Legislature(1993 - 1994)
03/24/1994 09:07 AM CRA
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
The Senate Community & Regional Affairs Committee was called to order by Chairman Randy Phillips at 9:07 a.m. He brought SB 62 (PUBLIC SCHOOL FOUNDATION PROGRAM) before the committee and asked Duane Guiley to explain the differences between the original bill and the proposed committee substitute. Number 010 DUANE GUILEY, Director of School Finance, Department of Education, directed attention to a schedule he prepared which outlines the differences in the two versions of the legislation. The original version of SB 62 requires the Department of Education to develop the Alaska School Price Index, which is intended to be a replacement for the current Area Cost Differential within state statute. The committee substitute retains the original Area Cost Differential. In the original version funding for Centralized Correspondence Study is based on the elementary and secondary foundation formula. The committee substitute retains the existing system, which bases the revenue only on the elementary school formula. The original SB 62 suggests that funding for vocational education should be based on a weighting factor multiplied by each student enrolled in grades 9 - 12. The committee substitute leaves the current system unchanged, which is based on approximately .004 instructional units for each child who receives vocational educational. The original SB 62 suggests limiting the number of children that can be identified for funding purposes at 4.5 percent of the K-12 population and multiplying that number times a weighting factor (.012) to be specified in regulations. The committee substitute leaves gifted and talented funding unchanged at .025 units per student enrolled in gifted and talented program. The original SB 62 requires a 4 mill local tax levy or 35 percent of basic need. The committee substitute suggests that the 35 percent of basic need would be increased to 50 percent of basic need, thereby affecting only those very well wealthy districts in the state (North Slope, Valdez and Unalaska). The 4 mill levy contribution would remain unchanged. In the original SB 62, there is no reference to funding communities in the statutes. The committee substitute provides that funding communities must have a minimum of 25 students in average daily membership. In the original SB 62, the elementary and secondary formulas remain unchanged with the divisor for large schools at 13, for secondary at 17, for elementary students at 17. The committee substitute provides that the elementary student divisor is reduced from 17 to 16, thereby awarding more money for the larger elementary schools by reducing the number of students needed to generate a unit. In the original SB 62, whether or not a district was a single funding community was considered in developing the Alaska School Price Index. The committee substitute provides that a single-site school district with an ADM of 900 or less shall receive between 6 - 12 percent additional K-12 units. The original SB 62 changes the reporting date for the succeeding year's enrollment from October 15 to November 20, thereby providing the department the opportunity to enhance its projections, as well as provide the opportunity for the district to first calculate their current year enrollment before they are required to make their projection. The committee substitute contains the same change. The original SB 62 contains a holdharmless provision of three years after the implementation date so that no single district would experience a decrease in revenue for three consecutive fiscal years after adoption. The committee substitute does not contain a holdharmless provision and the existing holdharmless is repealed. In the original SB 62 and in the committee substitute as well, a district may request to use the preceding year's ADM for good cause, which includes reduction in student enrollment. In the original SB 62, the requirement for the department to review each district's plan of service for gifted students is repealed. The committee substitute leaves that section of law unchanged, which would require the department to continue to review a gifted and talented plan of service. Number 190 SENATOR ADAMS said the original bill leaves the local contribution requirement unchanged, and he prefers that to changing it from 35 percent of basic need to 50 percent as is provided in the committee substitute. He suggested changing the allowable local effort from 23 percent of basic need to 24 or 25 percent of basic need rather than changing the local contribution factor, and he asked what impact that would have on the school districts. DUANE GUILEY said the department has testified in favor of a House bill that would increase the allowable local contribution from 23 percent excess to 24 percent excess. There is also another piece of legislation that would increase the allowable excess from 23 percent to 25 percent. The department has testified that it has concern over increasing it all the way to 25 percent in that the actual disparity is not known until nearly a year after the fact and it would require retroactive refunds of any excess contribution, or it would eliminate the district's opportunity to receive state aid. In the committee substitute, by increasing the minimum from 35 percent to 50 percent, it results in a savings to the state, whereby providing an opportunity for increased allowable excess presents no opportunity for savings to the state, but does provide additional revenue to the districts that have that opportunity. Number 220 SENATOR TAYLOR suggested leaving the local contribution requirement unchanged as was done in the original bill except to the add the words "whichever is greater." He said if it is made mandatory that each community must contribute 4 mills of tax or 35 percent, whichever is greater, it provides a very significant savings to the state. Number 245 SENATOR ADAMS asked for an update on PL 81-874. DUANE GUILEY answered that based on a conversation with the Governor's Office in Washington, D. C., it appears that the markup on the Senate side may begin sometime in late March or early April. There is some thought that the bill may be amended significantly on the Senate side. The department is hopeful that it will be amended to the point that the disparity will be retained at 25 percent, providing the opportunity for the state to continue to do the deduct. He said the department will keep the committee advised on the status of PL 81-874. Senator Adams also requested more information on the holdharmless section of the bill (Section 8). Number 266 SENATOR LEMAN moved that CSSB 62(CRA) version E be adopted as a working document. SENATOR ADAMS objected, stating he believes the original bill should be the version amended. SENATOR RANDY PHILLIPS stated there would be a hand vote on the motion. Senators Phillips and Leman voted "Yea" and Senators Adams and Taylor voted "Nay." The Chairman stated the motion failed. SENATOR RANDY PHILLIPS asked the committee members if they feel the school foundation formula needs to be rewritten. Senator Adams answered "No" and Senators Taylor Leman and Phillips said they believe it needs to be rewritten. Number 336 SENATOR LEMAN commented that he agrees that everybody ought to be contributing toward the cost of education and he doesn't believe it is being done now and it is not be done fairly. However, proposing this and making it happen is another thing. SENATOR ADAMS stated that he does not want to change the school foundation formula at this time because the input of various school districts have not been placed in this foundation change at this particular time. Senator Adams also asked for a cost breakdown on changing the divisor for elementary student formula from 17 to 16, as well as suggesting that single site language needs to be included in the bill. Number 358 SENATOR RANDY PHILLIPS spoke to the overcrowding conditions in the Anchorage school district, stating that they have over 40 percent of the student enrollment in the state, but they receive only about 29 percent of the funding. He added that he would like to rewrite the school foundation formula with the current funding and that is what the committee substitute was all about. Number 378 SENATOR RANDY PHILLIPS stated SB 62 would be back before the committee the following Tuesday, and he then adjourned the meeting at 9:35 a.m.