Legislature(2001 - 2002)

04/27/2001 01:45 PM Senate CRA

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                 SB 42-FOUNDATION FORMULA INCREASE                                                                          
                                                                                                                              
RICHARD BENAVIDES,  staff  for Senator Davis,  introduced SB  42 for                                                            
Senator Davis  because she was attending  a HESS committee  meeting.                                                            
He described it  as an issue that has been a priority  this year due                                                            
to the recognition  that current levels of funding  have not kept up                                                            
with  teaching   costs.  SB  42  would   help  alleviate   the  most                                                            
unpredictable  reason  for the  erosion  by inflation  proofing  the                                                            
foundation  formula. Inflation  has  risen about  30 percent in  the                                                            
last 10 years and the legislature  has increased the base foundation                                                            
formula by  only five percent.  During the  same time, the  required                                                            
local contribution has risen about 37 percent.                                                                                  
                                                                                                                                
There  are many  examples of  rising school  costs such  as fuel  or                                                            
electricity increases  and this legislation allows  school districts                                                            
to continue  to operate without eliminating  positions due  to those                                                            
types of increases.                                                                                                             
                                                                                                                                
This action  would not  bind future legislatures.  Each legislature                                                             
would have the  power to determine the appropriate  level of funding                                                            
for each fiscal year.                                                                                                           
                                                                                                                                
CHAIRMAN  TORGERSON  said  he  had  prepared  a  CS  to  change  the                                                            
effective date from 2001 to 2002.                                                                                               
                                                                                                                                
SENATOR PHILLIPS  moved the CS \J  version as the working  document.                                                            
                                                                                                                                
SENATOR  LINCOLN   objected  for  the  purpose  of   asking  for  an                                                            
explanation  of the difference  is between  "preceding fiscal  year"                                                            
from page  1, line 7 of  the original bill  and "preceding  calendar                                                            
year" on page  1, line 7 of the CS \J version. She  wondered whether                                                            
the change  is  supposed to  coincide with  the  effective date  and                                                            
whether the new language is acceptable with Senator Davis.                                                                      
                                                                                                                                
MR. BENAVIDES  said the language was acceptable with  Senator Davis.                                                            
                                                                                                                                
SENATOR LINCOLN withdrew her objection.                                                                                         
                                                                                                                                
SENATOR  PHILLIPS commented  that he thought  some school  districts                                                            
are on a calendar year versus a fiscal year.                                                                                    
                                                                                                                                
EDDY JEANS, school  finance manager for the Department  of Education                                                            
and Early  Development,  said the  purpose of  the language  "second                                                            
preceding calendar  year" is because of the timing  in which the TPI                                                            
index comes  out. This allows the  appropriate increase to  be built                                                            
into the budget for the upcoming year.                                                                                          
                                                                                                                                
Both the department and  the administration support the bill. School                                                            
districts have  lost 25 percent of the purchasing  power they had 10                                                            
years  ago. Chairman  Torgerson represents  a  school district  that                                                            
struggles to meet their  budget. The municipality contributes to the                                                            
CAP on  an annual basis  and yet the school  district has  increased                                                            
costs of personnel  services through  salaries and benefits  of over                                                            
$1 million per year. This  must be absorbed from other programs. The                                                            
department  believes  it  is  time  to  provide  some  inflationary                                                             
adjustment in the foundation formula.                                                                                           
                                                                                                                                
VERNON   MARSHALL,   executive  director   of   National   Education                                                            
Association (NEA) Alaska,  said inflation is a cruel and unavoidable                                                            
tax. There  is no avoiding that inflationary  payment and  kids have                                                            
felt that tax  in terms of missed educational opportunities.  Unless                                                            
inflation is offset it  will be charged against current capacity. At                                                            
a time when both teaching  and learning standards are being improved                                                            
it is time to stop "the  hemorrhage of academic depreciation and the                                                            
effects of inflation."                                                                                                          
                                                                                                                                
Retirement  incentive  programs  (RIP)  have  been  used  to  offset                                                            
inflation.  Data  from the  American  Federation of  Teachers  (AFT)                                                            
clearly shows ground has  been lost in terms of employee salary as a                                                            
percentage of  education expenditure. At the same  time, in relation                                                            
to  other states  ground  has  also been  lost  in terms  of  school                                                            
operational  costs.  For  the  year  1999-2000  they  estimate  that                                                            
teachers salaries are approximately  $1,000 to $1,100 less than they                                                            
were in 1998-1999.  This could be caused by retiring  of experienced                                                            
teachers at the  high end of the scale and hiring  teachers lower on                                                            
the  salary  scale  but the  $1,100  times  the  approximately  8000                                                            
teachers, equals  $8,800,000 that  has come out of experience  to be                                                            
put back into the classroom  and programs. Part of the cause of that                                                            
is because inflation is not offset.                                                                                             
                                                                                                                                
He closed in saying  that they support the efforts  of the committee                                                            
and will work  together but asked  for stabilization of the  funding                                                            
for children  in the  future.  It is a  wise move  for the State  of                                                            
Alaska  because  schools  are  thrown  into  a catch  up  race  when                                                            
inflation is not offset and the children will never win.                                                                        
                                                                                                                                
SENATOR  LINCOLN asked  for explanation  of the  ranking on a  sheet                                                            
handed to committee members.                                                                                                    
                                                                                                                                
MR. MARSHAL said  the figures on the far right indicate  the percent                                                            
change during  the decade. It's a comparison of the  state's percent                                                            
of the U.S. average over the ten year period.                                                                                   
                                                                                                                                
SENATOR LINCOLN said Alaska  was ranked #1 in 1988-1989 and number 6                                                            
in 1998-1999.                                                                                                                   
                                                                                                                                
 MR. MARSHAL responded Alaskan teacher's salaries ranked #1 ten                                                                 
years ago. The ranking does not reflect 1999-2000 and 2000-2001                                                                 
and they believe  the RIP has had  a significant impact on  schools.                                                            
They believe that the ranking for 1998-1999 is actually 8 rather                                                                
than the 6th place shown. Using the percentage as a part of the                                                                 
national average our ranking today is 51st.                                                                                     
                                                                                                                                
SENATOR LINCOLN moved CSSB 42 from committee with individual                                                                    
recommendations and accompanying fiscal note. There were no                                                                     
objections.                                                                                                                     

Document Name Date/Time Subjects