Legislature(2021 - 2022)ADAMS 519

04/14/2021 01:30 PM FINANCE

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Audio Topic
01:32:04 PM Start
01:33:18 PM Presentation: Tribal American Rescue Plan Act Funding
03:05:53 PM HB169
03:38:52 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Heard & Held
Heard & Held
Heard & Held
+ Bills Previously Heard/Scheduled TELECONFERENCED
+ Presentation: Tribal American Rescue Plan Act TELECONFERENCED
Funding by Nicole Borromeo, Exec. Vice-President
& General Counsel, Alaska Federation of Natives
HOUSE BILL NO. 169                                                                                                            
     "An Act making appropriations  for public education and                                                                    
     transportation  of  students;   and  providing  for  an                                                                    
     effective date."                                                                                                           
3:05:53 PM                                                                                                                    
Co-Chair Foster listed individuals available online.                                                                            
REPRESENTATIVE   DAN   ORTIZ,    SPONSOR,   introduced   the                                                                    
legislation with a prepared statement:                                                                                          
     I appreciate the opportunity for  the chance to present                                                                    
     House Bill 169, which is  an appropriation bill for the                                                                    
     education formula  and pupil transportation  for fiscal                                                                    
     year 2022.  House Bill 169 is  a separate appropriation                                                                    
     bill  from the  regular  operating budget  in order  to                                                                    
     pass funding  for education earlier in  the session and                                                                    
     prevent   school  districts   from  issuing   mandatory                                                                    
     teacher layoff notices.                                                                                                    
     Each  year,   school  districts  rely  heavily   on  an                                                                    
     appropriation  from   the  state  to   fund  education,                                                                    
     although  we, the  legislature, sometimes  do not  pass                                                                    
     the  operating budget  until late  May or  June. School                                                                    
     districts  must complete  their  budgets much  earlier,                                                                    
     usually in  March. Districts are often  forced to draft                                                                    
     multiple budgets and anticipate low amounts.                                                                               
     In  the  face  of uncertainty,  school  districts  will                                                                    
     sometimes issue  pink slips to tenured  teachers by May                                                                    
     15th and  to non-tenured  teachers by  the last  day of                                                                    
     the  school year  because they  did not  know what  the                                                                    
     legislature   was   going   to   do   specifically   in                                                                    
     relationship  to  funding   for  education;  therefore,                                                                    
     without  knowing,   by  contracts,   stipulations,  and                                                                    
     things  like that,  they sometimes  are forced  to hand                                                                    
     out  pink  slips because  they  were  left without  the                                                                    
     information  they  needed.   Therefore,  there  was  an                                                                    
     opportunity  cost with  that.  Education and  students'                                                                    
     success is a high priority for the state.                                                                                  
     Keeping educators in the classrooms  is one of the most                                                                    
     effective  ways to  address that  priority. House  Bill                                                                    
     169   reflects   the    legislature's   commitment   to                                                                    
     education, the school districts, and teachers.                                                                             
Vice-Chair Ortiz  further explained the bill  was an attempt                                                                    
by the legislature  to give early notice to  districts as to                                                                    
where  things  would  stand  for  them  in  relationship  to                                                                    
funding. The  goal was to  hopefully avoid  districts having                                                                    
to issue pink  slips. He explained there  was an opportunity                                                                    
cost  with issuing  pink  slips  because teachers  sometimes                                                                    
decided to  leave a community  and take a job  elsewhere. He                                                                    
highlighted the difficulty retaining  teachers in Alaska. He                                                                    
hoped the  problem could be  avoided by working  together to                                                                    
pass an early funding bill. He was available for questions.                                                                     
Co-Chair Foster did  not see the necessity  of reviewing the                                                                    
sectional analysis. He pointed  out that the legislature had                                                                    
provided early funding for education  several years back. He                                                                    
explained early funding was  different than forward funding.                                                                    
He elaborated  that early funding  meant paying  the current                                                                    
year  as the  legislature  normally would  in the  operating                                                                    
budget, but rather than putting  it in the operating budget,                                                                    
it  was  included in  a  separate  bill to  provide  funding                                                                    
sooner.  He  elaborated  that   with  the  anticipated  ARPA                                                                    
funding, the  operating budget timeline had  slowed down. He                                                                    
detailed that  if the budget  was not completed  until after                                                                    
May 15,  it was  a problem for  school districts.  He argued                                                                    
that while  May 15 was  the deadline, some  school districts                                                                    
had multiple  schools that were asked  internally to provide                                                                    
a  list of  potential pink  slips by  May 1.  He highlighted                                                                    
that if the legislature did not  issue a budget by May 10 or                                                                    
so,  it  would put  some  school  districts  in a  bind.  He                                                                    
pointed out that  HB 169 was a basic bill  that followed the                                                                    
formula.  He   clarified  the  bill  did   not  contain  any                                                                    
additional items  such as projected  ARPA funds  or one-time                                                                    
3:10:49 PM                                                                                                                    
Representative   Josephson   asked    what   average   daily                                                                    
membership (ADM) would be applied to the calculation.                                                                           
Vice-Chair Ortiz answered that the  ADM had been impacted in                                                                    
the current year by COVID. He  had heard requests to use the                                                                    
FY  19  ADM numbers  rather  than  the most  recent  October                                                                    
numbers. He  did not  know whether  the legislature  had the                                                                    
leeway to  make the  adjustment in the  bill. He  relayed he                                                                    
had submitted the question to the department.                                                                                   
LACEY SANDERS, ADMINISTRATIVE  SERVICES DIRECTOR, DEPARTMENT                                                                    
OF  EDUCATION AND  EARLY DEVELOPMENT,  OFFICE OF  MANAGEMENT                                                                    
AND  BUDGET, OFFICE  OF THE  GOVERNOR (via  teleconference),                                                                    
answered  that there  were no  changes made  by the  current                                                                    
version  of the  bill and  the Department  of Education  and                                                                    
Early Development (DEED) would  utilize the existing statute                                                                    
to  provide  payments  to school  districts.  Currently  the                                                                    
projection in the bill was based  on the ADM provided by the                                                                    
school districts in September  2020; however, there would be                                                                    
a new  student count with preliminary  numbers after October                                                                    
2021. She  detailed that a reconciliation  would be provided                                                                    
by the  department and finalized numbers  would be available                                                                    
in March of 2022. She  explained the March 2022 number would                                                                    
be paid to school districts.                                                                                                    
3:13:02 PM                                                                                                                    
Representative Josephson  provided a scenario  where student                                                                    
populations  beginning  in  mid-August looked  more  like  a                                                                    
typical  year as  opposed  to the  current  school year.  He                                                                    
asked  if  the  appropriation   would  look  more  like  the                                                                    
2019/2020 school year under the scenario.                                                                                       
Ms.  Sanders  answered  in  the  affirmative.  She  detailed                                                                    
districts would be paid based  on the school count period in                                                                    
the fall [of 2021].                                                                                                             
Representative Rasmussen  asked if  it was possible  to look                                                                    
at language  for funding the  following year as well  in the                                                                    
same  piece  of  legislation  to  bring  some  certainty  to                                                                    
districts. She reasoned  if the funding was  within the same                                                                    
two-year  cycle,  the legislature  would  not  be binding  a                                                                    
future legislature to an appropriation.  She believed it was                                                                    
important for the legislature do  everything it could to not                                                                    
put teachers and  schools in the position  of receiving pink                                                                    
slips,  especially   during  a  time  with   many  financial                                                                    
stresses on families.                                                                                                           
Ms. Sanders responded that the  bill provided funding for FY                                                                    
22 and did  not address FY 23. She believed  it was what Co-                                                                    
Chair Foster  had spoken  to earlier  when he  had explained                                                                    
the bill did not forward fund education.                                                                                        
Co-Chair Foster  added that the  bill did not  forward fund,                                                                    
but it could.  He stated the other part of  the equation was                                                                    
whether  the legislature  wanted to  do so.  He relayed  the                                                                    
committee could add the provision with an amendment.                                                                            
3:15:47 PM                                                                                                                    
Representative  LeBon supported  the legislation.  He stated                                                                    
that he almost wished the  legislature had passed the bill a                                                                    
bit earlier.  He recalled his  time on the  Fairbanks School                                                                    
Board and reported that the  school board had been deep into                                                                    
its budget  process one to  two months back.  He highlighted                                                                    
that it still  did not hurt that the  legislature was giving                                                                    
districts some heads  up that it was willing to  fund to the                                                                    
formula. He stated that the bill would help regardless.                                                                         
Vice-Chair   Ortiz  referenced   an   earlier  question   by                                                                    
Representative Josephson. He  asked if it would  be legal to                                                                    
use the  ADM count  from FY 19  with the  understanding that                                                                    
those numbers may more accurately  reflect the student count                                                                    
in October of 2021.                                                                                                             
Ms. Sanders  answered that using  a different  student count                                                                    
period would require a statutory  change. She noted that the                                                                    
bill  reflected  the  projections currently.  She  clarified                                                                    
that the  actual payment  made by  DEED to  school districts                                                                    
would be paid based on actuals in FY 22.                                                                                        
Representative  Thompson  noted  that  the  bill  looked  at                                                                    
projections for  the current budget  using 2020  counts from                                                                    
the past  fall. He  believed funding would  be short  if the                                                                    
student count in  the fall increased to the  2019 level, but                                                                    
the budget used the 2020 count.  He asked if it would mean a                                                                    
supplemental budget item.                                                                                                       
Co-Chair  Foster  answered that  it  was  possible to  do  a                                                                    
supplemental. He  remarked that the question  had been asked                                                                    
to  Legislative   Legal  Services  or  another   entity.  He                                                                    
explained that  if the  2019 student  count were  used, each                                                                    
school would get a disproportionate  amount. He referenced a                                                                    
recent year  when the legislature  had allocated  a one-time                                                                    
increment of $35 million. He  noted it had been necessary to                                                                    
get  around the  disparity test.  He asked  if the  one-time                                                                    
increment had been allocated based on the ADM.                                                                                  
3:20:07 PM                                                                                                                    
Ms.  Sanders clarified  that the  estimates provided  in the                                                                    
bill were projections  by the school districts  on what they                                                                    
think the next  school year would look  like. She elucidated                                                                    
that  the  projections  were not  based  on  the  districts'                                                                    
decreased  populations during  the  pandemic. She  explained                                                                    
the language in  the bill provided the  appropriation at the                                                                    
amount necessary  to fund, which  provided DEED  the ability                                                                    
to pay  school districts based  on the actual  student count                                                                    
period  and  did  not  require  DEED  to  come  back  for  a                                                                    
supplemental. The  department reported  back on  the changes                                                                    
between  the  initial  projection   and  the  actual  amount                                                                    
required. She  reiterated it  did not  require DEED  to come                                                                    
back for  a supplemental.  She agreed  that the  $35 million                                                                    
had been  an appropriation  outside the  foundation formula,                                                                    
which  was   allocated  based  on  the   adjusted  ADM.  She                                                                    
confirmed that changes to the  formula required working with                                                                    
federal partners to avoid failing  the disparity test, which                                                                    
would cost the state more money.                                                                                                
Co-Chair Foster thought there would  be a $26 million dip in                                                                    
the  funding  for education  because  students  had gone  to                                                                    
correspondence and  fewer students  had been in  schools. He                                                                    
asked  how to  ensure schools  did not  see a  reduction. He                                                                    
highlighted that eventually students  would be back in brick                                                                    
and mortar schools.                                                                                                             
Ms.  Sanders replied  that school  districts  would be  paid                                                                    
based on  their actual student  count. In the  current year,                                                                    
districts  may see  a dent  based on  the decline  in actual                                                                    
student   enrollment.   She    clarified   that   the   fund                                                                    
appropriated in HB  169 would be based on  the next [school]                                                                    
year.  She   explained  that   school  districts   may  have                                                                    
considered students  returning from  correspondence programs                                                                    
as  schools  were reopening  in  the  next fiscal  year  and                                                                    
projections would not  reflect the dip that  occurred in the                                                                    
current year.                                                                                                                   
3:23:28 PM                                                                                                                    
Representative  Edgmon spoke  to  projections versus  actual                                                                    
student counts.  He stated  that in the  fall of  2020, many                                                                    
schools had kids being instructed  by remote learning or not                                                                    
in  school. He  stated his  understanding that  schools were                                                                    
projecting "x"  number of students  in the fall in  order to                                                                    
meet  the funding  that would  come  into play  in March  of                                                                    
2022. He asked  if projections could be used  to suffice for                                                                    
the student count.                                                                                                              
Ms. Sanders replied in the  affirmative. She elaborated that                                                                    
statutory  guidance  directed  school districts  to  provide                                                                    
projections in the  fall in order for DEED to  have a budget                                                                    
to present to the  legislature. She confirmed that districts                                                                    
provided projections.                                                                                                           
Representative Edgmon  used the  Bristol Bay Borough  in his                                                                    
district as  an example. He  remarked that most of  the kids                                                                    
were at  home. He considered  a scenario where  the district                                                                    
projected 300  students for  the fall of  2020. In  terms of                                                                    
the legislation,  he asked if the  projections would suffice                                                                    
as opposed to counting the actual students.                                                                                     
Ms.  Sanders responded  that DEED  used projections  when it                                                                    
developed the  future year budget.  She clarified  that when                                                                    
DEED  reimbursed   districts  during   the  year,   it  used                                                                    
districts' first  nine months based  on the FY 21  count and                                                                    
trued  up in  the  final three  months.  She explained  that                                                                    
projections  were used  for purposes  of budgeting  and when                                                                    
the   actual  student   count  occurred   in  October,   the                                                                    
department used the actual counts.                                                                                              
Representative   Edgmon  surmised   the  legislature   could                                                                    
appropriate $1.1  billion in  HB 169, but  in the  end, what                                                                    
actually went  to school districts could  be smaller because                                                                    
of the actual numbers in the true up.                                                                                           
Ms. Sanders answered that the  funding could be less or more                                                                    
depending on student counts.                                                                                                    
Co-Chair Foster  referenced $26 million the  legislature had                                                                    
heard schools would be shorted.  He asked if the $26 million                                                                    
would be applied to the FY  21 budget with the "estimated to                                                                    
be"  language.  Alternatively,  he   asked  if  it  was  the                                                                    
projection for the FY 22  budget that schools would be short                                                                    
by $26 million.                                                                                                                 
3:27:11 PM                                                                                                                    
Ms. Sanders  stated her  understanding that  in FY  21 there                                                                    
was an  increase over  the projection  in the  prior budget.                                                                    
She would follow up with an answer in writing.                                                                                  
Representative  LeBon stated  there  was a  lot unknown  out                                                                    
there.  He shared  that his  own district  in Fairbanks  was                                                                    
doing  everything  it   could  identify  returning  students                                                                    
because many  students sought other  options as much  of the                                                                    
in-person  instruction   had  paused.  He   recalled  having                                                                    
meetings  in June  and July  during his  time on  the school                                                                    
board to  adjust budget amounts because  of new information.                                                                    
He  explained  that  in Fairbanks,  funding  had  come  from                                                                    
federal sources  because of the  schools on  Fort Wainwright                                                                    
and  Eielson Air  Force Base.  Additionally,  there was  the                                                                    
state   funding   formula,    a   borough   component,   and                                                                    
miscellaneous  grants. He  highlighted  that budget  actions                                                                    
were not limited to one time per year.                                                                                          
Co-Chair Foster pointed out that  although May 15th may be a                                                                    
deadline for tenured  teachers, there was a  deadline on the                                                                    
last  day  of school  for  non-tenured  teachers, which  was                                                                    
April 30 in one of the  schools in his district. He stressed                                                                    
that the issue impacted schools.                                                                                                
Representative Wool  stated that the student  count was down                                                                    
in Fairbanks by 2,000 from  the previous year. He added that                                                                    
statewide  the count  was  down 2,000.  He  noted that  kids                                                                    
doing remote  learning during in-person school  closures did                                                                    
not   change   the   student   count.   He   remarked   that                                                                    
correspondence learning was within  the public school system                                                                    
depending  on  the program.  He  pointed  out that  although                                                                    
projected  numbers   were  down   from  2019,   some  school                                                                    
districts  were  up.  He  cited Galena  as  an  example  and                                                                    
explained  that  correspondence  schools   had  a  surge  in                                                                    
enrolment.   He  referenced   many   calls  to   legislators                                                                    
requesting  the  use  of  2019  numbers  [in  the  education                                                                    
budget]. He reasoned  that if the budget  used 2019 numbers,                                                                    
the schools  with robust correspondence programs  (e.g., the                                                                    
Galena  or Yukon-Kuskokwim  School districts)  would take  a                                                                    
hit.  He  did  not  know what  the  correspondence  schools'                                                                    
projected numbers were, but he  speculated they would likely                                                                    
see decreases in student numbers.  He reasoned that while it                                                                    
sounded simple, it may not  be advisable to use 2019 student                                                                    
count numbers  in the budget. He  considered that statewide,                                                                    
the student count was only  down by 2,000 and attributed the                                                                    
decrease partially  to people leaving the  state and private                                                                    
schools  absorbing some  of the  students. He  believed that                                                                    
remote schooling  would not be  offered in Fairbanks  in the                                                                    
coming  school  year. He  thought  students  would have  the                                                                    
choice  of  doing  correspondence  or  going  to  school  in                                                                    
person.  He  speculated  that school  numbers  would  bounce                                                                    
back. He reported  that his kids, who  were attending school                                                                    
in person, had told him  more students were returning to the                                                                    
classroom  each week.  He asked  where  student counts  were                                                                    
currently in comparison to 2019 numbers.                                                                                        
3:32:35 PM                                                                                                                    
Ms.  Sanders replied  that  she did  not  have the  district                                                                    
allocation on hand.  She shared that the DEED  website had a                                                                    
report  showing projections  provided  by school  districts.                                                                    
She would  include the  information in  her response  to the                                                                    
Vice-Chair  Ortiz  asked  if  Ms. Sanders  had  the  HB  169                                                                    
sectional analysis on hand.                                                                                                     
Ms. Sanders replied that she would pull it up online.                                                                           
Vice-Chair  Ortiz  referenced   language  in  the  sectional                                                                    
analysis specifying  the bill  would appropriate  the amount                                                                    
necessary, estimated to  be $1.193 billion. He  asked if the                                                                    
number reflected the savings or  lessened funding that would                                                                    
go  towards  the  Base Student  Allocation  (BSA)  based  on                                                                    
declined student enrollment due to COVID.                                                                                       
Ms. Sanders  answered that the number  reflected the student                                                                    
count projected  by school districts during  the next school                                                                    
year. She  relayed that school  districts may  have included                                                                    
some  reduction based  on projected  declines, whether  from                                                                    
COVID or students leaving the  state. She could not speak to                                                                    
each   school  districts'   basis   for  determining   their                                                                    
Vice-Chair Ortiz asked  if it was no longer  the position of                                                                    
the administration  that approximately $30 million  would be                                                                    
saved in the FY 22 budget based on declining enrollment.                                                                        
Ms.  Sanders  answered  that  she   was  not  aware  of  the                                                                    
statement being made.  She was not aware of  the $30 million                                                                    
in savings  due to  [enrollment] decline. She  reported that                                                                    
the  actual  cost  of  education   had  increased  over  the                                                                    
projection from  the previous year. She  elaborated that the                                                                    
number  had  increased  by $26  million  from  the  previous                                                                    
session.  She  wondered  if Vice-Chair  Ortiz  was  possibly                                                                    
comparing FY 20 to FY 22.                                                                                                       
Vice-Chair Ortiz answered that he  was referring to a number                                                                    
referenced  by  Co-Chair  Foster.   He  explained  that  the                                                                    
governor's  initial  budget  reflected  a  decrease  in  BSA                                                                    
funding based on  declining enrollment in FY 21.  He did not                                                                    
recall  the precise  number  referenced  by Co-Chair  Foster                                                                    
earlier in the meeting.                                                                                                         
Co-Chair Foster recalled the figure as $26 million.                                                                             
Co-Chair   Foster  asked   Ms.   Sanders   to  include   the                                                                    
information in the written response to the committee.                                                                           
3:36:46 PM                                                                                                                    
Representative  Carpenter  asked  for clarification  on  the                                                                    
projections  and  student   counts.  He  referenced  earlier                                                                    
discussion  about September  2020 and  October 2021  student                                                                    
counts  for the  ADM. He  asked for  verification that  both                                                                    
were  physical counts.  He surmised  the October  2021 count                                                                    
was not  a projection.  He thought  the budget  process used                                                                    
what   he  characterized   as  a   third  count   reflecting                                                                    
projections created currently during  the budget process. He                                                                    
asked for verification that the  projected count resulted in                                                                    
the $1.2 billion appropriation.                                                                                                 
Ms.  Sanders  answered that  there  was  one physical  count                                                                    
period that occurred in October  2020, which determined what                                                                    
would  actually  be  paid  during   the  current  year.  The                                                                    
projection provided by  the school district was  at the same                                                                    
time  for  the following  year;  however,  in October  2021,                                                                    
there would  be another  physical student count  period that                                                                    
would apply to the next year's payment.                                                                                         
HB 169 was HEARD and HELD in committee for further                                                                              
Co-Chair Foster reviewed the schedule for the following                                                                         

Document Name Date/Time Subjects
HB 169 Sectional Analysis.pdf HFIN 4/14/2021 1:30:00 PM
HB 169
HB 169 Sponsor Statement.pdf HFIN 4/14/2021 1:30:00 PM
HB 169
AFN - HFIN, re - ARPA (14APR21).pdf HFIN 4/14/2021 1:30:00 PM