Legislature(2013 - 2014)HOUSE FINANCE 519

04/22/2014 10:00 AM FREE CONFERENCE COMMITTEE ON HB278


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10:30:30 AM Start
10:30:30 AM HB278
05:48:55 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
-- Recessed to a Call of the Chair --
HB 278 EDUCATION
                        HB 278-EDUCATION                                                                                    
                                                                                                                                
10:30:30 AM                                                                                                                   
                                                                                                                                
CHAIR HAWKER announced  that the only order of  business would be                                                               
HOUSE  BILL  NO.  278,  "An   Act  increasing  the  base  student                                                               
allocation  used  in the  formula  for  state funding  of  public                                                               
education;   repealing    the   secondary    student   competency                                                               
examination  and related  requirements; relating  to high  school                                                               
course credit  earned through assessment;  relating to  a college                                                               
and career readiness assessment  for secondary students; relating                                                               
to  charter  school  application  appeals  and  program  budgets;                                                               
relating  to  residential  school  applications;  increasing  the                                                               
stipend  for  boarding  school students;  extending  unemployment                                                               
contributions for  the Alaska technical and  vocational education                                                               
program; relating  to earning high  school credit  for completion                                                               
of   vocational  education   courses   offered  by   institutions                                                               
receiving  technical and  vocational  education program  funding;                                                               
relating to education tax  credits; making conforming amendments;                                                               
and providing for an effective date."                                                                                           
                                                                                                                                
[Before  the   committee  was  CSHB   278(FIN)am  and   SCS  CSHB
278(FIN)amS.]                                                                                                                   
                                                                                                                                
10:33:40 AM                                                                                                                   
                                                                                                                                
CHAIR HAWKER  noted that the  committee would be  operating under                                                               
Uniform Rule  42, Conference and Free  Conference Committees, (a)                                                               
and (b) suspended.   Thus, the Uniform rules were  waived and the                                                               
conference  committee  has  been   granted  the  powers  of  free                                                               
conference, which  gives the conference committee  the ability to                                                               
consider all  issues that are germane  to the titles of  the bill                                                               
before the committee.   He advised his intention  to consider the                                                               
Senate version of  HB 278, which was built on  the House version.                                                               
He  characterized these  bills  as creating  "book  ends" to  the                                                               
dialogue.    He  indicated  that disagreement  in  policy  exists                                                               
between the  two versions and the  goal will be to  bring the two                                                               
bills into accord  for adoption as a final bill  and brought back                                                               
to the respective bodies for mutual concurrence.                                                                                
                                                                                                                                
10:36:34 AM                                                                                                                   
                                                                                                                                
CHAIR  MEYER  explained  the  leadership as  it  applies  to  the                                                               
committee.  He pointed out  that Representative Hawker will chair                                                               
the meeting since the bill originated  as a House bill.  He asked                                                               
staff  to provide  a  section-by-section  comparison between  the                                                               
House and Senate versions of the bill.                                                                                          
                                                                                                                                
10:39:33 AM                                                                                                                   
                                                                                                                                
EDRA  MORLEDGE,   Staff,  Senator   Kevin  Meyer,   Alaska  State                                                               
Legislature,  directed  attention  to  page 1  of  the  committee                                                               
handout  labeled  "HB  278  Comparison,"   with  a  footer  dated                                                               
4/22/2014 9:58 AM.                                                                                                              
                                                                                                                                
MS.  MORLEDGE  referred  to  Section 1,  relating  to  jury  duty                                                               
postponement to  a time not  during the  school year.   Section 1                                                               
language for  both bills  is the  same.   The language  in Senate                                                               
Section 2 was  similar to the House version  for secondary school                                                               
course credit  through mastery not  limited to core topics.   The                                                               
Senate  version would  limit high  school  course credit  through                                                               
mastery and  includes core  topics only,  such as  math, language                                                               
arts, science, social studies, and world languages.                                                                             
                                                                                                                                
10:40:44 AM                                                                                                                   
                                                                                                                                
CHAIR HAWKER asked  for a definition of  "secondary" versus "high                                                               
school."                                                                                                                        
                                                                                                                                
MS.  MORLEDGE  replied  that "secondary  school"  is  defined  in                                                               
statute as  seventh through twelfth  grades and "high  school" is                                                               
only ninth through twelfth grades.                                                                                              
                                                                                                                                
10:41:03 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE  GATTIS  reported  that  Section 1  of  the  House                                                               
version of  HB 278  was based  on all  subjects being  tested and                                                               
opined that the tests should not be limited to core areas.                                                                      
                                                                                                                                
CHAIR  MEYER said  the Senate  based  its decision  more on  cost                                                               
since funding is necessary to  provide students an opportunity to                                                               
test out of  classes although it could be expanded  in the future                                                               
from core areas.                                                                                                                
                                                                                                                                
10:42:06 AM                                                                                                                   
                                                                                                                                
MS. MORLEDGE  directed attention  to House  Section 3  and Senate                                                               
Section  4 of  HB  278.   She  explained  that  Senate Section  4                                                               
removes the  reference to the  High School  Graduation Qualifying                                                               
Exam  (HSGQE) [exit  exam] and  requires electronic  reporting by                                                               
the  department to  the  legislature and  House  Section 3  makes                                                               
technical cleanup to the language but does not repeal the HSGQE.                                                                
                                                                                                                                
CHAIR   HAWKER  commented   that   the   House  passed   separate                                                               
legislation [HB 220] to repeal  the HSGQE but the Senate included                                                               
the HSGQE concept in HB 278.                                                                                                    
                                                                                                                                
10:43:20 AM                                                                                                                   
                                                                                                                                
MS. MORLEDGE  said that  House Section  4 provides  language that                                                               
the state  may not cede any  measure of autonomy or  control over                                                               
education standards and assessments.   The Senate version did not                                                               
have a similar section.                                                                                                         
                                                                                                                                
10:43:37 AM                                                                                                                   
                                                                                                                                
MS. MORLEDGE directed  attention to House and  Senate language in                                                               
Section 5,  noting the House  version contains  technical cleanup                                                               
language and requires reporting  on military and associated data,                                                               
which is also included in the Senate version.                                                                                   
                                                                                                                                
CHAIR HAWKER added that the  Senate Section 5 also had conforming                                                               
language involving the exit examination [HSGQE] removal.                                                                        
                                                                                                                                
10:44:09 AM                                                                                                                   
                                                                                                                                
MS.  MORLEDGE  noted  [House  version]  Section  6  is  technical                                                               
cleanup language  and [House version]  Section 7  substitutes the                                                               
term  "language  arts"  for  "reading and  writing."    This  was                                                               
included in  the Senate version,  which also  includes conforming                                                               
language for the HSGQE repeal.                                                                                                  
                                                                                                                                
10:44:36 AM                                                                                                                   
                                                                                                                                
MS.  MORLEDGE turned  to Section  8 of  the House  version, which                                                               
replaces the  "star" rating  with an "A-F"  grading system.   The                                                               
Senate does not have a similar section.                                                                                         
                                                                                                                                
The committee took a brief at-ease from 10:45 a.m. to 10:46 a.m.                                                                
                                                                                                                                
10:46:21 AM                                                                                                                   
                                                                                                                                
MS.  MORLEDGE directed  attention to  page 2  of the  section-by-                                                               
section comparison.   She related that Senate  Section 7 contains                                                               
three new provisions.   First, it would include  funding to bring                                                               
every  school's  Internet speed  up  to  10 megabits  per  second                                                               
(mbps);  second,  it  would   provide  funding  for  personalized                                                               
learning opportunity grants; and  third, it would provide funding                                                               
for innovative approaches to learning grants.                                                                                   
                                                                                                                                
CHAIR MEYER commented  that this language would  allow schools to                                                               
expand  their broadband  service to  at least  10 mbps,  which is                                                               
very important in  rural Alaska especially pertaining  to the use                                                               
of  digital learning.   In  addition,  the personalized  learning                                                               
opportunity  grants and  the  innovative  approaches to  learning                                                               
grants were items that were  brought to the Senate's attention by                                                               
the   [Senate]  Education   [Standing]   Committee  and   Senator                                                               
Dunleavy.                                                                                                                       
                                                                                                                                
10:47:44 AM                                                                                                                   
                                                                                                                                
SENATOR DUNLEAVY  explained that the personalized  learning grant                                                               
is the  one-on-one concept  that has been  discussed in  the past                                                               
two years  with the Association  of Alaska School Boards  and the                                                               
Alaska  Department of  Education [and  Early Development]  (EED).                                                               
This would  put "tablets" in  the hands of students  and teachers                                                               
to address the growing trend  in education of working with online                                                               
vendors to  integrate technology into the  actual program instead                                                               
of  as  an  add-on  element.     The  Senate  Education  Standing                                                               
Committee  developed these  changes by  proposing the  technology                                                               
expansion  and  the innovative  education  grants.   The  program                                                               
would allow small start-up educational  grants to plan approaches                                                               
that a district could endorse such  as cyber schools.  This is in                                                               
response  to an  issue  that sometimes  occurs  when people  seek                                                               
funding  to implement  ideas  that are  later  discovered as  not                                                               
being well thought  out.  Under the grant program,  a "project of                                                               
promise"  could  be eventually  brought  to  the legislature  for                                                               
further appropriation.  He envisioned  that districts would float                                                               
concepts  to the  department,  and if  the  department found  the                                                               
concept had  merit, a  small planning grant  would ensue  and the                                                               
district would hire a contractor  to fully flesh out the concept.                                                               
That  fleshed-out concept  would go  back to  the department  for                                                               
approval,   and,  if   approved,  would   be  presented   to  the                                                               
legislature as a  "project of promise" for  funding.  Ultimately,                                                               
this process  could firm  up projects  to avoid  funding concepts                                                               
without merit.                                                                                                                  
                                                                                                                                
CHAIR HAWKER asked for further  clarification on the fiscal notes                                                               
for these three components.                                                                                                     
                                                                                                                                
SENATOR DUNLEAVY  answered that  the one-on-one grant  was funded                                                               
at  $5 million  and the  innovative learning  grant approach  was                                                               
funded at  $750,000 for this  fiscal year.  In  further response,                                                               
he agreed the Internet services fiscal impact was $7.3 million.                                                                 
                                                                                                                                
10:51:05 AM                                                                                                                   
                                                                                                                                
CHAIR  MEYER interjected  that he  believed  the learning  grants                                                               
would start  at $3-$5  million.   In response  to a  question, he                                                               
clarified he was speaking about the one-on-one grants.                                                                          
                                                                                                                                
CHAIR  MEYER   related  his   understanding  that   the  proposed                                                               
broadband  Internet services  would be  eligible for  four-to-one                                                               
matching funds  from the  federal government.   In response  to a                                                               
question,  he reiterated  his comment  related  to the  broadband                                                               
Internet services.                                                                                                              
                                                                                                                                
10:51:42 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE   GATTIS   offered   support   for   technological                                                               
advances, which will change how  Alaska does business in the next                                                               
50 years;  however, challenges for providing  these grants exist.                                                               
She offered her preference to  consider all contractors, not just                                                               
the Association of Alaska School  Boards, as possible vendors for                                                               
the grants.                                                                                                                     
                                                                                                                                
10:52:36 AM                                                                                                                   
                                                                                                                                
SENATOR HOFFMAN, regarding the Internet  speed, reported that the                                                               
national standard calls for 100 megabits (mbps) by 2016 or 2017.                                                                
                                                                                                                                
CHAIR HAWKER  acknowledged that the  national target is  100 mbps                                                               
rather than the 10 mbps that the Senate Section 7 proposes.                                                                     
                                                                                                                                
10:53:18 AM                                                                                                                   
                                                                                                                                
MS.  MORLEDGE  directed  attention  to House  Sections  9-10  and                                                               
Senate  Sections 8-9  addressing charter  school application  and                                                               
appeal  process.    The  House version  doesn't  have  a  similar                                                               
provision  to Senate  Section  10, which  would  repeal the  High                                                               
School  Graduation  Qualifying  Exam   (HSGQE)  [exit  exam]  for                                                               
charter school students.                                                                                                        
                                                                                                                                
CHAIR  HAWKER  pointed  out  the  House  accomplished  the  HSGQE                                                               
language change in a separate bill.                                                                                             
                                                                                                                                
10:53:52 AM                                                                                                                   
                                                                                                                                
MS. MORLEDGE  turned to Section  11, which requires  districts to                                                               
offer  the right  of first  refusal to  charter schools  to lease                                                               
space,  noting  lease agreements  shall  be  true to  operational                                                               
costs.   She said this language  is the same in  both versions of                                                               
HB 278.                                                                                                                         
                                                                                                                                
MS.  MORLEDGE directed  attention to  [House and  Senate] Section                                                               
12.   She explained that  the Senate adopted the  House language,                                                               
but also added  language that would require funds  generated by a                                                               
charter  school   student  to  include   grants,  appropriations,                                                               
federal impact aid, and local contributions.                                                                                    
                                                                                                                                
CHAIR  HAWKER  remarked  that  the [Senate  version]  is  a  more                                                               
encompassing implementation of the  same concept that was brought                                                               
forward in the House version of the bill.                                                                                       
                                                                                                                                
10:54:36 AM                                                                                                                   
                                                                                                                                
MS. MORLEDGE  referred to Section  13, relating that  language in                                                               
both [House  and Senate] versions  would provide a  $500 one-time                                                               
per student grant for charter  school start-up funds in the first                                                               
year.                                                                                                                           
                                                                                                                                
MS.  MORLEDGE  directed  attention  to [House]  Section  15  that                                                               
substitutes the term "language arts"  for "reading, writing."  In                                                               
addition,  the  language  would   prohibit  the  department  from                                                               
spending money  on "common core" standards  implementation for K-                                                               
12.                                                                                                                             
                                                                                                                                
10:55:19 AM                                                                                                                   
                                                                                                                                
MS. MORLEDGE referred  back to Senate Section  14, which includes                                                               
language related  to a  correspondence study  program, individual                                                               
learning plans, and student allotments.                                                                                         
                                                                                                                                
CHAIR  HAWKER  asked for  further  clarification  on the  student                                                               
allotment component.                                                                                                            
                                                                                                                                
CHAIR MEYER deferred to Senator Dunleavy.                                                                                       
                                                                                                                                
SENATOR  DUNLEAVY   explained  that  [Section  14]   pertains  to                                                               
correspondence  homeschool  programs,  which  are  public  school                                                               
programs that  have existed for approximately  15 years educating                                                               
thousands  of students  statewide.   Some programs  are district-                                                               
centered programs and others are  statewide programs.  The change                                                               
was  originally  proposed under  SB  100.   He  detailed  several                                                               
components.    First,  under   the  program,  all  correspondence                                                               
students must  have an individual  learning plan  (ILP), although                                                               
one  component  that changes  is  the  ILP  is considered  to  be                                                               
functioning for  those students who  are proficient  according to                                                               
statewide assessments.  For students  who are not proficient, the                                                               
teacher and parent would amend  the ILP and dedicate resources to                                                               
ensure that the child becomes proficient.                                                                                       
                                                                                                                                
SENATOR  DUNLEAVY  turned  to the  second  component  [of  Senate                                                               
Section 14],  noting that many homeschool  correspondence program                                                               
students  obtain an  allotment to  purchase materials  to support                                                               
the ILP.  In  the past, that allotment would lapse  at the end of                                                               
the  fiscal  year.   One  unintended  consequence has  been  that                                                               
families rushed to spend the  allotment to purchase materials for                                                               
the next  year before funds  lapsed.  Under [Senate  Section 14],                                                               
funding  wouldn't  lapse,  but  could  accumulate  for  long-term                                                               
planning  for students  who remain  in the  program.   This could                                                               
have the  desired effect  of keeping a  family with  the program,                                                               
but will also  have the effect funds being spent  more wisely and                                                               
judiciously instead  of end-of-year  spending.  Third,  the final                                                               
component  will change  the  current  foundation formula  funding                                                               
factor for correspondence students from  .80 to .90.  In response                                                               
to Representative  Kito III, he  indicated that the  allotment in                                                               
AS  14.03.320 is  not an  actual cash  payment to  the parent  or                                                               
guardian but is held by the school.                                                                                             
                                                                                                                                
10:59:58 AM                                                                                                                   
                                                                                                                                
MS. MORLEDGE  related that  Section 14 of  the House  version and                                                               
Section 15  of the Senate  version substitute the  term "language                                                               
arts"  for  "reading,  writing."   House  Section  15  would  add                                                               
language  prohibiting  the EED  from  spending  funds on  "common                                                               
core"  standards  implementation for  K-12.    Senate Section  16                                                               
contained the cleanup  language, but did not  contain the "common                                                               
core" standards language, she said.                                                                                             
                                                                                                                                
CHAIR HAWKER  highlighted the committee  will need to  be briefed                                                               
by  Commissioner  Hanley today  on  the  "common core"  standards                                                               
issue and implementation language.                                                                                              
                                                                                                                                
REPRESENTATIVE GATTIS  explained that  the House intent  was that                                                               
Alaskans  be in  control of  the curriculum  being taught  in the                                                               
state and that it would not be based on a national standard.                                                                    
                                                                                                                                
11:01:28 AM                                                                                                                   
                                                                                                                                
MS. MORLEDGE  directed attention  to Senate  Sections 17  and 18,                                                               
noting Section 17 is a technical  change related to the exit exam                                                               
[HSGQE]  and   Section  18  defines   the  term  "child   with  a                                                               
disability."                                                                                                                    
                                                                                                                                
11:01:45 AM                                                                                                                   
                                                                                                                                
MS. MORLEDGE  referred to  House Section  16, which  requires the                                                               
State  Board   of  Education  and  Early   Development  (BOE)  to                                                               
recommend changes in  how the state could  expend education funds                                                               
more efficiently.  The Senate removed that language, she said.                                                                  
                                                                                                                                
CHAIR  HAWKER  advised  this is  another  item  for  Commissioner                                                               
Hanley  to  address since  there  are  several opinions  on  this                                                               
matter.                                                                                                                         
                                                                                                                                
11:02:47 AM                                                                                                                   
                                                                                                                                
MS. MORLEDGE  directed attention  to page  4, of  the section-by-                                                               
section comparison,  to House Section  17 and Senate  Section 19,                                                               
noting  both versions  retain the  same language  regarding pupil                                                               
transportation  for charter  schools.   The  Senate version  also                                                               
inserted  a new  Section 20,  related to  debt reimbursement  for                                                               
school construction and maintenance.                                                                                            
                                                                                                                                
CHAIR HAWKER emphasized  that the Senate Section  20 represents a                                                               
substantial change from current statute  that is not in the House                                                               
version.   He  also  would like  Commissioner  Hanley to  address                                                               
this.   He characterized this  as being  more of a  Department of                                                               
Revenue  (DOR)  function, but  he  was  certain the  commissioner                                                               
could recommend the appropriate party to inform the committee.                                                                  
                                                                                                                                
11:03:35 AM                                                                                                                   
                                                                                                                                
CHAIR  MEYER  indicated that  from  a  financial standpoint,  the                                                               
state  can control  its substantial  bonding  for many  projects;                                                               
however,  the  state  can't control  costs  when  districts  pass                                                               
school  bonds,  with  the  state  having  responsibility  for  60                                                               
percent or 70 percent of the  cost.  He related his understanding                                                               
that  the commissioner  will discuss  the  70/30 program,  noting                                                               
that the  state has more control  over it than it  does the 60/40                                                               
program.    He  identified  this  is  an  area  that  needs  some                                                               
adjustment.                                                                                                                     
                                                                                                                                
REPRESENTATIVE GATTIS  agreed that  this is  an area  of concern.                                                               
She suggested  that the legislature  might consider  lowering the                                                               
bonding and  removing some regulations  to give  school districts                                                               
the ability  to make choices that  work best for them.   She said                                                               
she looks forward to the conversation.                                                                                          
                                                                                                                                
11:05:01 AM                                                                                                                   
                                                                                                                                
MS. MORLEDGE  directed attention to  House Section 18  and Senate                                                               
Section  21,  which contain  the  same  language and  will  allow                                                               
course credit by mastery for  boarding school students.  The next                                                               
section, House Section  19, and Senate Section 22  would allow an                                                               
annual open application period for residential schools.                                                                         
                                                                                                                                
11:05:24 AM                                                                                                                   
                                                                                                                                
MS. MORLEDGE  turned to Senate  Sections 23-26, which  were added                                                               
in  the Senate  version.   Senate Section  23 would  increase the                                                               
residential school stipend.                                                                                                     
                                                                                                                                
CHAIR  HAWKER  interjected that  he  believes  that has  a  $2.25                                                               
million fiscal note.                                                                                                            
                                                                                                                                
CHAIR MEYER  offered his belief  that it was  Senator [Coghill's]                                                               
bill and that Senator Hoffman  was very familiar with residential                                                               
schools.                                                                                                                        
                                                                                                                                
REPRESENTATIVE   GATTIS    related   that   she    introduced   a                                                               
corresponding bill, [HB  291] that is currently  before the House                                                               
Finance [Standing] Committee.                                                                                                   
                                                                                                                                
11:06:12 AM                                                                                                                   
                                                                                                                                
MS. MORLEDGE  turned to Senate  Section 24, which  would increase                                                               
the  required local  contribution from  a 2.65  mill to  2.8 mill                                                               
rate.                                                                                                                           
                                                                                                                                
CHAIR HAWKER suggested that the  committee will hear testimony to                                                               
provide background and the ramifications of this.                                                                               
                                                                                                                                
CHAIR  MEYER  acknowledged  the  importance  of  considering  the                                                               
bigger issue between  voluntary contributions that municipalities                                                               
make  versus required  contributions.   Obviously  when the  mill                                                               
rate  is adjusted  it constitutes  a required  contribution.   He                                                               
recalled that  the mill  rate was adjusted  three years  ago that                                                               
the contribution  changed from  a 2.9  mill rate  to a  2.65 mill                                                               
rate, which  meant the state  had to take  on a bigger  burden of                                                               
the education  funding.  In  fact, he recommended this  change in                                                               
order to find  a better balance between local  and state required                                                               
contributions to education.                                                                                                     
                                                                                                                                
11:07:34 AM                                                                                                                   
                                                                                                                                
MS. MORLEDGE directed attention to  Senate Section 25, which is a                                                               
provision to allow municipalities to  contribute up to 23 percent                                                               
of funds that are distributed  to the school districts outside of                                                               
the basic need.                                                                                                                 
                                                                                                                                
CHAIR  HAWKER explained  that funding  added outside  of the  BSA                                                               
[base student  allotment] contribution  is treated  as if  it was                                                               
within  the  BSA  for  the purpose  of  calculating  the  maximum                                                               
voluntary local contributions.                                                                                                  
                                                                                                                                
MS.  MORLEDGE   related  that  Senate   Section  26   raises  the                                                               
correspondence study factor from 80 percent to 90 percent.                                                                      
                                                                                                                                
CHAIR HAWKER added that the fiscal  note for the factor change is                                                               
approximately $6.1 million.                                                                                                     
                                                                                                                                
SENATOR DUNLEAVY said the idea  was to increase it to incentivize                                                               
school  districts  to give  serious  thought  to expanding  their                                                               
homeschool  correspondence programs.   He  characterized it  as a                                                               
low-cost  approach  to  expanding  the "larger  tent"  of  public                                                               
education  to as  many  students as  possible  without having  to                                                               
factor in building  construction, transportation, lunch programs,                                                               
and  other costs.   The  homeschool  correspondence programs  are                                                               
probably the fastest growing programs within public education.                                                                  
                                                                                                                                
11:09:22 AM                                                                                                                   
                                                                                                                                
CHAIR MEYER  asked when funding for  homeschool or correspondence                                                               
school was last changed.                                                                                                        
                                                                                                                                
SENATOR DUNLEAVY  offered his belief  that this funding  has been                                                               
in  place for  many  years.   He  related  his understanding  the                                                               
percentage was a number that was chosen.                                                                                        
                                                                                                                                
11:09:52 AM                                                                                                                   
                                                                                                                                
MS.  MORLEDGE  continued  on page  5  of  the  section-by-section                                                               
comparison  of HB  278 to  Senate  Section 27,  noting the  House                                                               
version does not have a similar  provision.  She stated that this                                                               
language relates  to the  charter school  size factor  and lowers                                                               
the  threshold of  120 students  to  75 students  to receive  100                                                               
percent of funding.                                                                                                             
                                                                                                                                
CHAIR HAWKER asked Commissioner Hanley  to address and put on the                                                               
record  what  is  at  issue  for both  of  these  charter  school                                                               
adjustments.                                                                                                                    
                                                                                                                                
11:10:36 AM                                                                                                                   
                                                                                                                                
MS. MORLEDGE  referred to House  Sections 20-22, which  relate to                                                               
BSA increases.  The Senate version  does not contain any of these                                                               
provisions.                                                                                                                     
                                                                                                                                
CHAIR HAWKER said this is  the biggest sticking point between the                                                               
Senate and  House approaches to HB  278.  The House  preferred to                                                               
include some  element of  funding within the  BSA and  the Senate                                                               
chose  not to  increase funding  inside the  BSA, yet  still make                                                               
substantial  commitments  to   education  funding  by  increasing                                                               
funding outside the  BSA for the next three years.   He indicated                                                               
that the  committee will be work  to find a route  forward as the                                                               
free conference committee proceeds.                                                                                             
                                                                                                                                
11:11:31 AM                                                                                                                   
                                                                                                                                
MS. MORLEDGE  directed attention  to House Sections  23-24, which                                                               
provide increases  the time for  teacher tenure to five  years in                                                               
urban areas.                                                                                                                    
                                                                                                                                
SENATOR  HOFFMAN asked  for  a breakdown  on  the dollar  amounts                                                               
within the BSA, outside the BSA, and other funding.                                                                             
                                                                                                                                
CHAIR HAWKER responded  that the general formula used  is that an                                                               
increase  of $100  to  the  BSA equates  to  approximately a  $25                                                               
million  increase  in  the  budget,   therefore,  a  $25  million                                                               
increase outside  the BSA would  have the  same effect as  a $100                                                               
increase to  the BSA.  He  said that a summary  will be necessary                                                               
to highlight  the overall financial  impact.  Again, this  is the                                                               
greatest sticking point in the bill, he said.                                                                                   
                                                                                                                                
11:13:11 AM                                                                                                                   
                                                                                                                                
CHAIR MEYER said  he believed that his  staff, Suzanne Armstrong,                                                               
or David  Teal, Legislative  Fiscal Analyst,  Legislative Finance                                                               
Division will be able to provide the comparison.                                                                                
                                                                                                                                
CHAIR  HAWKER commented  that the  comparison would  be available                                                               
for all of the components,  recognizing that costs are associated                                                               
with many of the proposals before the free conference committee.                                                                
                                                                                                                                
11:13:40 AM                                                                                                                   
                                                                                                                                
MS. MORLEDGE  directed attention again  to House Sections  23 and                                                               
24, which increases  the qualifying period for  teacher tenure to                                                               
five years for  urban school districts and three  years for rural                                                               
school districts; however, this language  is not contained in the                                                               
Senate version.                                                                                                                 
                                                                                                                                
REPRESENTATIVE GATTIS pointed  out that a tenure  bill was passed                                                               
last year.  She agreed it may be a sticking point.                                                                              
                                                                                                                                
11:14:48 AM                                                                                                                   
                                                                                                                                
MS.  MORLEDGE  directed attention  to  Senate  Section 28,  which                                                               
increases   the  employee   contribution   to  the   unemployment                                                               
insurance fund  from the current  .15 percent to .16  percent for                                                               
the  technical vocational  education program.   She  related that                                                               
House Section 25 and Senate Section  29 included a sunset date of                                                               
2017.   In addition,  the Senate version  corrected the  names of                                                               
the recipient  organizations and rolled the  University of Alaska                                                               
Southeast  into  the  university  system as  a  whole  and  added                                                               
Ilisagvik  College.     The  Senate  version   also  reduced  the                                                               
university system funding by five percent overall.                                                                              
                                                                                                                                
MS. MORLEDGE turned to House  Section 26 [and Senate version 30],                                                               
which relates to the TVEP program survey and performance review.                                                                
                                                                                                                                
11:15:56 AM                                                                                                                   
                                                                                                                                
MS.  MORLEDGE  continued  to page  6  of  the  section-by-section                                                               
comparison of HB 278.   She directed attention to [House Sections                                                               
27 and  28 and Senate  Sections 31 and  32], which relate  to the                                                               
TVEP  [Technical  Vocational  Education Program]  and  to  [House                                                               
Sections  30-41 and  Senate  version 34-45]  that  relate to  the                                                               
education tax  credits.   She explained  that the  Senate version                                                               
included all of the House  language and added two recipients, the                                                               
Regional Training  Center (RTC)  and apprenticeship  programs and                                                               
nonprofit  agencies  providing   educational  opportunities  that                                                               
promote the legacy of public service.                                                                                           
                                                                                                                                
11:16:45 AM                                                                                                                   
                                                                                                                                
MS.  MORLEDGE  continued  to page  7  of  the  section-by-section                                                               
comparison of HB 278.  She  turned to House Section 42 and Senate                                                               
Section  46,  which  is  a  technical  cleanup  and  repeals  BIA                                                               
language.   House Section  43 and Senate  Section 47  contain the                                                               
same language regarding charter schools, she said.                                                                              
                                                                                                                                
11:17:08 AM                                                                                                                   
                                                                                                                                
MS.  MORLEDGE  directed  attention  to House  Section  44,  which                                                               
relates  to the  applicability  of tenure  [not  included in  the                                                               
Senate version].  House Sections  45-46 and Senate Sections 48-49                                                               
would   provide   transition    language   for   charter   school                                                               
applications and regulations.                                                                                                   
                                                                                                                                
11:17:38 AM                                                                                                                   
                                                                                                                                
MS.  MORLEDGE  directed  attention  to House  Section  47,  which                                                               
requires the Department of Administration  (DOA) to submit to the                                                               
legislature a  salary and benefits proposal  for school districts                                                               
statewide.    Senate Section  55  would  require the  Legislature                                                               
Budget & Audit Committee (LB&A) to perform that study.                                                                          
                                                                                                                                
CHAIR HAWKER turned to the  proposed studies with the distinction                                                               
being that the House approach  has the DOA taking authority while                                                               
the  Senate  retains  it  within  the  legislative  function  and                                                               
authority [LB&A).   He questioned whether the  function should be                                                               
in terms of an administrative  forum or a legislative forum since                                                               
the legislature retains the sole authority to appropriate.                                                                      
                                                                                                                                
REPRESENTATIVE GATTIS commented that the  intent of the House was                                                               
to  have a  clear  look at  not only  a  study, but  implementing                                                               
updated state salaries and benefits.                                                                                            
                                                                                                                                
11:19:45 AM                                                                                                                   
                                                                                                                                
CHAIR  HAWKER  asked  for further  clarification  on  the  LB&A's                                                               
approach to the Senate version's study.                                                                                         
                                                                                                                                
CHAIR MEYER deferred to Senator  Fairclough, as Chair of the LB&A                                                               
committee; however, he  added that the key critical  point to the                                                               
Senate's  approach to  educational funding  was to  avoid putting                                                               
funds in a foundation formula, which  the BSA is part of, when it                                                               
is known  that the formula  needs adjustments.  Thus,  the Senate                                                               
version  places the  funding outside  of  the foundation  formula                                                               
until the  [LB&A] study  is completed.   In addition,  the Senate                                                               
version funds education  at $100 million for each  of three years                                                               
since it will  take two to three years to  complete and implement                                                               
the study.                                                                                                                      
                                                                                                                                
CHAIR HAWKER  related these comments  segue into the next  two or                                                               
three points.                                                                                                                   
                                                                                                                                
11:20:52 AM                                                                                                                   
                                                                                                                                
MS.  MORLEDGE  directed  attention  to House  Section  48,  which                                                               
includes a $30  million one-time grant to  districts and although                                                               
the Senate version does not  include a similar provision, it does                                                               
propose that  $100 million be  appropriated for each of  the next                                                               
three years.                                                                                                                    
                                                                                                                                
MS. MORLEDGE  turned to Senate  Sections 50-51, which  propose to                                                               
study components  of the  foundation formula,  including district                                                               
costs and  school-size factors.   Senate Section 52 relates  to a                                                               
design and  construction report by  the EED and Section  53 would                                                               
create a middle school pilot  program to expand the ANSEP [Alaska                                                               
Native Science  and Engineering  Program] and  Science Technology                                                               
Engineering and Math [STEM] programs.   Senate Section 55 relates                                                               
to  the [HSGQE]  exit  exam.   House  Sections  49-53 and  Senate                                                               
Sections 56-59 relate to the effective dates.                                                                                   
                                                                                                                                
11:22:10 AM                                                                                                                   
                                                                                                                                
CHAIR  HAWKER said  it is  apparent that  there are  a number  of                                                               
areas  in  which  the  House  and  Senate  have  taken  the  same                                                               
approach.   One area, the  elimination of the [HSGQE]  exit exam,                                                               
has  the same  goal but  used  different approaches.   The  House                                                               
version has been largely incorporated  into the Senate version of                                                               
HB  278, he  said.   He  indicated that  at this  point the  free                                                               
conference committee seeks to identify  and build a foundation of                                                               
commonality,   removing  as   many  issues   as  possible   where                                                               
fundamental  agreement  exists.   He  indicated  a more  vigorous                                                               
debate can  occur for the  remaining issues.  He  highlighted his                                                               
intention  to  work  with  Chair   Meyer  to  identify  areas  of                                                               
consensus  and  develop  a  baseline  free  conference  committee                                                               
substitute (FCCS for  HB 278), which will be brought  to the free                                                               
conference committee.   Further, he hoped to  bring testifiers to                                                               
before  the   committee  to  provide  information   on  the  more                                                               
contentious issues.   The free conference  committee will proceed                                                               
steadily toward this goal, he said.                                                                                             
                                                                                                                                
11:25:38 AM                                                                                                                   
                                                                                                                                
JULI  LUCKY,  Staff,  Representative Mike  Hawker,  Alaska  State                                                               
Legislature, noted that she has  an e-mail notification list that                                                               
will be accessed to provide meeting information.                                                                                
                                                                                                                                
11:26:35 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE  KITO III  asked for  clarification regarding  the                                                               
forthcoming fiscal summary  and if it will cover  all sections of                                                               
the bill with fiscal impact.                                                                                                    
                                                                                                                                
CHAIR  HAWKER answered  yes;  that he  hoped  the fiscal  summary                                                               
would be as comprehensive as possible.                                                                                          
                                                                                                                                
CHAIR MEYER agreed the fiscal impacts will be covered.                                                                          
                                                                                                                                
11:28:00 AM                                                                                                                   
                                                                                                                                
CHAIR  HAWKER recessed  the meeting  to a  call of  the chair  at                                                               
11:28 a.m.                                                                                                                      
                                                                                                                                
2:22:23 PM                                                                                                                    
                                                                                                                                
CHAIR   HAWKER    reconvened   the    meeting   at    2:22   p.m.                                                               
Representatives  Gattis,  Kito  III,  and  Hawker,  and  Senators                                                               
Dunleavy, Hoffman, and  Meyer were present at the  call to order.                                                               
Representatives  Hughes and  LeDoux and  Senator Fairclough  were                                                               
also in attendance.                                                                                                             
                                                                                                                                
2:22:36 PM                                                                                                                    
                                                                                                                                
CHAIR HAWKER  recapped the status,  such that he and  Chair Meyer                                                               
have  identified areas  of  common ground  and  have requested  a                                                               
draft free conference committee substitute (FCCS) for HB 278.                                                                   
                                                                                                                                
2:22:48 PM                                                                                                                    
                                                                                                                                
CHAIR HAWKER reviewed the morning  meeting and directed attention                                                               
to  points requiring  further  information  and clarification  in                                                               
order to find  accord.  He referred to a  spreadsheet prepared by                                                               
the Legislative Finance Division.   In response to a question, he                                                               
clarified that the single document  was before them [footer label                                                               
of  "4-22-14  LFD  Summary  278  Senate vs  House  (2)"].    This                                                               
document  and other  supporting documents  are also  found posted                                                               
online in BASIS [Bill Activity Status Inquiry System], he said.                                                                 
                                                                                                                                
2:25:58 PM                                                                                                                    
                                                                                                                                
DAVID  TEAL,  Legislative  Fiscal  Analyst,  Legislative  Finance                                                               
Division,  Alaska State  Legislature, directed  attention to  the                                                               
committee packet handout and the  document with a footer label of                                                               
"4-22-14  LFD  Summary 278  Senate  vs  House (2),"  noting  this                                                               
document  has  been  prepared  for   the  division's  use.    The                                                               
division's role is not to  determine the policy provisions but to                                                               
translate actions the legislature takes  to fiscal impacts and be                                                               
certain  the decided  upon  funding is  included  in the  capital                                                               
budget or in a fiscal note, he said.                                                                                            
                                                                                                                                
MR. TEAL  noted that  section numbers for  the House  version and                                                               
Senate version and  associated costs are listed  in the document.                                                               
He  explained  that  as the  free  conference  committee  chooses                                                               
specific  funding amounts  these  amounts will  be  added to  the                                                               
columns; however, it's a little  more complicated to put together                                                               
amendments to the  capital budget.  For example,  the $100,000 on                                                               
the first line  of the aforementioned document  implies that $100                                                               
million is associated with FY 15,  FY 16, and FY 17; however, the                                                               
actual funding  mechanism in the  Senate version would  fund $300                                                               
million in FY  15, but distribute it in FYs  15-17.  He explained                                                               
that it  is one-time funding, but  it will also give  districts a                                                               
three-year  certainty  since  districts  don't  have  to  request                                                               
additional funds  from subsequent legislatures  for FY 16  and FY                                                               
17.                                                                                                                             
                                                                                                                                
CHAIR  HAWKER added  that  aspect would  be  accommodated in  the                                                               
fiscal note attached to the proposed HCCS.                                                                                      
                                                                                                                                
MR. TEAL agreed; however, the  way the Senate version was adopted                                                               
doesn't necessarily mean that the  free conference committee will                                                               
decide to  take the same  route.  He  suggested that if  the free                                                               
conference committee  chose to  increase the  BSA rather  than to                                                               
fund an increase outside the  formula [BSA], it would represent a                                                               
different  method.   He  acknowledged that  it  wouldn't be  more                                                               
complicated, but it  would mean funding the BSA for  FY 15 if the                                                               
forward  funding  concept  is  included.    For  instance,  House                                                               
Section 20 costs in FY 15 for  BSA changes is $45 million, but in                                                               
FY 16,  the BSA is scheduled  to increase by another  $50 million                                                               
pushing that  total cost to  $60 million.  Forward  funding would                                                               
include  the $45  million plus  the  $60 million  in FY  15.   He                                                               
concluded that the division will simply  need to know how much to                                                               
deposit into the education fund.                                                                                                
                                                                                                                                
CHAIR  HAWKER  acknowledged that  in  terms  of "book  ends"  the                                                               
funding  is  broken into  two  major  categories, which  are  the                                                               
distribution according to the formula,  and the breakdown between                                                               
the House  version and  the Senate  version.   He also  noted the                                                               
House total of $859,000 and the  Senate total of $18,351,000.  He                                                               
identified   the  total   unrestricted   general   funds  of   as                                                               
approximately  $76.6 million  and  $24.9 [$124.9  million for  FY                                                               
15], which provide  the book ends to be worked  within today.  He                                                               
described the aforementioned document as a reference document.                                                                  
                                                                                                                                
2:31:11 PM                                                                                                                    
                                                                                                                                
SENATOR HOFFMAN, concentrating  on the BSA, stated that  in FY 15                                                               
the  House version  funded  $30 million  outside  the BSA  [money                                                               
distributed  in the  same way  as the  formula and  $45.8 million                                                               
inside  the  BSA; however,  the  line  entitled "Approximate  BSA                                                               
Equivalent (Dollars)" totals $75.8  million for the House version                                                               
and $106.6 million for the Senate  version.  In FY 16 the figures                                                               
drop to  $60.1 million, but increase  to $74.5 million in  FY 17.                                                               
He stated that  the total House funding for three  years would be                                                               
approximately $210  million and for  the Senate version  would be                                                               
$310 million.   He asked  for further clarification  whether that                                                               
was correct.                                                                                                                    
                                                                                                                                
MR.  TEAL,  referring to  the  spreadsheet,  responded that  this                                                               
represents  the difference  between the  one-time funding  on the                                                               
first line,  with the  House version at  $30 million  outside the                                                               
BSA.  This figure is removed in FY  16 and FY 17 since it is one-                                                               
time  money; however  this doesn't  mean it  will necessarily  be                                                               
removed,  but it  won't be  reflected in  this spreadsheet  since                                                               
unlike the  Senate version  of $300  million in  forward funding,                                                               
the $30  million in  the House version  is truly  one-time money.                                                               
He acknowledged it could be  replaced next year but the committee                                                               
has no way of knowing for certain if that will occur.                                                                           
                                                                                                                                
CHAIR  HAWKER pointed  out that  this leads  to the  crux of  the                                                               
discord that has  led to this conference committee,  which is the                                                               
House's  general  desire to  have  a  lesser degree  of  spending                                                               
recognizing the  state's fiscal circumstances  at this  time than                                                               
the  Senate was  willing  to bring  forward.   The  purpose of  a                                                               
conference committee is to reconcile these differences.                                                                         
                                                                                                                                
CHAIR HAWKER  asked Commissioner Hanley, Department  of Education                                                               
and  Early  Development  (EED)  to testify.    He  indicated  the                                                               
committee  would  work from  the  HB  278  comparison used  as  a                                                               
section-by-section  analysis   of  the  bill  [entitled   HB  278                                                               
Comparison,"  with  a  footer  dated  4/22/2014  9:58  AM].    He                                                               
anticipated  that most  of the  dialogue  will be  on the  Senate                                                               
version of  the bill since  the Senate added  to the bill  with a                                                               
few exceptions.                                                                                                                 
                                                                                                                                
2:34:29 PM                                                                                                                    
                                                                                                                                
CHAIR HAWKER  directed attention to  the first item  of interest,                                                               
which  is  Senate  Section  2.   The  House  version  related  to                                                               
"secondary  school" courses  but  did not  limit  testing out  of                                                               
programs  to core  subjects.   The Senate  version allowed  "high                                                               
school" course credit  testing via mastery of core  subjects.  He                                                               
asked for the department's perspective.                                                                                         
                                                                                                                                
MIKE  HANLEY, Commissioner,  Department  of  Education and  Early                                                               
Development (EED), said both  versions accomplish similar things.                                                               
Currently, districts  are allowed to give  students opportunities                                                               
to test out of courses;  however, sometimes the opportunities are                                                               
available  and some  districts have  not allowed  testing out  of                                                               
courses to occur.   The governor's version [of  HB 278] contained                                                               
a  provision  to limit  testing-out  assessments  to core  areas.                                                               
This is largely  due to a sensitivity to  school districts, since                                                               
districts  would need  to develop  assessments for  these subject                                                               
areas, and a  recognition that some elective courses  do not lend                                                               
themselves  well to  a summative  assessment, such  as drama  and                                                               
debate.  Thus, the bill  would require districts to allow testing                                                               
out  for  core  areas  subjects,  such  as  reading,  writing  or                                                               
language  arts,   math,  social   studies,  science,   and  world                                                               
languages.  Other  courses were identified as  optional, he said.                                                               
The [House Section 2] allows testing-out for all courses.                                                                       
                                                                                                                                
2:36:27 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE   GATTIS  explained   that  the   House  Education                                                               
Standing Committee  disagreed with the department  on testing-out                                                               
of courses.   The House determined  that final exams exist  for a                                                               
topic  such as  pottery, and  the district  must administer  that                                                               
exam  to  students who  believe  they  have mastered  the  course                                                               
topic.   The  House worked  on  the assumption  that these  tests                                                               
already exist.   She  asserted that  numerous courses  identify a                                                               
certain level of proficiency so  testing-out should be allowed to                                                               
students who demonstrate that level of proficiency.                                                                             
                                                                                                                                
2:37:52 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  KITO  III  pointed  out another  issue  that  was                                                               
raised related  to students having the  ability to test out  of a                                                               
series of core courses.  For  example, students could test out of                                                               
Algebra I and enroll in Algebra II.   One concern was that if the                                                               
high  school  had  testing-out  options  for  every  core  class,                                                               
students  could effectively  test out  of high  school and  never                                                               
attend any classes.                                                                                                             
                                                                                                                                
CHAIR HAWKER  reminded members the  process will be  to introduce                                                               
the subjects, lay the groundwork, but  not debate the issues to a                                                               
conclusion at this point.                                                                                                       
                                                                                                                                
REPRESENTATIVE GATTIS, with respect  to testing-out, preferred to                                                               
allow students  who have  mastered the course  work test  out and                                                               
move on with their education and  not spend an additional year in                                                               
a classroom.                                                                                                                    
                                                                                                                                
CHAIR  MEYER  added  that  the Senate's  approach  was  to  allow                                                               
students  to test  out of  core topics.   Later,  districts could                                                               
expand  into other  topics since  it might  be burdensome  to ask                                                               
districts  to  provide testing-out  options  for  all courses  at                                                               
once.   He then  asked which term  the department  favored, using                                                               
the term "high  school" or "secondary school."   He further asked                                                               
whether high  school is defined  as grades 9-12 and  secondary is                                                               
defined as grades 7-12.                                                                                                         
                                                                                                                                
COMMISSIONER HANLEY  responded that traditionally  the department                                                               
uses the term "secondary school"  but they are synonymous.  After                                                               
verifying  that a  definition for  the terms  existed, he  agreed                                                               
that secondary school begins in  7th grade.  Thus, the department                                                               
would prefer  the term  "high school"  since the  department does                                                               
not allow  any option to test-out  of middle school courses.   In                                                               
further response to a question,  he agreed he would recommend the                                                               
Senate version that uses the term "high school."                                                                                
                                                                                                                                
2:40:46 PM                                                                                                                    
                                                                                                                                
CHAIR HAWKER  referred to House  Section 4, relating  to language                                                               
that the  state may not cede  any measure of autonomy  or control                                                               
over education  standards or assessments.   He asked  whether any                                                               
problems exist with this language.                                                                                              
                                                                                                                                
COMMISSIONER HANLEY answered no.   He said concern arose when the                                                               
state  joined  the  Smarter Balanced  Consortium  in  regards  to                                                               
finding  a   new  state  assessment   standard.     Although  the                                                               
perception was that the state  had relinquished its authority and                                                               
someone else would control the  state's standards, he assured the                                                               
committee that was never the  case.  This language [House Section                                                               
4] simply  clarifies that the  state should not give  up autonomy                                                               
to someone  outside the state.   The department would  agree with                                                               
that statement.                                                                                                                 
                                                                                                                                
2:41:50 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE GATTIS  asked why the Senate  removed the autonomy                                                               
language from its version.                                                                                                      
                                                                                                                                
COMMISSIONER HANLEY  interjected that  a conversation  ensued for                                                               
the removal  of the  language since  House Section  4 essentially                                                               
tells  the department  to "not  do something  which is  not being                                                               
done."   The Senate found  it unnecessary to retain  the autonomy                                                               
language;  however, he  said it  is  not harmful  to include  the                                                               
language.                                                                                                                       
                                                                                                                                
CHAIR HAWKER  commented that it seems  like this is an  area that                                                               
would not be an  area of concern.  He turned  to Senate Section 7                                                               
and the three subsections on  Internet funding, technical support                                                               
for the  student one-on-one program,  and funding  for innovative                                                               
approaches  to  learning.    He  characterized  this  as  a  more                                                               
substantive area,  with significant  financial consequences.   He                                                               
referred to these provisions as 7A, 7B  and 7C.  He asked for the                                                               
agency's perspective on 7A, the broadband Internet bandwidth.                                                                   
                                                                                                                                
COMMISSIONER  HANLEY  recognized  that additional  broadband  can                                                               
only be  a positive move, but  the negative aspect is  the fiscal                                                               
aspect.  The goal  is to have all schools attain  a minimum of 10                                                               
megabits,  which is  a  minimum  floor.   The  department has  no                                                               
concern  with  increasing the  amount  of  Internet broadband  to                                                               
schools statewide.                                                                                                              
                                                                                                                                
CHAIR  HAWKER highlighted  that the  issue on  the House  version                                                               
would be that the fiscal impact was $7.3 million.                                                                               
                                                                                                                                
2:45:24 PM                                                                                                                    
                                                                                                                                
CHAIR MEYER asked if the federal  matching funds are $4 for every                                                               
$1 the state puts towards this.                                                                                                 
                                                                                                                                
LINDA  THIBODEAU, Director,  Office of  the Director,  Libraries,                                                               
Archives  &  Museums, answered  that  the  e-rate is  a  discount                                                               
program, not necessarily providing matching  funds.  She said the                                                               
discount is  based on the poverty  level in any given  school and                                                               
may range  from 20-90  percent with  an average  in Alaska  of 70                                                               
percent.   She indicated  that in  off-the-road system  areas the                                                               
average is  80 percent.   For example, if  $100 is spent,  with a                                                               
poverty  rate  discount of  80  percent,  the federal  government                                                               
would provide $80 and the district would pay $20.                                                                               
                                                                                                                                
2:46:36 PM                                                                                                                    
                                                                                                                                
CHAIR MEYER offered his belief that  this would not only help the                                                               
schools but also helps the communities, villages, and region.                                                                   
                                                                                                                                
MS. THIBODEAU  agreed that schools  provide access to  the public                                                               
in off  hours and  some public school  libraries are  also public                                                               
libraries.                                                                                                                      
                                                                                                                                
CHAIR MEYER  asked whether concern  exists that  additional costs                                                               
are involved for provider services.                                                                                             
                                                                                                                                
MS. THIBODEAU answered that additional  costs would be related to                                                               
first-time cost for the vendor  to initially set up the equipment                                                               
and  put in  new  routers, wiring,  or  switches; however,  these                                                               
costs  are  also   eligible  for  the  discount.     The  Federal                                                               
Communications  Commission (FCC)  requires that  e-rate discounts                                                               
be made  each January and the  cost is a very  significant factor                                                               
in choosing which vendor is chosen for the school.                                                                              
                                                                                                                                
2:47:50 PM                                                                                                                    
                                                                                                                                
CHAIR  HAWKER asked  what drives  the $7.3  million fiscal  note,                                                               
whether it is the cost the state  would need to bear to bring all                                                               
the districts up to the 10 megabit level.                                                                                       
                                                                                                                                
MS.  THIBODEAU answered  that the  fiscal note  amount represents                                                               
the  cost  for  districts  below  10 megabits  per  second.    In                                                               
response to a  question, she agreed the state would  need to bear                                                               
that cost.                                                                                                                      
                                                                                                                                
CHAIR HAWKER  asked whether the  state could access  any matching                                                               
federal funds or additional federal grant funding.                                                                              
                                                                                                                                
MS. THIBODEAU answered no.                                                                                                      
                                                                                                                                
CHAIR HAWKER  asked for further clarification  on which districts                                                               
might be affected.                                                                                                              
                                                                                                                                
MS. THIBODEAU  did not specifically recall  individual districts;                                                               
however  she noted  that a  spreadsheet has  been distributed  to                                                               
committee members.                                                                                                              
                                                                                                                                
2:49:23 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE GATTIS  referred to  a survey  on bandwidth.   She                                                               
asked whether  the state  has identified  any alternative  if the                                                               
state  cannot  deliver  this.     She  offered  her  belief  that                                                               
technology will be the driver in educational delivery.                                                                          
                                                                                                                                
COMMISSIONER  HANLEY  explained  that   this  proposal  has  been                                                               
generated by the  legislature so he was unsure  if an alternative                                                               
exists.  He  pointed out the vision and goal  will be to increase                                                               
opportunities and  equalize them statewide and  this proposal has                                                               
the potential to accomplish this.                                                                                               
                                                                                                                                
REPRESENTATIVE  GATTIS   said  some  districts   have  inadequate                                                               
bandwidth and may  struggle.  She asked for  ways these districts                                                               
can be helped to creatively provide adequate Internet bandwidth.                                                                
                                                                                                                                
2:51:15 PM                                                                                                                    
                                                                                                                                
CHAIR  HAWKER turned  to Senate  Section  7B, to  the $3  million                                                               
funding for  technical support and  training for  students, known                                                               
as the one-to-one initiative.                                                                                                   
                                                                                                                                
COMMISSIONER HANLEY  answered that this initiative  is similar to                                                               
one  introduced  last  year  by   Senator  Dunleavy  to  increase                                                               
opportunities for  students.   He explained that  the goal  is to                                                               
change the way teaching occurs and technical devices are a tool.                                                                
                                                                                                                                
CHAIR  HAWKER  remarked  this  will  be  a  policy  call  by  the                                                               
committee  based  on the  legislature's  willingness  to fund  $3                                                               
million.                                                                                                                        
                                                                                                                                
COMMISSIONER HANLEY  answered yes.   He remarked that he  did not                                                               
see  a downside  to adding  technology into  schools in  the 21st                                                               
century;  however,  there is  a  cost  associated  with it.    In                                                               
further  response  to  a  question,   he  agreed  the  one-on-one                                                               
initiative  appears to  have a  fiscal impact  of $3  million per                                                               
year.                                                                                                                           
                                                                                                                                
2:52:30 PM                                                                                                                    
                                                                                                                                
SENATOR DUNLEAVY highlighted one  advantage will be that students                                                               
would no  longer be saddled  and weighed  down by backpacks.   As                                                               
districts  move  into  this technology,  all  textbooks  will  be                                                               
downloaded  onto tablets  and all  information and  communication                                                               
will  be  accomplished  using  these  devices.    In  fact,  this                                                               
technology  will revolutionize  Alaskan  classrooms and  research                                                               
will  be  done  by  students accessing  the  Internet  via  their                                                               
tablets, he said.                                                                                                               
                                                                                                                                
CHAIR HAWKER  referred to  the $3 million  fiscal note  and asked                                                               
what that  would cover,  for example, whether  it would  begin in                                                               
kindergarten  or in  the 11th  grade and  how widely  the program                                                               
would extend to across the state.                                                                                               
                                                                                                                                
SENATOR DUNLEAVY  answered that the Alaska  Association of School                                                               
Boards  could provide  detail, but  he envisioned  that districts                                                               
would be ready and willing to  make the transition.  He suggested                                                               
that the  districts that were  interested would have  ideas about                                                               
the grade level appropriate for implementation.                                                                                 
                                                                                                                                
2:54:57 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE KITO III said this  funding proposal did not arise                                                               
on the  House side.  He  asked for further clarification  of what                                                               
happens if  course materials are  on tablets and a  student drops                                                               
or otherwise damages the tablet and  all the course work is lost.                                                               
In addition,  although significant  information may  be available                                                               
on their  tablets, students might not  be able to take  notes and                                                               
utilize the information  in the same way as they  can using paper                                                               
tablets.  He  further inquired as to whether there  is a good way                                                               
to  include written  communication  on tablets  since writing  is                                                               
part of the course work.                                                                                                        
                                                                                                                                
REPRESENTATIVE  GATTIS asked  about  the  procurement process  in                                                               
terms  of   the  one-to-one  program,   noting  that   the  state                                                               
procurement  process can  be used  rather than  using the  Alaska                                                               
Association of School Boards (AASB)  as the default provider.  In                                                               
other words, an  open competitive bidding process  should be used                                                               
if a substantial number of tablets will be purchased.                                                                           
                                                                                                                                
2:57:17 PM                                                                                                                    
                                                                                                                                
CHAIR  HAWKER directed  attention  to Senate  Section  7C to  the                                                               
funding for encouraging innovative  approaches to learning with a                                                               
fiscal note of $750,000 for each of the next three years.                                                                       
                                                                                                                                
COMMISSIONER HANLEY  explained that  sometimes districts  need an                                                               
opportunity  to "get  the ball  rolling"  and the  implementation                                                               
strategy for these grants is  that they would be operated through                                                               
the department, which fits within  its mission to provide funding                                                               
to districts  with innovative  ideas to  improve education.   The                                                               
department  would  report  on   funding  expenditures  and  grant                                                               
outcomes, but he was unsure if  the department would speak to the                                                               
legislature  on  individual school  district  ideas.   Still,  it                                                               
doesn't  mean the  implementation strategies  will be  lost since                                                               
the  department would  report, which  will allow  for legislative                                                               
response.                                                                                                                       
                                                                                                                                
CHAIR HAWKER  asked how  the department  would allocate  funds to                                                               
assure  some  degree of  fairness  and  parity between  districts                                                               
throughout the state.                                                                                                           
                                                                                                                                
COMMISSIONER  HANLEY  answered  that  the  statute  offers  broad                                                               
language and  it would  be necessary  to stipulate  parameters to                                                               
address this  issue.   He acknowledged  the importance  to assure                                                               
integrity in  the process.   He  anticipated that  grants ranging                                                               
from $50 to  $150 thousand would be issued, but  the details have                                                               
not yet been fleshed out.                                                                                                       
                                                                                                                                
3:00:00 PM                                                                                                                    
                                                                                                                                
CHAIR  HAWKER directed  attention  to Senate  Section  14 to  the                                                               
correspondence study  programs.   He characterized this  as being                                                               
one  of  the more  controversial  provisions.   This  relates  to                                                               
individual learning  programs (ILPs) and the  ability to rollover                                                               
the student allotment or stipend for program materials.                                                                         
                                                                                                                                
COMMISSIONER HANLEY  answered that  the ILP  language is  not new                                                               
but  puts  regulatory  language  into   statute.    He  said  the                                                               
department  has not  weighed in  on the  ability to  rollover the                                                               
funds;  however  he also  understood  the  "use  it or  lose  it"                                                               
spending  philosophy that  might ensue,  rather than  identifying                                                               
needs and spending funds on them.   Certainly one pro would be to                                                               
avoid  parents having  a quick  rush to  spend money  since funds                                                               
will otherwise expire.                                                                                                          
                                                                                                                                
CHAIR  HAWKER  asked  whether  it  would  be  beneficial  to  ILP                                                               
students to allow rollover funding.                                                                                             
                                                                                                                                
COMMISSIONER  HANLEY answered  yes.   The stipends  are typically                                                               
determined  by  school  districts  and are  not  excessive.    He                                                               
pointed out  these decisions  are already  made by  the districts                                                               
and unexpended funds will revert back to the districts.                                                                         
                                                                                                                                
CHAIR  HAWKER commented  that the  fiscal  note is  indeterminate                                                               
since the department doesn't know.                                                                                              
                                                                                                                                
COMMISSIONER HANLEY  answered that the  note is zero  because the                                                               
correspondence students  would still be  funded at .80  with this                                                               
funding mechanism.                                                                                                              
                                                                                                                                
CHAIR  HAWKER asked  whether there  has been  testimony from  the                                                               
local school districts to indicate any support or opposition.                                                                   
                                                                                                                                
SENATOR DUNLEAVY  offered his  belief that  the Matanuska-Susitna                                                               
Borough School  District is in favor  of this.  He  also believed                                                               
that the Galena City School District  IDEA program is in favor of                                                               
it.  He  did not believe extensive comment has  been received but                                                               
certain areas have demonstrated support, he said.                                                                               
                                                                                                                                
COMMISSIONER HANLEY  said he hasn't received  any public comment,                                                               
but  he  did not  think  having  this  flexibility would  pose  a                                                               
problem for correspondence programs.                                                                                            
                                                                                                                                
3:03:43 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  KITO III  wondered  if there  is  any benefit  in                                                               
attaching a  cap on  the rollover amount.   He  expressed concern                                                               
that a  buildup could  result over  time if a  student is  in the                                                               
program for 12 years.                                                                                                           
                                                                                                                                
SENATOR DUNLEAVY  responded that it  would be difficult  for that                                                               
to occur  since the  ILP requires the  purchase of  equipment and                                                               
material  for  course work.    He  offered  his belief  that  the                                                               
process is  established.  In  addition, once the child  exits the                                                               
program,  any   residual  allotment  will  be   returned  to  the                                                               
district.  He did not foresee this happening.                                                                                   
                                                                                                                                
CHAIR HAWKER was reassured knowing  the funds would revert to the                                                               
districts.                                                                                                                      
                                                                                                                                
3:05:09 PM                                                                                                                    
                                                                                                                                
CHAIR  HAWKER referred  to Senate  Section 16,  noting the  House                                                               
proposes to prohibit  funds being spent on  the implementation of                                                               
"common core" standards  implementation for K-12.   He was unsure                                                               
if this reaffirms  current practice or if it  would constrain the                                                               
department's  ability   to  operate   and  develop   the  state's                                                               
curriculum.                                                                                                                     
                                                                                                                                
COMMISSIONER  HANLEY related  that  the  "common core"  standards                                                               
were  developed  as  a  national   movement.    Alaska  chose  to                                                               
reference  some   of  those  materials  but   developed  its  own                                                               
standards.  Thus, the department  never adopted the "common core"                                                               
standards.  He suggested that  this language is being proposed to                                                               
insure that the  state won't do so.   One thing he  noted is that                                                               
sponsor of  the component  was clear  that the  intent is  not to                                                               
inhibit the adoption of the state  standards.  Prior to the state                                                               
adopting  the higher-level  standards, some  districts had  taken                                                               
the initiative to adopt the  "common core" standards.  He pointed                                                               
out that  the expectations  from students is  similar in  the new                                                               
state standards  and the "common  core" standards  at graduation.                                                               
Thus,  it doesn't  create issues  for the  department, especially                                                               
given that the state trains  specifically to the Alaska standards                                                               
and  much of  the  verbiage  and standards  are  the  same.   For                                                               
example,  Anchorage  adopted  the "common  core"  standards  just                                                               
prior to  the state moving  forward with adopting  its standards.                                                               
He  hoped  the  intent  is  not  to  withdraw  support  from  any                                                               
districts that have moved ahead of the department.                                                                              
                                                                                                                                
CHAIR HAWKER  remarked that the commissioner  has referenced that                                                               
this is a "don't do what you're not doing measure."                                                                             
                                                                                                                                
REPRESENTATIVE   GATTIS  reported   that  the   [House  Education                                                               
Standing  Committee] worked  with the  administration on  several                                                               
areas.  She referred to Section 4 of the bill, which read:                                                                      
                                                                                                                                
     AS 14.03.083 is  amended by adding a  new subsection to                                                                    
     read:                                                                                                                      
                                                                                                                                
     (d)  The department  and the  state Board  of Education                                                                    
     and Early  Development may  not enter  into or  renew a                                                                    
     contract  or   agreement,  or  participate,   with  any                                                                    
     organization,  entity, group,  or consortium  after the                                                                    
     effective date of this section  that requires the state                                                                    
     to  cede  any  measure  of  autonomy  or  control  over                                                                    
     education  standards  and  assessments,  including  the                                                                    
     determination of passing scores.                                                                                           
                                                                                                                                
CHAIR HAWKER asked whether that was previous [language].                                                                        
                                                                                                                                
                                                                                                                                
REPRESENTATIVE GATTIS  agreed.  She  emphasized that the  goal is                                                               
to  not adopt  a national  standard, to  use state  standards and                                                               
tests for  the state  to be  in control  of education  in Alaska.                                                               
She  agreed that  the language  does  what the  state is  already                                                               
doing.                                                                                                                          
                                                                                                                                
COMMISSIONER HANLEY appreciated the work  that was done since the                                                               
language was previously  a little broad.  He  reiterated that the                                                               
current language is not an issue.                                                                                               
                                                                                                                                
CHAIR MEYER  indicated that  as the  commissioner states  this is                                                               
something  already being  done so  the  Senate did  not view  the                                                               
language as necessary and didn't include this language.                                                                         
                                                                                                                                
3:12:16 PM                                                                                                                    
                                                                                                                                
CHAIR HAWKER directed  attention to House Section  16, noting the                                                               
Senate version did  not include this provision, which  will add a                                                               
requirement that  the state Board of  Education recommend changes                                                               
to promote efficiency in the administration of public education.                                                                
                                                                                                                                
REPRESENTATIVE GATTIS said the intent  is to identify and promote                                                               
efficiency in the administration of public education.                                                                           
                                                                                                                                
COMMISSIONER HANLEY answered that this  provision was part of the                                                               
House CS  for HB 278.   Certainly,  the state Board  of Education                                                               
(BOE) does not  shy away from making  recommendations or offering                                                               
support.  He voiced concern over  the language as written in that                                                               
it requires the  BOE to make recommendations as to  the method of                                                               
education spending by state and  school districts that results in                                                               
efficiencies.    In reviewing  the  BOE's  duties, which  are  in                                                               
statute,  this language  seems  to fall  outside  its duties  and                                                               
purview.   He related  that BOE members  are policy  oriented and                                                               
are  not  experts in  methods  of  education spending  at  school                                                               
district levels  or making recommendations to  the legislature on                                                               
education  spending.   He  referred  to some  of  the duties  and                                                               
policies, for example,  that the BOE shall  adopt statewide goals                                                               
on regulations  regarding application and  award of grants.   The                                                               
current legislative report requires the  BOE to provide a summary                                                               
of  resolves  and  rationales in  support  of  policy  decisions,                                                               
program or  curriculum changes  made, and  additional information                                                               
relevant to the  efforts to improve education.  It  seems to be a                                                               
stretch  to  ask  the  state BOE  about  methods  of  educational                                                               
spending, since  it seems to be  outside of the BOE's  duties and                                                               
expertise.                                                                                                                      
                                                                                                                                
CHAIR HAWKER remarked that the  legislature retains the authority                                                               
to    appropriate,   which    is    solely   the    legislature's                                                               
responsibility.   He  suggested that  the commissioner  has given                                                               
the legislature a good grounding.                                                                                               
                                                                                                                                
REPRESENTATIVE GATTIS  remarked this  language came about  in the                                                               
latter hours and  didn't get a lot of discussion.   She said this                                                               
language does not represent a sticking point.                                                                                   
                                                                                                                                
CHAIR  HAWKER thanked  Representative  Gattis,  remarking he  was                                                               
beginning to see a way forward through this process.                                                                            
                                                                                                                                
3:16:19 PM                                                                                                                    
                                                                                                                                
CHAIR HAWKER referred to Senate Section  20 to the changes to the                                                               
debt  reimbursement program  percentages.   He acknowledged  that                                                               
this  is  a  serious component  of  HB  278  and  is one  of  the                                                               
contentious points between  the House and the  Senate versions of                                                               
the bill.                                                                                                                       
                                                                                                                                
CHAIR  MEYER  offered several  reasons  Section  20 needs  to  be                                                               
considered.  If the state  isn't fortunate enough to increase oil                                                               
production and doesn't build a  gas pipeline or control expenses,                                                               
the state  will have  used up  all of its  savings in  ten years.                                                               
The legislature  doesn't have  much control  over the  60/40 debt                                                               
bond reimbursement program, yet the  state must pay 60 percent of                                                               
bond debt reimbursement.  Thus,  the Senate's approach was not to                                                               
incentivize  the   60/40  bond  debt  reimbursement   program  by                                                               
flipping  it to  a 40/60  ratio.   The 70/30  program has  been a                                                               
little  more successful  because  the commissioner  has a  little                                                               
more control over how that money  is spent; however, when a local                                                               
school district passes bonds, the  state is liable for 70 percent                                                               
of the bonds  and local community is responsible  for 30 percent.                                                               
He deferred to  the commissioner; however, he  noted this program                                                               
is heavily used and it costs the state significant money.                                                                       
                                                                                                                                
CHAIR  HAWKER  explained that  the  70/30  program was  initially                                                               
established as a  balanced program that involved  both the school                                                               
debt and  school grant programs.   He asked about  the historical                                                               
outlook and  noted that the  legislature may  consider suspending                                                               
the program for several years.                                                                                                  
                                                                                                                                
COMMISSIONER  HANLEY   responded  that  the  70/30   has  several                                                               
parameters in  order for  a school to  qualify, which  includes a                                                               
square footage  ratio to  students, and  a demonstrated  need for                                                               
the program.   This program has  provided a powerful way  for the                                                               
schools to  maintain their facilities  and build  facilities when                                                               
needed.  The  60/40 program does not have those  parameters so it                                                               
allows  school districts  to work  outside  those square  footage                                                               
parameters.  They  also don't have to  demonstrate need; however,                                                               
he cautioned that these bonds are  not frivolous, but are used to                                                               
maintain school facilities.  He  suggested it might make sense to                                                               
protect  the integrity  of the  70/30  program more  so than  the                                                               
60/40 program.                                                                                                                  
                                                                                                                                
CHAIR HAWKER asked for a foundational  view of the history of the                                                               
debt program.                                                                                                                   
                                                                                                                                
3:22:33 PM                                                                                                                    
                                                                                                                                
ELIZABETH   SWEENEY  NUDELMAN,   Director,  School   Finance  and                                                               
Facilities   Section,   Department   of   Education   and   Early                                                               
Development  (EED), highlighted  the grant  program and  the debt                                                               
program.   The grant programs  use a competitive  process, noting                                                               
that projects are  ranked by the department,  and the legislature                                                               
funds  the  projects  in  rank  order.   One  list  covers  major                                                               
maintenance  and another  construction.   The lists  overlap, but                                                               
the grant list  allows all districts to participate  and the debt                                                               
program  is limited  to  municipalities  with bonding  abilities.                                                               
Although  municipalities can  bond, not  all municipalities  have                                                               
the  financial backing  to do  so.   Another overlap  between the                                                               
debt  and grant  programs  is the  participating  share based  on                                                               
qualifying square  footage and major maintenance  projects on the                                                               
debt program  is 30  percent, with the  state paying  70 percent.                                                               
The  participating share  in the  grant program  is based  on the                                                               
assessed value per [Average Daily  Membership] ADM.  The Regional                                                               
Education Attendance  Areas (REAAs)  are set  at two  percent and                                                               
each  district in  the grant  program has  a participating  share                                                               
that  ranges  from  5  percent  to  35  percent.    For  example,                                                               
Anchorage  has a  30  percent participating  share  in the  grant                                                               
program which equals the 30 percent in the debt program.                                                                        
                                                                                                                                
CHAIR HAWKER  suggested there is  a carefully  constructed inter-                                                               
relationship between these programs.                                                                                            
                                                                                                                                
3:25:06 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  KITO  III  noted  that the  change  in  the  debt                                                               
program decreases  the major split  from 70/30 to 60/40  with the                                                               
districts receiving  60 percent, but  having an ability to  go to                                                               
the grant list  and only pay the 30  percent participating share.                                                               
Thus the pressure  would be transferred from the  debt program to                                                               
the grant  program.  He  identified this as the  "balancing act."                                                               
For  example,   if  the  participating   share  was   changed  in                                                               
conjunction  with  the  debt reimbursement  rate,  municipalities                                                               
would  still  be using  the  debt  program  as opposed  to  being                                                               
incentivized  to  apply  for  the grant  program.    Again,  this                                                               
represents the balancing of the  two programs.  Therefore, if the                                                               
legislature  decreases the  debt reimbursement  rate on  the debt                                                               
program there  is a strong  possibility that  municipalities that                                                               
can obtain  a 30 percent  participating share will use  the grant                                                               
program,  then try  to get  on the  grant list  since there  is a                                                               
financial incentive for them to do so.                                                                                          
                                                                                                                                
CHAIR MEYER  asked for further clarification  on participation in                                                               
the grant  program [those on  the list]  since it seems  like the                                                               
incentive for  municipalities is  to try for  the 70/30  or 60/40                                                               
programs rather than to wait for a grant.                                                                                       
                                                                                                                                
COMMISSIONER HANLEY agreed that the list is extensive.                                                                          
                                                                                                                                
MS. NUDELMAN  estimated perhaps 150 projects  have currently been                                                               
evaluated and  are awaiting funding,  but it doesn't  address all                                                               
the projects  awaiting major maintenance  grants.   Districts are                                                               
limited to the  number of requests they can make  so they tend to                                                               
work on  their highest priorities, understanding  project funding                                                               
is limited.   Thus, many more projects are waiting  to get on the                                                               
list.                                                                                                                           
                                                                                                                                
REPRESENTATIVE KITO III  commented that it may be a  good idea to                                                               
suspend new construction; however, the  concern he has is related                                                               
to the major  maintenance list or the debt  program that supports                                                               
major maintenance.   He  offered his  belief that  suspending the                                                               
program  will  delay  routine   facility  maintenance  and  could                                                               
decrease the sustainability of those buildings.                                                                                 
                                                                                                                                
CHAIR  HAWKER  acknowledged  that suspending  the  60/40  program                                                               
would put more pressure on the grant and maintenance list.                                                                      
                                                                                                                                
REPRESENTATIVE KITO III agreed.                                                                                               
                                                                                                                                
3:28:29 PM                                                                                                                    
                                                                                                                                
CHAIR  MEYER asked  for further  clarification  on whether  major                                                               
maintenance approved by the department  is eligible for the 70/30                                                               
program or if it would fall under the 60/40 program.                                                                            
                                                                                                                                
MS.  NUDELMAN  answered  that   currently  major  maintenance  is                                                               
eligible  for the  70/30  program,  and items  such  as roof  and                                                               
boiler repairs fall under the 70/30 debt program.                                                                               
                                                                                                                                
3:29:19 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  GATTIS  said  is   important  to  keep  buildings                                                               
maintained and suggested retaining the maintenance aspect.                                                                      
                                                                                                                                
SENATOR   HOFFMAN  commented   that   the   problem  with   major                                                               
maintenance  is that  although  the list  continues  to grow  the                                                               
state has not been funding anything on the list.                                                                                
                                                                                                                                
3:30:36 PM                                                                                                                    
                                                                                                                                
CHAIR HAWKER directed attention to  Senate Section 23, related to                                                               
the residential school stipend with  a $2.25 million fiscal note,                                                               
which is not in the House version.                                                                                              
                                                                                                                                
COMMISSIONER  HANLEY   explained  that  the  state   has  several                                                               
residential  schools,  which  are  funded  just  like  any  other                                                               
schools through  the BSA and  the [foundation]  formula; however,                                                               
these  schools   also  receive  a   stipend  for   a  residential                                                               
component.                                                                                                                      
                                                                                                                                
CHAIR  HAWKER asked  whether the  residential  school stipend  is                                                               
funded through the BSA or the foundation formula.                                                                               
                                                                                                                                
COMMISSIONER  HANLEY  answered  that  it is  funded  through  the                                                               
foundation formula.                                                                                                             
                                                                                                                                
CHAIR   HAWKER  clarified   that   the   foundation  funding   is                                                               
substantially more than just the BSA.                                                                                           
                                                                                                                                
COMMISSIONER HANLEY explained that  residential schools receive a                                                               
boarding stipend to help cover  the cost of housing, feeding, and                                                               
monitoring students for 24 hours per  day.  Last year, a proposal                                                               
was before  the legislature to  increase that funding  to reflect                                                               
actual  costs.    The  legislature   increased  the  funding  for                                                               
residential components, but  did not fully fund it.   He said the                                                               
$2.2 million will  raise the stipend to approach  actual costs to                                                               
house students, noting  the rate for the  most expensive district                                                               
for a residential student's room and  board is at $59 per day and                                                               
the lowest is at $40 per day.                                                                                                   
                                                                                                                                
CHAIR  HAWKER asked  whether  the $2.25  million  will bring  the                                                               
funding  level   up  to  last  year's   recommendation  that  was                                                               
partially funded.                                                                                                               
                                                                                                                                
COMMISSIONER HANLEY answered  yes.  In response to  a question he                                                               
said it  does not  exceed the  department's request  but reflects                                                               
the exact request by Senator Coghill and Representative Gattis.                                                                 
                                                                                                                                
3:33:26 PM                                                                                                                    
                                                                                                                                
CHAIR HAWKER  turned to  Senate Section  24, which  will increase                                                               
the required  local contribution from a  2.65 mill rate to  a 2.8                                                               
mill  tax  levy.    He   asked  Commissioner  Hanley  to  provide                                                               
background information.   He  referred to  a handout  in members'                                                               
packets entitled  "Department of  Education &  Early Development,                                                               
Prepared 4/19/2014, FN:   Increase to required Mill  rate 2.65 to                                                               
2.8."  He  stated that this chart identifies the  cost per school                                                               
district.                                                                                                                       
                                                                                                                                
COMMISSIONER  HANLEY answered  that  the mill  rate averaged  2.9                                                               
mills  prior to  a change  that  occurred two  years ago.   At  a                                                               
certain point new  properties came in with a mill  rate of 2.0 so                                                               
districts fell between 2.0 and  4.0 depending on how quickly they                                                               
were growing, the  value of property, and the  property tax rate.                                                               
Thus, on average the mill rate was  about 2.9.  Two years ago the                                                               
legislature chose to  take on more of the share.   The basic need                                                               
is determined by local and state contribution, he said.                                                                         
                                                                                                                                
CHAIR  HAWKER  interjected that  this  change  was adopted  under                                                               
Senate  Bill  182  under  actions  taken  by  the  House  Finance                                                               
Standing Committee on 4/14/2012.                                                                                                
                                                                                                                                
COMMISSIONER HANLEY  explained that the mill  rate represents the                                                               
local  contribution of  the  basic need  for  schools and  school                                                               
districts.   In April  2012, the  legislature chose  to establish                                                               
the mill rate at 2.65 for  all districts.  This means funding for                                                               
the basic need  was shifted to the state, requiring  the state to                                                               
pick  up an  additional  $20 million  from local  municipalities.                                                               
This proposal would shift it back to about $11.9 million.                                                                       
                                                                                                                                
CHAIR  HAWKER  remarked  that  the 2012  bill  was  a  gratuitous                                                               
transfer of  school funding responsibility from  the local school                                                               
districts to the state at $20  million.  This provision would put                                                               
the  responsibility of  approximately $12  million back  on local                                                               
school districts  and reduce  the state's  cost of  funding basic                                                               
education.  He  characterized it as a basic  cost-shifting with a                                                               
net benefit  to the state.   He directed attention to  Mr. Teal's                                                               
aforementioned  spreadsheet  to  a footnote  [Senate  Section  24                                                               
proposes  increasing  Required  Local   Effort  (RLE)  from  2.65                                                               
[mills] to  2.8 [mills]].   This provision would increase  RLE by                                                               
approximately $12  million and reduce  state funding by  the same                                                               
amount, he said.                                                                                                                
                                                                                                                                
COMMISSIONER HANLEY agreed  that it is a  cost-shift; however, it                                                               
will  not change  the amount  of  the overall  funding to  school                                                               
districts.                                                                                                                      
                                                                                                                                
3:38:29 PM                                                                                                                    
                                                                                                                                
CHAIR MEYER  said he has  asked his staff to  provide comparisons                                                               
using different mill  rates, such as 2.7, 2.75, or  2.9 since the                                                               
Senate felt  this proposed number  was part way between  the 2.65                                                               
and  the average  rate in  2012.   He  recalled at  the time  the                                                               
legislature  changed  the rationale  for  funding,  the vote  was                                                               
close, and some  uncertainty existed among the  members about the                                                               
overall effect of  the change.  Now that the  Senate has had more                                                               
time  to consider  this matter,  he considered  that perhaps  the                                                               
state may have  taken on more of the burden  than it should have.                                                               
It now  appears that communities  should carry more of  a burden.                                                               
Certainly, it's up to communities  to decide whether they want to                                                               
voluntarily  provide more  funding in  the BSA  process; however,                                                               
municipalities should contribute more  to education so the burden                                                               
is not on the state, he said.                                                                                                   
                                                                                                                                
CHAIR HAWKER  referred to  a summary  sheet being  distributed to                                                               
members [entitled,  Department of Education &  Early Development,                                                               
Prepared  4/11/2014,  Request  Local  Effort  adjustment],  which                                                               
shows a spectrum of rates.   In response to a question, he agreed                                                               
the mill rate was set at 4.0 for many years.                                                                                    
                                                                                                                                
CHAIR HAWKER  further clarified  that the  average for  the older                                                               
property mill rate  was set at 4.0 and newer  property was set at                                                               
2.0, and that the average mill rate was 2.9.                                                                                    
                                                                                                                                
COMMISSIONER HANLEY  agreed.  He  related his  understanding that                                                               
the  number was  chosen  from the  municipality  with the  lowest                                                               
effective  mill  rate, which  was  the  MSB's  rate at  the  time                                                               
although he admitted he did not participate in the discussion.                                                                  
                                                                                                                                
CHAIR HAWKER restated that the average mill rate was 2.9.                                                                       
                                                                                                                                
3:41:58 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  KITO  III  noted   that  the  overall  effect  of                                                               
increasing the  mill rate will  be an increase on  local property                                                               
taxes since it will place more of a burden on local government.                                                                 
                                                                                                                                
CHAIR  MEYER  pointed  out  that  municipalities  have  a  choice                                                               
whether to increase property taxes or  sales tax in areas with an                                                               
established sales tax.                                                                                                          
                                                                                                                                
REPRESENTATIVE  GATTIS   explained  that   the  Matanuska-Susitna                                                               
Borough (MSB)  doesn't have a sales  tax so it would  result in a                                                               
property tax increase.                                                                                                          
                                                                                                                                
CHAIR  HAWKER  identified Section  24  as  one  of the  items  of                                                               
contention  between the  House  and the  Senate  versions of  the                                                               
bill.                                                                                                                           
                                                                                                                                
CHAIR HAWKER related that Senate  Section 25 allows for voluntary                                                               
local contributions  and the  House does  not find  this to  be a                                                               
problem.                                                                                                                        
                                                                                                                                
3:44:10 PM                                                                                                                    
                                                                                                                                
CHAIR HAWKER directed attention to  Senate Section 26, which will                                                               
raise  the correspondence  study  factor from  80  percent to  90                                                               
percent of the BSA with a $6.1 million increment.                                                                               
                                                                                                                                
COMMISSIONER  HANLEY stated  that  the department  is neutral  on                                                               
this issue.   The $6.1 million  in funding would go  to districts                                                               
for their correspondence programs.                                                                                              
                                                                                                                                
3:45:17 PM                                                                                                                    
                                                                                                                                
SENATOR DUNLEAVY observed  that a theme runs through  the bill to                                                               
incentivize   lower   cost   approaches  to   education.      The                                                               
correspondence   homeschool   concept    in   several   districts                                                               
represents a means  to educate kids at a much  lower rate than in                                                               
the  classroom.   The state  developed a  system in  the past  50                                                               
years that  provides schools in every  community, with classrooms                                                               
of approximately 25 students.   The fiscal situation doesn't look                                                               
as  promising  and as  the  state  faces fiscal  uncertainty  the                                                               
question arises  as to how  to pivot  the system to  reduce costs                                                               
yet maintain a quality education for kids.                                                                                      
                                                                                                                                
SENATOR  DUNLEAVY  related  a  scenario  to  illustrate  how  the                                                               
legislature   impacts   local   districts  either   by   creating                                                               
incentives  or  else  by penalizing  districts  via  legislation.                                                               
Senate  Section   26  was   developed  to   incentivize  low-cost                                                               
approaches.      What   complicates    this   process   is   that                                                               
correspondence  students have  not been  viewed as  public school                                                               
students even though  they are part of the  public school system.                                                               
In  some  districts hybrid  programs  exist  and some  homeschool                                                               
students take some  courses at the brick and mortar  schools.  He                                                               
characterized  this approach  as providing  more flexibility  for                                                               
the districts,  especially those  with a diverse  population, and                                                               
to  offer a  different approach  to engage  more families.   Many                                                               
homeschool students  have statistically  remained outside  of the                                                               
system.    This proposal  attempts  to  incorporate a  lower-cost                                                               
program  and incentivize  it  to see  how  districts and  schools                                                               
respond.   He  viewed  Senate Section  26 as  a  means to  reduce                                                               
costs.                                                                                                                          
                                                                                                                                
3:48:48 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  KITO  III  said  it  is  important  to  not  over                                                               
incentivize programs that  may take emphasis away  from the state                                                               
providing education for students in neighborhood schools.                                                                       
                                                                                                                                
SENATOR  DUNLEAVY   said  the   district  receives   funding  and                                                               
determines the  distribution so it  should help  the neighborhood                                                               
schools.                                                                                                                        
                                                                                                                                
CHAIR MEYER asked when this issue was last raised.                                                                              
                                                                                                                                
COMMISSIONER  HANLEY   reported  that  the   [foundation  formula                                                               
funding factor for correspondence  students] was initially set at                                                               
.80  when the  program was  switched from  the statewide  Alyeska                                                               
correspondence  program in  the early  2000s.   In response  to a                                                               
question, he  agreed that  .80 was the  initial number  chosen in                                                               
2000.                                                                                                                           
                                                                                                                                
SENATOR   DUNLEAVY   asked   for   further   clarification   that                                                               
[foundation formula  funding factor for  correspondence students]                                                               
was never funded at 1.0 but has always been set at .80.                                                                         
                                                                                                                                
COMMISSIONER  HANLEY explained  that  it  was funded  differently                                                               
when the  state operated a statewide  correspondence program, but                                                               
the funding  factor shifted to  .80 when  correspondence programs                                                               
[were offered by districts.]                                                                                                    
                                                                                                                                
CHAIR HAWKER asked for clarification when that change occurred.                                                                 
                                                                                                                                
COMMISSIONER HANLEY  was unsure of  the exact date,  but believed                                                               
it was in the early 2000s.                                                                                                      
                                                                                                                                
3:50:22 PM                                                                                                                    
                                                                                                                                
CHAIR HAWKER  turned to Senate  Section 27, which  was originally                                                               
in  the governor's  bill.   This language  would allow  a charter                                                               
school with  at least  75 students  to obtain  additional funding                                                               
for the first  three years.  Currently, charter  schools obtain a                                                               
supplement for the  first year only.  This  proposal would change                                                               
the formula  by removing language  limiting the  adjusted student                                                               
count for a charter school to  95 percent of the student rate for                                                               
a school that has 150 or more students.                                                                                         
                                                                                                                                
3:51:19 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE GATTIS clarified that  the governor's proposal was                                                               
accepted  in  the House  Education  Standing  Committee, but  was                                                               
deleted in House Finance Standing  Committee, probably due to the                                                               
cost.                                                                                                                           
                                                                                                                                
COMMISSIONER  HANLEY  related that  the  fiscal  impact would  be                                                               
$483,000.                                                                                                                       
                                                                                                                                
CHAIR HAWKER  pointed out  it is  listed on  Mr. Teal's  chart as                                                               
formula changes for charter school size factor at $483,900.                                                                     
                                                                                                                                
3:51:48 PM                                                                                                                    
                                                                                                                                
SENATOR DUNLEAVY  offered his  belief this is  an attempt  by the                                                               
Senate to  reach out to a  diverse group of Alaskans  who want to                                                               
be engaged  in public  education.   Although charter  schools are                                                               
public schools  they have struggled  to gain a foothold.   Senate                                                               
Section  27 recognizes  that charter  schools provide  a valuable                                                               
approach to education to engage  more students each year and this                                                               
helps them obtain adequate funding.                                                                                             
                                                                                                                                
3:52:36 PM                                                                                                                    
                                                                                                                                
CHAIR HAWKER, referring to House  Sections 20-22, stated he would                                                               
set  aside the  BSA issues  for now.   He  directed attention  to                                                               
House  Sections 23  and 24,  which he  characterized as  a policy                                                               
call on teacher tenure.                                                                                                         
                                                                                                                                
REPRESENTATIVE GATTIS suggested that  some teacher tenure studies                                                               
exist and it might be possible to look at teacher tenure.                                                                       
                                                                                                                                
3:53:40 PM                                                                                                                    
                                                                                                                                
The committee took a brief at-ease from 3:53 p.m. to 3:56 p.m.                                                                  
                                                                                                                                
3:56:26 PM                                                                                                                    
                                                                                                                                
CHAIR MEYER stated  that although teacher tenure  is not included                                                               
in the Senate version of the  bill, teacher tenure is of interest                                                               
to the Senate.                                                                                                                  
                                                                                                                                
3:57:44 PM                                                                                                                    
                                                                                                                                
CHAIR HAWKER  directed attention to  House Section 47  and Senate                                                               
Section  55, to  the two  salary and  benefits studies  proposed.                                                               
The  House  study would  be  due  on  January  1, 2016,  but  the                                                               
Senate's took the  approach of using an LB&A study  with a report                                                               
due January 1, 2016.                                                                                                            
                                                                                                                                
COMMISSIONER HANLEY deferred to Senator Fairclough.                                                                             
                                                                                                                                
3:58:42 PM                                                                                                                    
                                                                                                                                
SENATOR ANNA  FAIRCLOUGH, Alaska  State Legislature, as  Chair of                                                               
the Legislative Budget & Audit  Committee, stated that the Senate                                                               
Finance  Committee considered  previous  LB&A  studies that  were                                                               
underway  to review  health care  benefits statewide.   A  Senate                                                               
Finance  subcommittee held  over the  past interim  evaluated the                                                               
largest  cost  drivers for  all  school  districts statewide  and                                                               
identified health  care costs  as the largest  driver.   The LB&A                                                               
Committee has gathered  considerable information about individual                                                               
benefits in  each school district.   The question was  whether to                                                               
build on  the current  information or  ask the  administration to                                                               
restart the process.  She  deferred to the committee with respect                                                               
to the  approach to take.   As Chair of the  Legislative Budget &                                                               
Audit Committee,  stated that the  LB&A study on  health benefits                                                               
could be built on as a  cost savings opportunity.  She noted that                                                               
the House will chair the LB&A committee next legislature.                                                                       
                                                                                                                                
CHAIR HAWKER related his understanding  that it would be a pretty                                                               
substantial cost savings issue.                                                                                                 
                                                                                                                                
SENATOR  FAIRCLOUGH  answered  that  the  proposed  overall  cost                                                               
savings were estimated  at $45 million, but as  the committee dug                                                               
deeper  it  was the  Senate  Finance  subcommittee's position  to                                                               
honor  collective  bargaining.     The  contractors  had  used  a                                                               
combined  approach.     The  committee   broke  the   costs  into                                                               
individual years.                                                                                                               
                                                                                                                                
CHAIR  HAWKER  interjected that  he  was  actually interested  in                                                               
further clarification on the cost  of performing the studies.  He                                                               
recalled  that if  the DOA  performed the  studies it  could cost                                                               
$600,000, but  if the LB&A  committee continued the costs  may be                                                               
closer to $100,000.                                                                                                             
                                                                                                                                
SENATOR FAIRCLOUGH advised  that the money has  been invested and                                                               
LB&A  estimated   it  could  complete  the   initial  survey  for                                                               
$150,000.                                                                                                                       
                                                                                                                                
CHAIR HAWKER  asked whether the  LB&A's work had been  done under                                                               
the Chair's signature authority.                                                                                                
                                                                                                                                
SENATOR  FAIRCLOUGH  related  that the  Senate  Finance  Standing                                                               
Committee  has been  housing the  contract  itself, with  Suzanne                                                               
Armstrong  as   the  project  coordinator,  but   LB&A  has  been                                                               
coordinating it.                                                                                                                
                                                                                                                                
4:01:40 PM                                                                                                                    
                                                                                                                                
SENATOR DUNLEAVY  explained that  the work was  the result  of SB
90, which  passed the legislature  in 2013, but the  study needed                                                               
more time more time to flesh out the information.                                                                               
                                                                                                                                
REPRESENTATIVE GATTIS  reported that  the House  doesn't consider                                                               
this to be  a sticking point.  She stated  that this language was                                                               
put  in as  a recommendation  by the  Sustainable Education  Task                                                               
Force during  the House Finance committee  meetings; however, the                                                               
House doesn't have  any preference for which  agency performs the                                                               
studies.                                                                                                                        
                                                                                                                                
REPRESENTATIVE KITO  III asked for  further clarification  on the                                                               
advertising process and how the contracts are solicited.                                                                        
                                                                                                                                
SENATOR FAIRCLOUGH  explained that a legislative  team consisting                                                               
of  three to  five members  will identify  the criteria  and work                                                               
with the  procurement officer in  the Legislative  Affairs Agency                                                               
on a  request for  proposal (RFP) which  would be  public noticed                                                               
and distributed.                                                                                                                
                                                                                                                                
4:04:00 PM                                                                                                                    
                                                                                                                                
CHAIR HAWKER  remarked that  he appreciated  the clarity  and can                                                               
see a  route forward.  He  skipped past Sections 50  and 51 which                                                               
are studies  proposed for the  foundation formula,  including the                                                               
district cost factor and the  school size factor, noting this has                                                               
been  quite contentious  in  HB 278.    He suggested  substantial                                                               
interest   exists   within   the   legislature   to   conduct   a                                                               
comprehensive review of  the foundation formula and  not limit it                                                               
to just a few variables.                                                                                                        
                                                                                                                                
4:05:18 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  GATTIS asked  for  further  clarification on  the                                                               
January 31, 2017 reporting date  and whether it should be January                                                               
31, 2016.                                                                                                                       
                                                                                                                                
CHAIR HAWKER referred to Senate  Section 52, which directs EED to                                                               
do  a  study  on developing  energy  and  engineering  efficiency                                                               
statewide  for  school  design and  construction  with  a  fiscal                                                               
impact of $620,000.                                                                                                             
                                                                                                                                
COMMISSIONER  HANLEY  answered  that  this will  require  EED  to                                                               
consider prototypical  designs with the idea  of enhancing energy                                                               
efficiency  in the  state, potentially  with models  that can  be                                                               
expanded.   He characterized this  study as being similar  to the                                                               
LB&A studies in that the EED would likely contract this out.                                                                    
                                                                                                                                
CHAIR HAWKER characterized Senate Section  52 as a funding policy                                                               
call.                                                                                                                           
                                                                                                                                
4:07:13 PM                                                                                                                    
                                                                                                                                
CHAIR HAWKER  directed attention to  Senate Section 53,  which is                                                               
an  expansion   of  the  ANSEP's   [Alaska  Native   Science  and                                                               
Engineering Program's] STEM program  into the middle schools with                                                               
a termination date of June  30, 2017, which essentially creates a                                                               
pilot  program,  noting  the  ANSEP   program  has  been  a  very                                                               
successful model.                                                                                                               
                                                                                                                                
COMMISSIONER HANLEY  concurred that the  STEM program has  been a                                                               
very  successful model.   Although  ANSEP  is not  listed in  the                                                               
bill,  it is  a  model  that fits  the  STEM [Science  Technology                                                               
Engineering and  Math] program  very well;  however, it  does not                                                               
preclude another program from being considered.                                                                                 
                                                                                                                                
4:08:48 PM                                                                                                                    
                                                                                                                                
SENATOR  DUNLEAVY  related that  the  emphasis  in middle  school                                                               
would be to come out of middle school with Algebra I concepts.                                                                  
                                                                                                                                
COMMISSIONER HANLEY answered  that is correct.  In  response to a                                                               
question,  he acknowledged  that  it has  encouraged raising  the                                                               
bar.                                                                                                                            
                                                                                                                                
CHAIR HAWKER pointed  out that the STEM program has  a $3 million                                                               
fiscal   impact   and   is  on   Mr.   Teal's   spreadsheet   for                                                               
consideration.  This concludes the  inventory of the policies and                                                               
points that require additional conversation, he said.                                                                           
                                                                                                                                
4:10:10 PM                                                                                                                    
                                                                                                                                
CHAIR MEYER  turned to Senate  Section 54.   He related  that the                                                               
governor   previously  recommended   removing  the   High  School                                                               
Graduation Qualifying Exam  (HSGQE) exam, but the  Senate took it                                                               
further  and  allowed  students  to get  their  diploma  if  they                                                               
initially failed the exit exam.                                                                                                 
                                                                                                                                
COMMISSIONER HANLEY agreed that the  goal is to remove the HSGQE.                                                               
The language also mirrors the language  that was in a House bill.                                                               
The governor  had initially planned  to phase out the  HSGQE over                                                               
three years and this language just  is another way to achieve the                                                               
same result.   In doing so, it would allow  students who have met                                                               
all other criteria and received  their certificate of achievement                                                               
to receive a diploma.                                                                                                           
                                                                                                                                
CHAIR HAWKER related his understanding  that if this language was                                                               
retained  and  the  diploma was  issued  retroactively  that  the                                                               
requirements would still need to be completed for graduation.                                                                   
                                                                                                                                
COMMISSIONER  HANLEY agreed  that  these students  would need  to                                                               
have  met all  other graduations  requirements, but  are students                                                               
who simply did not pass a portion of the exit exam.                                                                             
                                                                                                                                
4:12:44 PM                                                                                                                    
                                                                                                                                
CHAIR  HAWKER returned  to the  core school  funding approach  to                                                               
identify  the  differences  that exist  between  the  legislative                                                               
bodies.  He  asked Mr. Teal to explain the  different between the                                                               
House and  Senate versions of HB  278.  He stated  that the House                                                               
version used  a multiple-year approach  on a BSA increase  with a                                                               
smaller  amount funded  outside the  BSA [formula]  in year  one.                                                               
The Senate's  approach was  to provide  three years  of committed                                                               
funding outside the [BSA] formula.                                                                                              
                                                                                                                                
MR. TEAL  agreed with the  summary.   He said people  could argue                                                               
whether  one approach  is  better than  the  other; however,  the                                                               
primary difference is that the  BSA is typically considered to be                                                               
a  permanent  increase.    Technically, it  is  not  a  permanent                                                               
increase since the BSA can always  be changed downward.  The same                                                               
would be true for a one-time increase.   He did not recall a one-                                                               
time  increase  that has  ever  been  removed and  typically  the                                                               
increase  has been  rolled  into the  BSA;  however, he  reminded                                                               
members that one legislature can't bind any future legislatures.                                                                
                                                                                                                                
CHAIR  HAWKER  said  that  the   Senate's  approach  is  easy  to                                                               
understand since it is to fund  $100 million each year outside of                                                               
the BSA.   Since  the approximate conversion  rate is  that every                                                               
$25 million increase  outside the BSA equates to  a $100 increase                                                               
in the BSA,  this essentially means that $100 million  in each of                                                               
those three  years roughly  equates to  a $400  [dollar] increase                                                               
[to  the BSA]  for  each of  the  next three  years.   The  House                                                               
version  was not  quite  as  generous, he  said.    He asked  for                                                               
further clarification on  how the House BSA  increase works since                                                               
it may be a little confusing.                                                                                                   
                                                                                                                                
MR. TEAL  referred to his spreadsheet  to the House FY  15 column                                                               
with a  line item of  $30 million [$30,000.0], whereas  the House                                                               
column  contains $30  million  outside the  BSA  and $45  million                                                               
[$45,832.2] as  a BSA increase,  or a  $185 increase to  the BSA,                                                               
bringing the  total BSA to  $5,865.  However, converting  the $30                                                               
million  to a  BSA equivalent  means that  the $76  million total                                                               
distributed according to the formula  converts to a $303 increase                                                               
in the  BSA [listed as  the Approximate BSA  Equivalent (Dollars)                                                               
on the spreadsheet.]                                                                                                            
                                                                                                                                
CHAIR  HAWKER, referring  to the  spreadsheet, asked  for further                                                               
clarification that  the [BSA increase]  of $185  includes rolling                                                               
past one-time funding of $25 million.                                                                                           
                                                                                                                                
MR. TEAL  answered that is  correct.  The governor's  proposal to                                                               
include  $25  million  was deleted  from  the  operating  budget;                                                               
however, it was replaced in the  House version of HB 278 with $30                                                               
million outside  the BSA.   The Senate language increase  of $100                                                               
million  outside  the   BSA  plus  changes  in   the  formula  to                                                               
correspondence and  charter schools brings the  Senate's total to                                                               
$106 million, which equates to a $427 increase to the BSA.                                                                      
                                                                                                                                
4:18:12 PM                                                                                                                    
                                                                                                                                
CHAIR  HAWKER  asked  for further  clarification  on  the  growth                                                               
factor inside the BSA funding.                                                                                                  
                                                                                                                                
MR.  TEAL  reported  that  the House  version  [inside  the]  BSA                                                               
funding  increases  by another  $58  in  FY  16, bringing  it  to                                                               
$5,923,  but  the cost  drops  in  the total  distributed  amount                                                               
according  to the  formula because  of the  reduction to  the $30                                                               
million outside  the BSA.  He  suggested thinking of it  as going                                                               
from  $45 million  inside the  BSA to  $60 million  in FY  16 and                                                               
bringing that up to $75 million in FY 17.                                                                                       
                                                                                                                                
CHAIR  HAWKER related  his understanding  that the  current House                                                               
version  does not  make  a  commitment for  any  outside the  BSA                                                               
amount.                                                                                                                         
                                                                                                                                
MR. TEAL  answered that is the  reason there is a  reduction from                                                               
$75 million  to $60 million.   The net  is $75 million  minus $30                                                               
million, which drops  to $45 million, but raising the  BSA by $58                                                               
adds in the additional $14 million.   The House has more movement                                                               
but  it  is  understandable  if   one  thinks  of  it  simply  as                                                               
increasing  the  BSA by  $185,  then  another $58  increase,  and                                                               
another $58  increase, whereas the  Senate increment  is constant                                                               
for three years.                                                                                                                
                                                                                                                                
CHAIR  HAWKER highlighted  the House  Finance Standing  Committee                                                               
took  a very  measured  approach  to conserve  as  much money  as                                                               
possible  while   providing  adequate  investment  in   the  BSA,                                                               
although  he  acknowledged   it  doesn't  make  as   much  of  an                                                               
investment  as the  Senate does.    The House  version wanted  to                                                               
split some of it between "inside and outside" the BSA, he said.                                                                 
                                                                                                                                
4:20:44 PM                                                                                                                    
                                                                                                                                
CHAIR  MEYER commented  that the  public requested  stability and                                                               
this gives schools $427 in  increased funding that can be counted                                                               
on  for the  next three  years.   Although  the Senate's  funding                                                               
level  is  higher than  the  House,  the  House could  still  add                                                               
additional funding  outside of the  formula funding in FY  16 and                                                               
FY 17 to  increase their education funding.  The  Senate does not                                                               
intend  to  further   fund  the  formula,  but   will  study  the                                                               
foundation formula over  the next three years and try  to fix it.                                                               
Since the process  is significant, it will take  several years to                                                               
accomplish.   In  addition,  the  Senate's goal  is  to hold  the                                                               
districts harmless for the next  three years while the foundation                                                               
formula is studied  and avoid an annual battle.   This represents                                                               
the Senate's  attempt to adequately  fund education for  the next                                                               
three years.                                                                                                                    
                                                                                                                                
4:22:12 PM                                                                                                                    
                                                                                                                                
CHAIR HAWKER emphasized the House's  approach was to commit to an                                                               
increase to  the BSA for the  next three years, but  the Senate's                                                               
approach makes a  committed and forward funded  approach using an                                                               
outside the BSA [formula] mechanism to fund education.                                                                          
                                                                                                                                
4:22:32 PM                                                                                                                    
                                                                                                                                
SENATOR  DUNLEAVY  explained  the underlying  philosophy  in  the                                                               
Senate's approach  has been to  support the  neighborhood schools                                                               
while   exploring   other   approaches   such   as   residential,                                                               
correspondence, charter  schools, and  home study programs.   The                                                               
Senate's approach would provide  three years of sustained funding                                                               
at  a  level to  meet  the  needs  of  the mainstay  schools  and                                                               
districts while at  the same time exploring  other approaches and                                                               
opportunities.    At  the  same time  the  studies  will  provide                                                               
information and an understanding for future decisions.                                                                          
                                                                                                                                
SEANTOR  DUNLEAVY   said  the   House  and   Senate's  [Standing]                                                               
Education Committees  have looked at funding  and sustainability.                                                               
Mr. Teal has identified that by  2024 three items may consume the                                                               
state's entire budget.  He  recalled a prior funding shortfall in                                                               
the  1980s and  subsequently funding  began to  fall apart.   The                                                               
state  could  currently  be  hemmed in  by  price  and  declining                                                               
production  that  could  result  in  an  unsustainable  level  of                                                               
funding.    Instead  of  waiting for  an  exhaustion  of  funding                                                               
reserves, he suggested the  legislature could make determinations                                                               
and see  what can be  accomplished to lower educational  costs by                                                               
examining  different approaches  while still  trying to  maintain                                                               
the quality of education.                                                                                                       
                                                                                                                                
CHAIR HAWKER remarked that that was a well-stated explanation.                                                                  
                                                                                                                                
4:25:13 PM                                                                                                                    
                                                                                                                                
SENATOR HOFFMAN  also reminded  the committee  the last  time the                                                               
state  had an  extended BSA  increment was  when the  legislature                                                               
implemented recommendations  by an education task  force, chaired                                                               
by Representative Hawker.   At the time the  general consensus by                                                               
the education community was that they were satisfied.                                                                           
                                                                                                                                
SENATOR  HOFFMAN  expressed  concern  that  the  House's  current                                                               
approach doesn't  increase the BSA  to the amounts  the education                                                               
community would  like, which is  a $400 increment this  year, and                                                               
an additional  $125 increment each  of the  next two years  for a                                                               
total BSA of $650.   In fact, the House falls  well short of that                                                               
funding.   He doubted the  education community could  support the                                                               
House's  approach  to only  add  $185  to  the  BSA, with  a  $58                                                               
increment  in the  next two  fiscal  years.   He anticipated  the                                                               
response  will  be  that  that   level  of  funding  is  woefully                                                               
inadequate to  meet the educational  needs of  Alaska's students.                                                               
At a  time when  the legislature is  addressing education,  it is                                                               
unsatisfactory to  endorse such  low increments to  the BSA.   He                                                               
wondered whether the BSA will be  addressed again in two years or                                                               
if the  $30 million  in funding means  that education  needs will                                                               
continue  to  be funded  outside  the  [foundation] formula  each                                                               
year.    He  did  not  agree  with  the  House's  perspective  on                                                               
education funding for the next three years.                                                                                     
                                                                                                                                
CHAIR  HAWKER  responded that  he  cannot  speak for  the  House;                                                               
however  he  offered his  belief  that  the  House has  taken  an                                                               
approach of  "living within our  means."  He suggested  that it's                                                               
easy to  raise [the BSA  funding], but nearly impossible  to take                                                               
something away.   The  general sentiment  of the  legislature and                                                               
the public is  that value is not being realized  from the schools                                                               
and student performance.   Thus, instead of  rewarding the status                                                               
quo by  "writing a check" the  state needs to be  shown [student]                                                               
performance improvements.   "This  is the  balance that  we're in                                                               
this committee to discuss," he said.                                                                                            
                                                                                                                                
4:29:19 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  KITO III  commented that  Mr. Teal  has indicated                                                               
the level  of funding  inside the  BSA and outside  the BSA.   He                                                               
asked  whether  it  would  satisfy Alaskans  that  the  state  is                                                               
committed  [to education]  if  the funding  over  the next  three                                                               
years was all within the BSA,  while at the same time the studies                                                               
are  completed and  the formulas  are readjusted.   He  asked for                                                               
further  clarification on  the Senate  FY 15,  FY 16,  and FY  17                                                               
figures for  the BSA  increment of  $427; however,  he questioned                                                               
whether this  includes $6 million for  correspondence schools and                                                               
the  $400,000 for  the charter  school size  factor.   Still, all                                                               
districts don't have correspondence  programs and charter schools                                                               
are only  in a  handful of  school districts.   He  asked whether                                                               
this represents an  average for school districts  since the other                                                               
amounts only apply to some districts.                                                                                           
                                                                                                                                
MR. TEAL  concurred that the  funding is not  distributed equally                                                               
to  all districts,  but  it  is allocated  on  the  basis of  the                                                               
[foundation] formula.   The aforementioned  spreadsheet indicates                                                               
that it's  a formula distribution  like the fiscal  note section,                                                               
which has the same issue, which  is the grants to districts since                                                               
the state doesn't  know how they will be  allocated; however, the                                                               
state  does know  how correspondence  and  charter school  monies                                                               
will  be allocated.    Those  funds are  placed  into the  public                                                               
education   fund  and   are  distributed   without  appropriation                                                               
according to the formula.                                                                                                       
                                                                                                                                
REPRESENTATIVE  KITO  III expressed  concern  that  the $427  BSA                                                               
equivalent  is  actually not  going  to  be  the same  for  every                                                               
district.   He asked for  further clarification that  this figure                                                               
will   be  the   amount   for  school   districts  that   receive                                                               
correspondence and  charter school  funds, but  it will  be lower                                                               
for those schools without correspondence or charter schools.                                                                    
                                                                                                                                
MR. TEAL  answered that  is correct.   He  characterized it  as a                                                               
formula distribution.                                                                                                           
                                                                                                                                
CHAIR HAWKER  related his understanding  that [funding  for those                                                               
schools] will not be appreciably lower.                                                                                         
                                                                                                                                
MR.  TEAL agreed  that  is correct.   He  clarified  that the  $6                                                               
million  in funding  is  out of  a $1.2  billion  program so  the                                                               
"needle" won't be moved very far.                                                                                               
                                                                                                                                
4:32:03 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE GATTIS  advised members  that the  House Education                                                               
[Standing  Committee]  did  not   review  the  BSA  or  financial                                                               
portions,  but  deferred  the  financial  aspects  to  the  House                                                               
Finance [Standing Committee] to  review.  Certainly, members have                                                               
an  obligation  to make  decisions  to  live within  the  state's                                                               
means.  Granted,  it would be much easier for  the legislature to                                                               
simply  fund education  by  "writing the  check."   However,  she                                                               
viewed the  House's approach as establishing  long-term education                                                               
funding  through the  BSA.    The public  and  some members  have                                                               
expressed  an  interest in  having  the  total education  funding                                                               
within the BSA  and not outside the BSA.   She questioned whether                                                               
the state  has the ability  to continue  to fund at  these levels                                                               
and whether the studies will examine that issue.                                                                                
                                                                                                                                
SENATOR  DUNLEAVY explained  that the  projections indicate  that                                                               
the state  is not living within  it means and this  will continue                                                               
unless something  changes.  He  said the Senate  model recognizes                                                               
this and attempts to pivot  and consider other approaches to well                                                               
educate  Alaska's  children.   Continuing  to  fund  neighborhood                                                               
schools  at   the  exclusion  of  other   innovative  educational                                                               
approaches  will  hasten that  day.    In fact,  the  educational                                                               
system  that has  evolved over  50 years  in Alaska  simply needs                                                               
more money every  year.  The legislature  and administration must                                                               
decide  if it  will fall  off  the cliff  in  2024 or  if it  can                                                               
institute innovative  approaches using technology,  the Internet,                                                               
and low-cost  models to change  the course and  level-off funding                                                               
costs.                                                                                                                          
                                                                                                                                
4:35:54 PM                                                                                                                    
                                                                                                                                
MR.  TEAL commented  one thing  that  the committee  may wish  to                                                               
consider as it deliberates whether  to fund inside versus outside                                                               
the BSA  is that  funding outside  the BSA  does not  allow local                                                               
contributions to  increase.  Putting  money inside the  BSA means                                                               
that local contributions can go up  by 23 percent of that amount.                                                               
He referred  to page 4, to  Senate Section 25, which  would allow                                                               
funding  distributed outside  the  BSA to  be  used to  determine                                                               
voluntary   local  contributions.     This   would  allow   local                                                               
contributions  to  increase.   That  funding  would  include  the                                                               
entire $100 million,  or some other amount, noting  the House has                                                               
funding  outside the  BSA as  well.   Those funds  would increase                                                               
voluntary local  effort as does  quality schools, which is  a $16                                                               
per ADM grant distributed according  to the formula.  He recalled                                                               
earlier  comments  that  raising  the  mill  rate  will  increase                                                               
property taxes;  however, that will not  necessarily raise taxes.                                                               
He related  a scenario to illustrate  that as the mill  rate goes                                                               
up, the local  contribution will be more,  but the municipalities                                                               
can choose not to increase the voluntary effort by that amount.                                                                 
                                                                                                                                
CHAIR HAWKER  interjected that, for example,  the community could                                                               
pay for it out of existing revenues.                                                                                            
                                                                                                                                
MR.  TEAL  agreed;  however,  he said  there  isn't  any  linkage                                                               
between  raising the  mill rate  and  increasing taxpayer  burden                                                               
since a district can contribute  more because the sum of required                                                               
and  voluntary  contributions  will  be higher,  and  they  could                                                               
choose to  contribute the  same amount, or  they could  choose to                                                               
contribute  less.    He acknowledged  some  exceptions,  such  as                                                               
Tanana,  Nenana, and  other districts  that have  very low  local                                                               
effort  so an  increase could  affect them.   He  said that  most                                                               
districts contribute  a significant amount of  money voluntarily.                                                               
He offered  to provide  a spreadsheet for  the next  meeting that                                                               
show which school districts might be affected.                                                                                  
                                                                                                                                
CHAIR  HAWKER confirmed  that the  committee would  like to  have                                                               
that additional information.                                                                                                    
                                                                                                                                
4:39:21 PM                                                                                                                    
                                                                                                                                
CHAIR HAWKER  suggested the free  conference committee on  HB 278                                                               
has  challenging deliberations  ahead.   He counseled  members to                                                               
focus on possible  outcomes and not perfect outcomes  and to also                                                               
seek common ground  to build on to reach resolution.   He assured                                                               
members that  neither body will  dictate final provisions  in the                                                               
bill.   He highlighted  that the common  objective is  to achieve                                                               
what is  possible today  to improve schools  and commit  to long-                                                               
term and sustainable funding increases.   He acknowledged Senator                                                               
Hoffman related  the legislature previously took  a collaborative                                                               
approach.   He  also  anticipated the  free conference  committee                                                               
process  will take  some time.   He  announced that  the proposed                                                               
"consent" free conference committee substitute  for HB 278 is now                                                               
available  for distribution,  which he  hoped the  committee will                                                               
adopt as a working document.                                                                                                    
                                                                                                                                
4:43:19 PM                                                                                                                    
                                                                                                                                
CHAIR MEYER  emphasized that  the Senate  would like  to continue                                                               
deliberations  and asked  whether  the  committee could  identify                                                               
outstanding issues other than the funding issues.                                                                               
                                                                                                                                
CHAIR  HAWKER  related  his understanding  that  the  outstanding                                                               
issues are  the ones  just discussed with  the commissioner.   He                                                               
asked to have staff review the issues for members.                                                                              
                                                                                                                                
4:44:42 PM                                                                                                                    
                                                                                                                                
MS.  LUCKY clarified  that she  just received  the proposed  free                                                               
conference "consent"  committee substitute [FCCS for  HB 278] and                                                               
hopes  to  post it  to  the  Bill  Action Status  Inquiry  System                                                               
(BASIS) soon.                                                                                                                   
                                                                                                                                
MS.  LUCKY reviewed  the preliminary  actions  the committee  has                                                               
taken.  She  indicated the House and Senate  reached consensus on                                                               
Section  1.   Many of  the  sections on  page  1 [of  the HB  278                                                               
Comparison section-by-section] relate to  the HSGQE or exit exam.                                                               
The proposed  [FCCS for HB  278] would  repeal the exit  exam but                                                               
does  not  propose  an alternative  assessment  vehicle,  address                                                               
retroactive diplomas, or  include a period to  retest since those                                                               
items may require additional discussion.                                                                                        
                                                                                                                                
MS. LUCKY advised  that the House version  included statements on                                                               
ceding control and "common core"  standards, which are not in the                                                               
proposed  [FCCS  for  HB  278]   however,  amendments  are  being                                                               
drafted.    She  related  the  new  statutory  references  in  AS                                                               
14.03.126, AS  14.03.127, and AS  14.03.128 in Senate  Section 7,                                                               
include  funding  for  Internet services,  personalized  learning                                                               
opportunities   grant  programs,   and  innovative   approach  to                                                               
learning grants,  but are not  in the proposed consent  [FCCS for                                                               
HB 278], but will be considered as amendments.                                                                                  
                                                                                                                                
CHAIR HAWKER stated  that the proposed consent [FCCS  for HB 278]                                                               
was a collaborative process.                                                                                                    
                                                                                                                                
4:46:45 PM                                                                                                                    
                                                                                                                                
MS. LUCKY  indicated that Senate Sections  8, 9, and 11  were the                                                               
same; however,  since the [HSGQE]  exit exam was  repealed, these                                                               
sections were written a little  differently since the assessments                                                               
or  diploma  options   are  not  yet  resolved.     In  addition,                                                               
outstanding  issues include  the  fiscal  issues, including  debt                                                               
reimbursement,  the  residential  school stipend,  the  mill  tax                                                               
levy,  correspondence  study  factor increase,  and  funding  for                                                               
charter  schools.   She turned  to  House Section  15 and  Senate                                                               
Section  16,  noting  language   related  to  the  "common  core"                                                               
standards will be removed and will become an amendment.                                                                         
                                                                                                                                
REPRESENTATIVE  KITO III  asked  whether it  would  be easier  to                                                               
identify the sections  that are not resolved and  are open rather                                                               
than  try to  figure  out agreed  upon language  that  is in  the                                                               
proposed FCCS for HB 278.                                                                                                       
                                                                                                                                
CHAIR HAWKER  agreed and offered  to summarize the  open sections                                                               
that relate to  issues that are still unresolved:   House Section                                                               
2,  related to  "secondary" school  courses through  mastery, not                                                               
limited to  core topics;  House Section 4,  related to  the state                                                               
not  ceding any  measure of  autonomy or  control over  education                                                               
standards and assessments.   The general sense has  been that not                                                               
ceding autonomy is  unanimously agreed to as a  non-issue.  Still                                                               
unresolved  is  Senate  Section 7,  which  includes  funding  for                                                               
Internet,   technical  equipment   support   and  training,   and                                                               
innovative  approach  to  learning   grants;  Senate  Section  14                                                               
related to  correspondence study  programs and  student allotment                                                               
rollovers;  and  Senate  Section  16, which  is  related  to  the                                                               
semantic  change  to  "language  arts"  for  "reading,  writing."                                                               
Although the "common core"  standards implementation language was                                                               
not included,  he reiterated that  there appears to  be agreement                                                               
on this.                                                                                                                        
                                                                                                                                
CHAIR HAWKER turned  to House Section 16, which  would direct the                                                               
state Board of Education (BOE)  to make recommendations promoting                                                               
efficiency.    Although  he  cannot   speak  for  the  House,  he                                                               
suggested this  is an area that  will be held tightly  to since a                                                               
misunderstanding  on the  role of  the BOE  has been  identified.                                                               
Still  unresolved   is  Senate   Section  20,  related   to  debt                                                               
reimbursement,  noting that  some compromise  direction has  been                                                               
identified.   Senate  Section 23  would increase  the recommended                                                               
school stipend, which  will simply be a  funding decision; Senate                                                               
Sections 24  and 25, related  to the required  local contribution                                                               
mill tax  levy and voluntary  local contribution  are unresolved.                                                               
Senate   Section   26   would    increase   the   state   funding                                                               
correspondence study  from 80  to 90 percent  of the  BSA; Senate                                                               
Section  27   includes  the  governor's  proposed   language  for                                                               
increased funding of approximately  $483,000 for charter schools,                                                               
which is  not included in  the House  version.  He  remarked that                                                               
seemed like a good investment to him.                                                                                           
                                                                                                                                
CHAIR HAWKER  directed attention  to House  Sections 20,  21, and                                                               
22, as being the "elephant in  the room," relating to the "inside                                                               
the BSA" and "outside the BSA"  level of funding.  House Sections                                                               
23 and  24, relating to  teacher tenure  still need to  be sorted                                                               
out.                                                                                                                            
                                                                                                                                
4:52:21 PM                                                                                                                    
                                                                                                                                
CHAIR  HAWKER said  a  series of  reports and  how  they will  be                                                               
structured represent the  linchpin, including identifying aspects                                                               
to be  included and how  to reevaluate and  re-engineer education                                                               
in  Alaska.   These studies  include the  proposed Department  of                                                               
Education's   (EED)  study   on  efficient   school  design   and                                                               
construction, which seems  to make a lot of sense.   In addition,                                                               
Senate Section 54  relates to the EED issuing a  diploma to those                                                               
students who  failed the exit  exam, which he  personally thought                                                               
was a non-issue.  This fits  into the larger discussion, which is                                                               
whether  to require  other benchmarking  or attainment  standards                                                               
instead of the exit exam.                                                                                                       
                                                                                                                                
4:54:15 PM                                                                                                                    
                                                                                                                                
CHAIR  MEYER  asked  for further  clarification  on  the  House's                                                               
position on the [HSGQE] exit exam.                                                                                              
                                                                                                                                
REPRESENTATIVE  GATTIS   explained  that   the  public   and  the                                                               
department did not find the HSGQE  to be as rigorous as it should                                                               
be  and did  not adequately  measure what  high school  graduates                                                               
should know.   The committee  held discussions on how  to address                                                               
students  who passed  their final  exams, but  did not  receive a                                                               
high school  diploma [because  they failed the  exit exam].   She                                                               
did not think issuing a retroactive diploma was an issue.                                                                       
                                                                                                                                
CHAIR  MEYER related  his understanding  that  the Senate  agreed                                                               
with the  governor's version of  HB 278  that there should  be an                                                               
SAT, ACT, or WorkKeys assessment as an alternate assessment.                                                                    
                                                                                                                                
4:55:43 PM                                                                                                                    
                                                                                                                                
The committee took an at-ease from 4:55 p.m. to 5:22 p.m.                                                                       
                                                                                                                                
5:22:05 PM                                                                                                                    
                                                                                                                                
CHAIR HAWKER  suggested that several additional  items could also                                                               
be "taken  off the table,"  since agreement exists.   He directed                                                               
attention to House  Section 2, related to  testing-out of courses                                                               
limited to  core topics.   He asked  whether Senator Meyer  had a                                                               
strong position on the language in Senate Section 2.                                                                            
                                                                                                                                
CHAIR MEYER answered no; the Senate does not.                                                                                   
                                                                                                                                
CHAIR HAWKER  indicated that several House  members felt strongly                                                               
about this so  this would be an  item that would go  to the House                                                               
caucus  with  the recommendation  to  keep  the House  Section  2                                                               
language.                                                                                                                       
                                                                                                                                
CHAIR  MEYER offered  his  belief  that would  be  fine with  the                                                               
Senate.                                                                                                                         
                                                                                                                                
CHAIR HAWKER directed  attention again to House  Section 4, which                                                               
states that  the state may  not cede  any measure of  autonomy or                                                               
control over  education standards  and assessments.   He recalled                                                               
Commissioner Hanley  saying it  really is  "not doing  what we're                                                               
already not  doing."  In  response to  a question, he  agreed the                                                               
House  version  would  be  included  in  the  proposed  "consent"                                                               
version [FCCS for HB 278].                                                                                                      
                                                                                                                                
CHAIR  MEYER  said the  Senate  believed  the language  in  House                                                               
Section 4  was not necessary, but  it seems important to  some of                                                               
the  House  members  so  it  will be  included  in  the  proposed                                                               
committee substitute [FCCS for HB 278].                                                                                         
                                                                                                                                
CHAIR  HAWKER agreed.   In  terms of  the [HSGQE]  exit exam,  he                                                               
asked whether some  form of attainment testing  should be offered                                                               
or if  exit exams will simply  be removed and the  matter will be                                                               
addressed  in a  separate bill  next legislative  session, if  so                                                               
desired.                                                                                                                        
                                                                                                                                
CHAIR  MEYER, relating  his  desire to  show  good faith  effort,                                                               
agreed that the Senate will go  with the House language to repeal                                                               
the [HSGQE] exit exam.                                                                                                          
                                                                                                                                
5:25:48 PM                                                                                                                    
                                                                                                                                
MS. LUCKY  explained that  the House  version of  HB 278  did not                                                               
repeal  the [HSGQE]  exit exam;  however,  the House  did pass  a                                                               
separate bill, [HB 220], to repeal  the exit exam.  She clarified                                                               
that the House's position was to  have a clean repeal of the exit                                                               
exam.                                                                                                                           
                                                                                                                                
CHAIR  HAWKER  clarified  that  the proposed  FCCS  HB  278  will                                                               
include the  Senate Section 3  language to repeal the  exit exam,                                                               
but  will  not  add  the   Senate's  language  to  require  other                                                               
attainment testing, [such as the ACT, SAT or WorkKeys].                                                                         
                                                                                                                                
CHAIR MEYER concurred.                                                                                                          
                                                                                                                                
5:26:21 PM                                                                                                                    
                                                                                                                                
SENATOR DUNLEAVY asked for further clarification on the action.                                                                 
                                                                                                                                
MS. LUCKY pointed  out that the conference  committee would adopt                                                               
partial Senate  Section 3  language to repeal  the exit  exam but                                                               
not require the SAT, ACT, or WorkKeys be taken.                                                                                 
                                                                                                                                
SENATOR DUNLEAVY  related that the  governor's bill  required the                                                               
SAT, ACT,  or WorkKeys be taken,  although no cut score  would be                                                               
used  but  an  assessment  would  be taken.    Senate  Section  3                                                               
eliminated   the   current  HSGQE.      He   asked  for   further                                                               
clarification  that  the  free   conference  committee  will  not                                                               
require any assessment and that  the high school diploma would be                                                               
conferred at the local level.                                                                                                   
                                                                                                                                
MS. LUCKY agreed the exit exam  would be repealed and there would                                                               
not be any other requirements put into place.                                                                                   
                                                                                                                                
SENATOR DUNLEAVY  commented said this language  is different from                                                               
either the House or Senate version.                                                                                             
                                                                                                                                
5:28:09 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE GATTIS  reiterated that the exit  exam is repealed                                                               
in [HB 220] and emphasized that it should be repealed.                                                                          
                                                                                                                                
SENATOR DUNLEAVY agreed, but was  unsure that the Senate language                                                               
dismissed all exams on exit.                                                                                                    
                                                                                                                                
REPRESENTATIVE   GATTIS  explained   that  the   House  Education                                                               
[Standing]  Committee considered  whether  another  exam will  be                                                               
required.   However, after examining  the costs  of administering                                                               
an exam,  such as ACT or  SAT or WorkKeys, the  WorkKeys was left                                                               
as  an optional  exam that  will  be given  during the  student's                                                               
junior year,  but will not be  required in order for  the student                                                               
to receive a diploma.                                                                                                           
                                                                                                                                
SENATOR DUNLEAVY offered his belief  that the Senate accepted the                                                               
governor's  language in  the bill  so the  Senate may  not concur                                                               
with this change.                                                                                                               
                                                                                                                                
5:30:57 PM                                                                                                                    
                                                                                                                                
CHAIR  MEYER   suggested  that  some   type  of   measurement  is                                                               
necessary, but it  can be accomplished through  regulation.  This                                                               
would allow the  department to decide if it  is best accomplished                                                               
by administering the ACT, the SAT, or WorkKeys, or ACCUPLACER.                                                                  
                                                                                                                                
SENATOR  DUNLEAVY   asked  whether  intent  language   should  be                                                               
proposed  authorizing the  department  to  develop regulation  to                                                               
satisfy this requirement.                                                                                                       
                                                                                                                                
CHAIR HAWKER  clarified the free conference  committee's process,                                                               
such that  each body has a  caucus it represents and  the process                                                               
will be  to solicit support  and concurrence from  the respective                                                               
caucuses.   He asked whether  intent language could  address some                                                               
type  of  optional  attainment  testing.   He  asked  whether  an                                                               
uncodified law  of intent allows  the department to  promulgate a                                                               
regulation to allow students to take one of the exams.                                                                          
                                                                                                                                
COMMISSIONER HANLEY  explained that currently the  WorkKeys is in                                                               
regulation and is  required to be taken in the  11th grade.  This                                                               
will  not be  affected by  the proposed  adoption of  a [modified                                                               
Senate Section 3].   He indicated that the  governor's intent was                                                               
to allow  students a choice by  adding the SAT or  ACT instead of                                                               
the WorkKeys.  If the SAT/ACT  is not added in the bill, students                                                               
will continue to take the WorkKeys.                                                                                             
                                                                                                                                
CHAIR  HAWKER  suggested  using  the  governor's  language  as  a                                                               
recommendation for optional testing [by  adding in the SAT/ACT as                                                               
optional  exams  students can  take  instead  of WorkKeys].    He                                                               
further  suggested that  the Senate  Section  3 be  provisionally                                                               
adopted.                                                                                                                        
                                                                                                                                
COMMISSIONER HANLEY said the governor would support that.                                                                       
                                                                                                                                
5:33:55 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  GATTIS asked  whether  the ACCUPLACER  assessment                                                               
will be included.                                                                                                               
                                                                                                                                
COMMISSIONER  HANLEY answered  no; that  SAT/ACT as  well as  the                                                               
WorkKeys   are  all   avenues  as   qualifiers  for   the  Alaska                                                               
Performance Scholarship.   Currently,  students who want  to take                                                               
the SAT/ACT must  pay for it.  The  administration's position was                                                               
that it  would save  $2.7 million  by removing  the HSGQE  so the                                                               
department could  institute an alternate  option and pay  for the                                                               
SAT/ACT  exams.   Currently, the  ACCUPLACER  is not  one of  the                                                               
tools and was not added to the governor's language in HB 278.                                                                   
                                                                                                                                
REPRESENTATIVE  GATTIS  agreed  that  WorkKeys  and  SAT/ACT  are                                                               
alternate  exam   choices,  but  questioned  not   including  the                                                               
ACCUPLACER exam as a choice.                                                                                                    
                                                                                                                                
COMMISSIONER HANLEY explained that  the department will work with                                                               
local  districts to  offer  the optional  WorkKeys  that aim  for                                                               
students seeking  careers, or  the SAT/ACT  for students  who aim                                                               
for  a college  score.   He was  unsure how  the ACCUPLACER  exam                                                               
would fit within these options.                                                                                                 
                                                                                                                                
REPRESENTATIVE GATTIS  acknowledged that the ACCUPLACER  exam was                                                               
never discussed in the House Education [Standing] Committee.                                                                    
                                                                                                                                
CHAIR  HAWKER  concluded  that the  Senate  approach  [in  Senate                                                               
Section 3] will  be taken with respect to the  [HSGQE] exit exam,                                                               
noting this  item will  come before  the respective  caucuses for                                                               
further discussion.                                                                                                             
                                                                                                                                
5:36:42 PM                                                                                                                    
                                                                                                                                
CHAIR HAWKER  referred to Senate  Sections 7A, 7B, and  7C, which                                                               
relate  to the  Internet, technical  equipment and  training, and                                                               
innovative learning grant approaches to education.                                                                              
                                                                                                                                
CHAIR  MEYER welcomed  Senator  Dunleavy's  participation in  the                                                               
House caucus  to impart his  expertise.   He has spent  his whole                                                               
life  in   education,  serving  as  a   teacher,  superintendent,                                                               
principal,  and  on  the  school  board.   He  described  him  as                                                               
knowledgeable  about  education,   employing  an  innovative  and                                                               
progressive approach to create change  in the field of education.                                                               
However,  at the  end  of the  day  it will  relate  to level  of                                                               
spending and where it will be spent, he said.                                                                                   
                                                                                                                                
5:38:12 PM                                                                                                                    
                                                                                                                                
CHAIR HAWKER  referred to  Senate Section  14, and  asked Senator                                                               
Dunleavy to also  address the caucus on this  language related to                                                               
a correspondence  study program,  individual learning  plans, and                                                               
student allotments.  He directed  attention to Senate Section 16,                                                               
to   the   "common   core"    standards   language,   which   the                                                               
administration  is  somewhat  ambivalent about,  although  it  is                                                               
important to some members.                                                                                                      
                                                                                                                                
CHAIR MEYER related the Senate [was neutral] on Section 16.                                                                     
                                                                                                                                
SENATOR DUNLEAVY  clarified that the Senate  didn't disagree with                                                               
the House.                                                                                                                      
                                                                                                                                
CHAIR MEYER  remarked that  he did  not believe  it is  the BOE's                                                               
role to discuss spending.                                                                                                       
                                                                                                                                
CHAIR HAWKER offered to recommend  Senate Section 16 with respect                                                               
to removal of the "common core" standards language.                                                                             
                                                                                                                                
5:39:42 PM                                                                                                                    
                                                                                                                                
CHAIR  HAWKER referred  to Senate  Section 20,  which relates  to                                                               
debt reimbursement,  which is an  area that will  require further                                                               
discussion.                                                                                                                     
                                                                                                                                
CHAIR  HAWKER  directed  attention   to  Senate  Section  23,  to                                                               
increases for  residential school  stipends, which is  a spending                                                               
issue.  He  asked Senator Dunleavy to address the  caucus on this                                                               
issue.                                                                                                                          
                                                                                                                                
5:40:06 PM                                                                                                                    
                                                                                                                                
CHAIR HAWKER identified  [Senate Section 24] related  to the mill                                                               
levy will also be a House caucus conversation.                                                                                  
                                                                                                                                
CHAIR  MEYER acknowledged  that the  Senate education  funding is                                                               
more  than the  House level;  however, the  Senate is  offering a                                                               
means  to  gain  a  credit.   He  offered  his  belief  that  the                                                               
education  funding should  be shared  with  municipalities.   The                                                               
proposal is  not necessarily a tax  increase since municipalities                                                               
can elect  not to do the  voluntary portion.  He  acknowledged it                                                               
was a potential savings to the state.                                                                                           
                                                                                                                                
CHAIR  HAWKER acknowledged  it would  be a  cost-shifting measure                                                               
from the state to the municipalities.                                                                                           
                                                                                                                                
5:41:08 PM                                                                                                                    
                                                                                                                                
CHAIR  HAWKER  referred to  Senate  Section  26, related  to  the                                                               
correspondence study,  and asked Senator Dunleavy  to address the                                                               
House  caucus.   He  directed  attention  to Senate  Section  27,                                                               
related to  the charter school  start-up funding, removed  in the                                                               
House Finance  [Standing] Committee.  He  acknowledged that there                                                               
has been substantial support for charter schools.                                                                               
                                                                                                                                
REPRESENTATIVE GATTIS highlighted offered  her belief that one of                                                               
the  things the  governor's bill  did  was address  the need  for                                                               
parity between the neighborhood  schools and the charter schools.                                                               
However, to  do so will  require substantial funding.   The House                                                               
Finance  Committee  struggled  with  the level  of  spending  for                                                               
charter schools and removed the  additional funding; however, she                                                               
acknowledged  the   significant  parental  support   for  charter                                                               
schools.                                                                                                                        
                                                                                                                                
CHAIR HAWKER indicated that Senate  Section 27 will be brought to                                                               
the  House caucus  with the  recommendation to  adopt the  Senate                                                               
language.                                                                                                                       
                                                                                                                                
5:43:09 PM                                                                                                                    
                                                                                                                                
SENATOR  DUNLEAVY remarked  that the  charter and  correspondence                                                               
families don't  necessarily have an organized  constituency group                                                               
or  lobbying  group  to  approach the  legislature  as  a  whole.                                                               
However, the voice of this group  should be heard and can only be                                                               
heard  through  the  respective  House  and  Senate  members  who                                                               
represent them.                                                                                                                 
                                                                                                                                
REPRESENTATIVE   HAWKER   pointed    out   many   sections   have                                                               
commonality.   He  directed attention  to Senate  Sections 50-53,                                                               
related  to studies  and reporting,  which  will require  further                                                               
discussion; however, he said he sees a way forward.                                                                             
                                                                                                                                
5:45:18 PM                                                                                                                    
                                                                                                                                
CHAIR  HAWKER  directed attention  to  Senate  Section 54,  which                                                               
relates  to  retroactive  high  school diplomas.    If  the  free                                                               
conference committee  adopts the Senate's language  on testing it                                                               
will automatically  mean accepting the Senate  version of Section                                                               
54.                                                                                                                             
                                                                                                                                
MS. LUCKY pointed  out Senate Section 53 is not  actually a study                                                               
but  is for  a  middle school  pilot program.    She related  her                                                               
understanding that it is still an outstanding issue.                                                                            
                                                                                                                                
CHAIR HAWKER acknowledged it was still outstanding.                                                                             
                                                                                                                                
5:45:58 PM                                                                                                                    
                                                                                                                                
CHAIR MEYER asked for further clarification on teacher tenure.                                                                  
                                                                                                                                
CHAIR HAWKER said the House is divided on this issue.                                                                           
                                                                                                                                
REPRESENTATIVE  GATTIS  stated  that teacher  tenure  passed  the                                                               
House.   She said the vote  is an indicator the  House wants this                                                               
issue to be brought forward.                                                                                                    
                                                                                                                                
CHAIR  MEYER  remarked some  Senate  members  felt very  strongly                                                               
about  teacher tenure.   He  offered to  bring it  to the  Senate                                                               
caucus as well  and hoped this is something that  could be agreed                                                               
upon.                                                                                                                           

Document Name Date/Time Subjects
CCS HB 278 Work Draft X.pdf JHB278 4/22/2014 10:00:00 AM
HB 278
HB 278 CC Comparison 4-22.pdf JHB278 4/22/2014 10:00:00 AM
HB 278
Mill Rate Comparison.pdf JHB278 4/22/2014 10:00:00 AM
HB 278
4-22-14 LFD Summary HB 278 Senate vs House.pdf JHB278 4/22/2014 10:00:00 AM
HB 278