                                    
students and families heard about  the issues as well, which                                                                    
caused uncertainty  for students.  He referenced  the Alaska                                                                    
Education  Challenge  -  one of  the  commitments  was  that                                                                    
schools  were  safe places  for  students  where safety  and                                                                    
well-being was cultivated.                                                                                                      
                                                                                                                                
Mr. Benshoof  believed the instability students  had to deal                                                                    
almost  annually  with was  difficult.  He  shared that  the                                                                    
previous year the  district had been asked to  create a plan                                                                    
for how to deal with flat  funding. He detailed the plan had                                                                    
been two to four staff  fewer, an increase in parent/teacher                                                                    
ratio, and  a decrease  in enrollment.  About one  week into                                                                    
that  process they  had been  asked to  make a  plan b  that                                                                    
would  include an  additional teacher  cut. Ultimately,  the                                                                    
district had been asked  to come up with a plan  c, d, and e                                                                    
over the remainder of the year.  He was in favor of the bill                                                                    
and appreciated the committee's time and attention.                                                                             
                                                                                                                                
10:13:02 AM                                                                                                                   
                                                                                                                                
JAMES HARRIS,  TEACHER, SOLDOTNA, testified in  favor of the                                                                    
bill. He shared  that he was the 2017 Alaska  teacher of the                                                                    
year  and he  had  spent most  of the  year  focused on  the                                                                    
issue.  He explained  that  it was  an  issue for  teachers,                                                                    
students,  and communities.  The Soldotna  School Board  had                                                                    
been   faced   with    developing   multiple   budgets   and                                                                    
administrators had  made multiple  plans. He  discussed that                                                                    
the Soldotna  High School had numerous  initiatives it would                                                                    
like to offer,  but it did not ever know  if the ability was                                                                    
there. The high  school did not ever know  how many teachers                                                                    
may need to  be cut and whether electives  could be offered.                                                                    
He recalled  that two  years back the  school had  not known                                                                    
whether  it could  offer  AP  [advanced placement]  classes,                                                                    
which  created instability  for  students.  He believed  one                                                                    
thing that all Alaskans wanted  was to provide stability for                                                                    
kids. He  stated that  kids felt  undervalued -  he believed                                                                    
the current  generation of students  needed to  feel valued.                                                                    
He relayed  that the borough  assembly also had to  hold off                                                                    
on its budget  because it did not know how  much it would be                                                                    
able to  give to  help the school  district. He  thanked the                                                                    
committee for its work. He  supported stability for students                                                                    
in the long-term.                                                                                                               
                                                                                                                                
Representative  Guttenberg  thanked  Mr.  Harris  for  being                                                                    
teacher of  the year  and for  the efforts  he had  put into                                                                    
education.                                                                                                                      
                                                                                                                                
10:15:29 AM                                                                                                                   
                                                                                                                                
AMY  JO MEINERS,  TEACHER, JUNEAU,  testified in  support of                                                                    
the bill.  She shared that  she was the 2016  Alaska teacher                                                                    
of the  year and a  mother of  three daughters who  had gone                                                                    
through the  Juneau school system.  She recognized  that the                                                                    
school calendar  did not fit  neatly into a  fiscal calendar                                                                    
or a  January/December timeline. She stated  that pink slips                                                                    
went  out in  May, but  job fairs  were held  in March.  She                                                                    
explained that  teachers booked travel  in February  for the                                                                    
March job fairs. The instability  played out for students in                                                                    
many  ways. She  shared  that her  youngest  daughter was  a                                                                    
senior and  had given  tours to  incoming freshman  who were                                                                    
deciding between  the two Juneau  high schools. Many  of the                                                                    
questions had been about what  courses were offered and what                                                                    
teachers would be  there. All the instability  played out in                                                                    
the spring.  She thanked  the sponsor  for putting  the bill                                                                    
forward and  thanked the legislature  for the  discussion it                                                                    
was having  about education. She  hoped the  headlines would                                                                    
read  about  the  positive   movement  for  education  going                                                                    
forward. She thanked the committee  for its consideration of                                                                    
passing an  education bill that would  stabilize the options                                                                    
for children.                                                                                                                   
                                                                                                                                
10:17:33 AM                                                                                                                   
                                                                                                                                
PATRICK  MAYER, SUPERINTENDENT,  WRANGELL, spoke  in support                                                                    
of the  legislation. He thanked  everyone who had a  hand in                                                                    
sponsoring the bill. He stressed  the importance of the bill                                                                    
for  the stability  of education  in  Alaska. Early  funding                                                                    
allowed  districts to  get  teacher  contracts signed  early                                                                    
enough so  they were not lost  to other states. He  spoke to                                                                    
statistics  suggesting  that  if teachers  were  given  pink                                                                    
slips   they  would   leave  for   jobs  in   other  states.                                                                    
Additionally,  there were  fewer job  candidates. He  shared                                                                    
that  he had  been in  Alaska  since 1982  and believed  the                                                                    
discussion was long overdue. He  applauded the committee for                                                                    
taking the issue  on. He urged the committee  to support the                                                                    
bill.                                                                                                                           
                                                                                                                                
Representative  Guttenberg spoke  to  the  process of  going                                                                    
through a  school district budget.  He asked if  the delays,                                                                    
teacher pink slips,  and other had a measurable  cost to the                                                                    
school district.                                                                                                                
                                                                                                                                
Mr.  Mayer  answered that  the  district  currently had  two                                                                    
vacant  positions in  math and  art. The  lack of  budgetary                                                                    
certainty  was causing  the district  to  delay filling  the                                                                    
positions. Other districts  throughout the state experienced                                                                    
the  same problem.  The issue  was  especially important  in                                                                    
small districts  because they may  have access to  a smaller                                                                    
pool  of  candidates.  The issue  was  a  continual  concern                                                                    
throughout its budget drafting process.                                                                                         
                                                                                                                                
10:20:50 AM                                                                                                                   
                                                                                                                                
Co-Chair  Foster  CLOSED  public testimony  with  intent  to                                                                    
reopen it on Thursday afternoon.                                                                                                
                                                                                                                                
HB  287  was  HEARD  and   HELD  in  committee  for  further                                                                    
consideration.                                                                                                                  
                                                                                                                                
10:21:33 AM                                                                                                                   
AT EASE                                                                                                                         
                                                                                                                                
10:25:29 AM                                                                                                                   
RECONVENED                                                                                                                      
                                                                                                                                

Document Name Date/Time Subjects
HB 213HFIN CS WORKDRAFT V.R.pdf HFIN 1/30/2018 9:00:00 AM
HB 213
HB 287 Anchorage School District - Bishop. Deena - Public Testimony 012518.pdf HFIN 1/30/2018 9:00:00 AM
HB 287
HB 213 Summary of Changes Ver. U to Ver. R.pdf HFIN 1/30/2018 9:00:00 AM
HB 213
Sectional Analysis HB 213 - version 30-LS0765-R.pdf HFIN 1/30/2018 9:00:00 AM
HB 213
HB 287 PublicTestimonyPiazza20180125.pdf HFIN 1/30/2018 9:00:00 AM
HB 287
HB 287 NEA-Alaska letter of support HB287.pdf HFIN 1/30/2018 9:00:00 AM
HB 287
HB 213 Response Qs HFIN-DOR re HB 213 2-3-2018.pdf HFIN 1/30/2018 9:00:00 AM
HB 213