Legislature(1995 - 1996)
03/05/1996 02:04 PM House HES
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HB 452 - CALCULATION OF STATE AID TO EDUCATION Number 098 SHIRLEY HOLLOWAY, Commissioner, Department of Education, introduced Richard Cross, Deputy Commissioner, Jim Elliott, Director of School Finance, and Eddy Jeans, the department's expert on PL-874. Commissioner Holloway said there were two main reasons that HB 452 was before the committee. First, Governor Knowles made a commitment at the beginning of his Administration to ensure that the school funding formula is fair, equitable and accountable and protects the partnership between the state, federal and local dollars. The second reason had to do with the changes in the federal impact aid law, lowering the allowable disparity standard from 25 percent to 20 percent. She stated in order to continue to consider impact aid when calculating the state's portion of school funding, Alaska would have to meet the 20 percent federal disparity test in FY 96. In order to meet the disparity in FY 96, the department had requested supplemental funding of $1.2 million in aid to the Rural Education Attendance Areas (REAA) who are at the bottom of the disparity table. This would provide $500 per instructional unit. Failure to meet this disparity will cost the state $30 million to $35 million. The other option would be to prorate the instructional unit down by $2,850 in FY 98, or the state would have to fill that gap with state general fund money. COMMISSIONER HOLLOWAY remarked that the State Board of Education is committed to revising the Alaska Foundation Program. They appointed a task force last year which struggled with this issue and ultimately made the recommendation to the State Board of Education that there be a minimalist fix and to then encourage the State Board to continue working on a more creative funding formula for the state. The State Board of Education took that under consideration and the legislation before the committee was the result of the State Board of Education's recommendation to the Governor. She commented the State Board of Education is now meeting as a committee of the whole to work on the foundation formula and have a time line set to introduce a new foundation formula during the next legislative session. She emphasized this request is a short-term fix; it buys time to develop long-term solutions and it addresses the disparity test by providing for the supplementary aid to REAAs. It offsets the cost of supplementary aid by increasing the amount of impact aid deductible from REAAs from 90 percent to 95 percent, and it incorporates the single site funding into the formula which has been an issue since the current formula went into effect in FY 88. Number 345 COMMISSIONER HOLLOWAY said the department is concerned about the quality of public education in the state of Alaska and feels that funding is the mechanism for developing quality schools. Consequently, the department believes that a funding strategy, which she hopes to bring to the legislature next session, will reflect a well-articulated and strongly driven instructional philosophy about what they hope to achieve. She noted that over the years, funding has been approached from "let's just re- distribute the dollars" versus "what are we trying to achieve." She often hears the comment "just re-write the formula" as if it is some simple task, when indeed it is a very difficult and complex task and one that needs thoughtful design. She added that many people have tried and not been successful. The department feels that one of the things that has been lacking in the past is the strong philosophical premise involving all the stakeholders. The State Board of Education's plan is to take their proposed foundation formula to the public and have lots of public engagement over the summer so there can be a good understanding of what they are trying to achieve. Number 435 COMMISSIONER HOLLOWAY said the department is really focused on what she called a "standards-driven change effort." That is high standards for kids with an assessment to make sure they are being reached. Also, high standards for professionals are being worked on through the State Board of Education/Board of Regents partnership to make sure that teachers coming out of the preparation institutions meet those standards, and they are looking at licensing and re-licensing people based on standards. The third area of focus is parent, family and community involvement in student learning and how that can be promoted. The fourth area is school standards. The State Board of Education is looking at a school accreditation process based on the research of what makes a quality school, so the kids are most apt to achieve those high standards set for them. Number 498 COMMISSIONER HOLLOWAY concluded that even though the discussion today was a short-term fix for funding, she wanted to put it in the framework of having high standards for kids and having the money to make it happen for them. Number 523 CO-CHAIR TOOHEY asked if the state of Alaska was going to fashion their education system after any other state that has already tried it? She is fearful that with the downturn in finances, the state will jump into a system that has never been tried before or will go into a system that cannot be achieved. She noted there have been trials across the country on what makes a good school, and it has been determined that it has absolutely nothing to do with money. COMMISSIONER HOLLOWAY responded that the concepts being discussed have been used in other states. For example, one of the concepts being considered by the State Board of Education is rolling capital improvement dollars into the foundation formula. That is being done in 14 other states where there is a per pupil dollar amount allocated for capital improvement projects. She didn't think the State Board of Education was currently considering anything that was so far out of the norm that would jeopardize the system. They are trying to simplify the formula so it can be understood by average folks and can be communicated to parents. The Board of Education is very interested in looking at it from a per pupil cost, so discussions can take place on how much it costs to educate a child in a specific place versus the present convoluted instructional unit calculation. She believed the effort was to simplify it so it is understandable and most of all, make sure that it is fair. Number 708 CO-CHAIR BUNDE said he was heartened by Commissioner Holloway's willingness to grasp the reality of the state's educational system, the dollars that are available for education and the fact that we need to streamline, consolidate or even close small schools that aren't educationally or economically viable. Those are difficult decisions. He noted that Commissioner Holloway had remarked that if the impact aid is lost, the state could either accommodate the impact aid or reduce the formula by close to $3,000. There is concern the federal government is in the process of weaning us and they will keep making this disparity more and more difficult to achieve so eventually the state will have to reduce the amount of funding or take whatever action needs to be done. Co-Chair Bunde asked if Commissioner Holloway shared that concern, if this would be taken into the formula re-write and if she could anticipate a time frame in which that may occur. COMMISSIONER HOLLOWAY said it was her impression that it wouldn't happen real soon, but there is a perception that the federal government is trying to wean the state every time the disparity is moved down. She said she didn't have a sense for the time table. Number 816 JAMES ELLIOTT, Acting Director, School Finance, Department of Education, testified the current program is authorized through FY 99. He felt is was safe to say that every President since President Truman has tried to get rid of the program, so the best guess is that it is going to be around for some time. CO-CHAIR BUNDE noted that one of the challenges has been single site schools and asked Mr. Elliott if he had any idea of how that challenge would be addressed in the re-write. COMMISSIONER HOLLOWAY responded that as far as she knew, it was not being discussed as a separate issue, so it would not be identified as outside the general formula. She believed one thing being looked at by the State Board of Education is generally streamlining dollars and trying to give the dollars to the local level for them to make decisions about what to do. She said if the concept of having capital improvement dollars as part of the foundation formula is successful, there has been some general discussion that if a school district had met their major maintenance and construction issues and there was some assurance of that, there would be no reason why those dollars couldn't be used to reduce class size for example in urban areas. The general direction the State Board of Education is currently discussing has to do with putting the money in more of a block grant kind of fashion and allowing the local people to make decisions about where they need to spend their money. Number 837 CO-CHAIR BUNDE asked if he could interpret that to mean there would still be a superintendent for a school district which is one school. COMMISSIONER HOLLOWAY said the State Board of Eduction will be holding an all-day workshop on governance on April 18. She commented that some of the board members are interested in looking at alternative governance models for the state. A whole day will be devoted to working on Native student learning issues and there is a steering committee working on framing those issues. Number 974 CO-CHAIR TOOHEY asked if the single site schools were brought up in the discussions on the foundation formula? COMMISSIONER HOLLOWAY asked Co-Chair Toohey to repeat her question. CO-CHAIR TOOHEY asked if the one superintendent/one school/one school district issue had been brought up in discussions on the foundation formula? COMMISSIONER HOLLOWAY replied that it had been discussed at the committee level, particularly as it related to the tiny schools. CO-CHAIR TOOHEY asked if there was any consensus. COMMISSIONER HOLLOWAY responded it is still being discussed and no decisions have been reached. CO-CHAIR TOOHEY remarked those were going to be hard decisions and she didn't feel the decisions were going to be made by a group of individuals like those meeting in April. She added nobody would make those decisions unless they were being paid to and even then, it would be a difficult decision to make. In her opinion the buck was being passed when those decisions were left to public discussion groups. Number 1067 REPRESENTATIVE BRICE expressed his appreciation to Commissioner Holloway for the work she was doing. He felt is was important to recognize that HB 452 was not a substantial rewrite of the foundation formula. He felt the current issues were compliance with the disparity test and the single site question. He acknowledged that a rewrite of the foundation formula would be a major undertaking, but hoped it would be the goal of this Administration to put policy over politics and that major issues would start being addressed. He mentioned he was fairly happy and satisfied with the educational system in the Fairbanks area, considering the high level of national merits and high SAT scores coming from the Fairbanks schools. Representative Brice requested a more detailed explanation on Section 4. Number 1218 CO-CHAIR BUNDE commented that the fiscal note addressed funding for single sites and funding needed to meet the disparity requirements of the federal government. He referenced the $223.8 reflected on the fiscal note and asked if that money would be deducted from funding for education, or would it be in addition to what the legislature is expected to fund for education this year. MR. ELLIOTT responded it is in addition to. CO-CHAIR BUNDE clarified that the department wanted to add $223.8 to the existing formula. MR. ELLIOTT said that portion goes to the REAAs. He said, "It's the difference of what is deducted and then the $500 per instructional unit that they're given. There is about a quarter of a million dollars difference." CO-CHAIR BUNDE said what he was trying to get at in round numbers was the amount of the total educational budget for this year assuming flat funding. MR. ELLIOTT said about $650 million. CO-CHAIR BUNDE questioned if the $223.8 would not be in addition to that amount. MR. ELLIOTT said it is in addition to the current budget. CO-CHAIR BUNDE noted the budget actually would be about $800 million then. MR. ELLIOTT informed Co-Chair Bunde it was $223.8 thousand, not million. CO-CHAIR BUNDE verified that it was $223,800 in addition to the $650 million. Number 1329 CO-CHAIR BUNDE referred to the comments on fairness and balance and asked Commissioner Holloway if she had an idea of how to balance the disparity where there are REAAs with little or no local contribution versus places like Kenai, where they are up to the maximum local contribution. COMMISSIONER HOLLOWAY said that was a real issue for them. First of all people often say that REAAs don't contribute, but in fact, the $35 million received for offsetting the cost is mostly generated off the backs of REAAs. So, in some sense, that is their contribution. The State Board of Education, under the direction of the Governor, is aware of the difference in the perception of fairness and the board is dealing with that. Also, the board is talking about raising the cap because it is real important for some communities. She added that is all part of the current discussion of the State Board of Education, and she thought they were ready to take the difficult step of making the decision after there had been public engagement. She didn't believe the State Board of Education was expecting any other group to make a recommendation. Number 1410 CO-CHAIR BUNDE referred to the $61,000 foundation formula and asked Commissioner Holloway if she thought the impact aid was about $500 of that $61,000. MR. ELLIOTT said that is the supplemental required for the state to meet disparity at the new federal standard. CO-CHAIR BUNDE verified it would be $61,500, which actually raises the foundation. COMMISSIONER HOLLOWAY interjected it would raise for the REAAs, because they are at the bottom, and have to be brought up in order to meet the 20 percent disparity test. Number 1450 CO-CHAIR BUNDE referred to the $35 million impact aid and asked Commissioner Holloway how that would be prorated out in the $61,000. MR. ELLIOTT indicated the department had a schedule prepared and he would be happy to furnish that information to the committee. CO-CHAIR BUNDE referenced Commissioner Holloway's comments on good education policy and research as it related to the quality of schools and asked if she had some idea as to what direction the research was leading them in trying to develop quality schools. COMMISSIONER HOLLOWAY advised there is about 25 years of research that demonstrates the kind of things that need to happen in schools in order to increase the probability of students learning and learning well. For example, one of the quality indicators that might be used in a school assessment or accreditation model would be that that school or district had determined what they want their kids to know and be able to do, had identified the desired results, and had an assessment system in place to measure that. She said knowing what is trying to be reached is one of the key quality indicators that makes a difference. Another high quality indicator is a planned systematic instructional approach throughout the system, so kids move well between schools and feeder schools. She said that principals play a key role if they are instructional leaders and keep the focus in the school on instruction, not on other issues. She offered to provide the committee with a general list of quality indicators. Number 1614 CO-CHAIR BUNDE said that he had read the series of articles in the Daily News Miner on rural schools and had heard from people in rural areas who felt they were, in some cases, ill-treated or mischaracterized. From an urban educator's point of view, he thought it was fairly balanced and asked if Commissioner Holloway would care to share her reaction to the articles. COMMISSIONER HOLLOWAY said that a lot of her years in Alaska had been spent in rural Alaska, and it was her opinion that rural Alaska was doing a far better job than those articles indicated. One of the reasons she believed that was true was because when standardized tests scores were used to determine whether children had learned, it's necessary to know where the children were at when they started. For instance, if a child came into the school and achieved at the 5th percentile on the first standard achievement test, but achieved at the 35th percentile three years later, that indicates lots of new learning and skills had been achieved. But many times children will come into a school program and will be at the 50th percentile the first time they are tested and five years later, they still score at the 50th percentile. If that's the measure, did that child need to go to school - there wasn't a whole lot of value added. She would say there is a lot of value added through the public education system in rural Alaska, but point out that's only one measure. Broader measures need to be looked at and that's why the assessment is so important. Does that mean there aren't any problems in rural Alaska? The answer is no, there are a lot of problems, but there are problems in urban Alaska, as well. She said when looking at schools that are not producing kids who are achieving well academically, we can identify schools in Fairbanks, Kenai and Anchorage who have the same kind of academic profiles as students in rural Alaska. It's not a rural/urban issue; it's much more complex than that. Number 1738 CO-CHAIR BUNDE commented there is a lot of frustration on the part of the public that high school graduates are being certified to do things they are not capable of doing. His recommendation is a two- tiered system of a high school diploma and a certificate of attendance. Students who have occupied a chair and kept it warm for three years, get a certificate of attendance. The students who can actually read and write get a high school diploma. He asked Commissioner Holloway for her reaction to such a system. COMMISSIONER HOLLOWAY responded that if a system identifies what kids should know and be able to do and then measure that, there shouldn't be kids who just sit in seats. CO-CHAIR BUNDE noted every time he goes to a high school, he sees kids sleeping. COMMISSIONER HOLLOWAY acknowledged she does too, and said it bothers her a great deal. She said there is some discussion about different certificates of mastery but that is an issue the State Board of Education has not taken on yet. Her hope would be that communities would come together and determine what they expect their students to know when they leave the 12th grade. She added that needs to be assessed along the way so when students at the 3rd grade are not meeting the bench marks, something will happen. She said that has not traditionally been done in education. The kids are just sent to school, the chairs are counted and the room has been determined large enough, but we've not held ourselves accountable for whether kids are learning. CO-CHAIR BUNDE added that the input may have to come from parents. COMMISSIONER HOLLOWAY said it was her hope that parents would be involved in all the processes. Number 1846 REPRESENTATIVE CAREN ROBINSON said she was trying to get an idea of when Commissioner Holloway was hoping to have legislation ready. It was her understanding that a subgroup would hold public hearings during the interim and bring their recommendations to the State Board of Education. The State Board would then bring the proposal to the Governor, who would then bring it to the legislature. She asked if that was the plan? COMMISSIONER HOLLOWAY said the State Board of Education is designing conceptually, the foundation formula. The board wants to take that to the public and hopes to have it solidified to recommendations for the Governor in time for introduction next legislative session. REPRESENTATIVE ROBINSON asked if the State Board of Education would be looking at the cap. She mentioned that Juneau is another area that has reached the cap, which means no additional city dollars can be put into education. COMMISSIONER HOLLOWAY assured Representative Robinson that was an area that would be looked at. There are several other areas in addition to Juneau where that is a problem. The board is aware of the problem and will be addressing it. Number 1943 CO-CHAIR TOOHEY referred to an article from Newsweek Magazine and commented that if a child isn't given the proper track setting at an early age, the child will never learn. She asked Commissioner Holloway if she was aware of any program, other than Headstart, that would help these children. COMMISSIONER HOLLOWAY said one of the initiatives of the Children's Cabinet is the 0 to 6 age group, and there is an attempt to identify across departments what kind of services families are receiving to address the issue. Also, the department has recently formed a partnership with the PTA, after a review of the Utah model which has a center for family learning so good parenting and stimulation can be addressed early on. The Department of Education is trying to form a partnership with the Department of Health & Social Services to work with primarily teen-age mothers. She announced the department had just received a Danforth Grant, for the Department of Health and Social Services and schools to develop a plan to provide integrated services to families at the local level. Legislators, Governor's staff and local people will be involved. She said it is recognized that a lot more family support is needed early on if those kids are going to have a chance at learning. Number 2088 WANDA COOKSEY, Lobbyist, Small Single Site School District Consortium, testified that Section 4 of HB 452 covers the issue the consortium was concerned about. It places in the formula, the equation that's been used to compute the grant amount appropriated for the 21 school districts for the last several years. The Small Single Site School District Consortium supports HB 452 for that section. Number 2148 CARL ROSE, Executive Director, Association of Alaska School Boards, said his comments were directed to Sections 1, 2 and 4 dealing with disparity. He advised that the rules have changed on the issue of disparity. The state of Alaska has at stake in FY 98, about $35 million and in order to qualify for that, the disparity test needs to be met in FY 96. He presented figures, in round numbers for the committee to state his point. He said, "If you take a look at the REAA supplemental, that $500, you have to have a supplemental appropriation of $1.2 million. The 90 percent to 95 percent deduct will get back from REAAs about $1 million, the net investment to the state is about $200,000 in FY 96 to qualify for $35 million in FY 98." In other words, a net investment this year supplementally of $200,000 qualifies the state for $30 million to $35 million in FY 98. He referred to the discussion regarding the possibility of federal impact aid going away sometime in the future and said the fact is this year Alaska can qualify for $35 million in FY 98 which shouldn't be overlooked because to prorate the instructional unit by that amount of money is roughly $3,000. The impact of that would be borne by the districts who have the most instructional units; Anchorage, Fairbanks, Mat-Su, Kenai and Juneau. The largest school districts would take the largest hit of that proration. MR. ROSE said the second area of support is for the single site school districts. As everyone is aware, a formula is currently used to calculate the amount of money that's appropriated for the single site schools. For many of these schools, 10 percent to 15 percent of their annual budget is wrapped up in a single site supplemental appropriation, and they are simply asking to be inside a foundation unit. Number 2242 CO-CHAIR BUNDE asked if it would be fair to say this would add a level of comfort for the single site school districts because these funds would be wrapped in other funding and would not be a separate budgetary item. MR. ROSE said all the single site school districts budget that money contingent on a supplemental, where all the other districts receive their funding up front. CO-CHAIR BUNDE said there are really two choices: This bill or reduce the foundation formula by about $3,000. MR. ROSE responded yes, in FY 98. Number 2279 CO-CHAIR BUNDE said that Commissioner Holloway had mentioned they were looking at a per student application rather than a unit as they move toward rewriting the foundation formula, and asked Mr. Rose if he would care to comment. MR. ROSE said the Association of Alaska School Boards' position is adequacy and equity in funding. He said the concern is that as their responsibilities to provide public education continue to grow, more and more mandates are made and the money gets less and less. The majority of their money is generated through regular instruction, K-12, and that source is tapped for every other mandate that is passed. The association is open to addressing the foundation unit for a whole host of reasons. If in fact the PL-874 impact funds should go away, the measure used to provide equity is the federal disparity test. If federal funding leaves, the state will have to devise their own standard, because he felt it would go to court. Currently, the federal government decides whether the state satisfies an equity standard because the state receives federal aid. Without federal aid, there would have to be an Alaskan standard. It will have to be looked at through the foundation process. CO-CHAIR BUNDE said he would hold HB 452 in committee and schedule it for another hearing.
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