Legislature(2003 - 2004)
05/07/2003 09:01 AM Senate FIN
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
SENATE BILL NO. 202
"An Act relating to school transportation; relating to the
base student allocation used in the formula for state funding
of public education; and providing for an effective date."
This was the first hearing for this bill in the Senate Finance
Committee.
Co-Chair Wilken stated that the Senate Finance Committee sponsors
this legislation. He shared that this legislation would change the
methodology of the grant program that the State has used to
reimburse K-12 public education school districts for local pupil
transportation expenses. In addition, he stated that the bill would
increase the per student base allocation funding to $4,169, an
increase of $159 per student, by absorbing Learning Opportunity
Grants that total $2.2 million into the student education
foundation formula. Co-chair Wilken suggested that the Committee
address these two bill components separately.
JOHN ALCANTRA, Government Relations Director, National Education
Association of Alaska (NEA-Alaska) stated that the State's 12,700
public school employees who belong to NEA-Alaska realize that the
Committee's recently adopted operating budget bill is contingent on
the two issues addressed in this bill. He voiced appreciation for
the Committee's efforts toward increasing the level of the base
student allocation funding which he declared would provide school
districts "stability of funding and help them reach some of the
requirements of the State (Education) Standards."
Mr. Alcantra voiced appreciation for the $159 per student increase,
but announced that NEA-Alaska's "ultimate" base student allocation
goal is $4,280 per student. He communicated that according to
nationally recognized business research [not provided], the $4,280
funding level would assist school districts in addressing projected
"one-year inflationary costs and just one year of unmet needs."
Continuing, he informed the Committee that this research recommends
a five-year phased in increase of $365 per student, plus additional
funds to address the inflationary erosion of funding. However, he
stated, that in recognition of the State's fiscal situation, NEA-
Alaska is limiting their funding request to the one-year funding
request of $4,280 per student. He stated that this request would
cost the State an additional $23 million in FY 04 and would assist
in accomplishing the State's constitutionally mandated provision to
provide quality public education.
Mr. Alcantra reminded Committee members that the FY 03 budget was
based on a specific crude oil barrel price along with a specified
draw on the Constitutional Budget Reserve (CBR). He attested that
because the average price per barrel for the initial ten months of
the fiscal year exceeded the specified price, the amount drawn from
the CBR account was reduced. Therefore, he suggested that some of
those CBR savings could be used to support the proposed $23 million
FY 04 funding increase that would be needed to adequately support
student education funding.
[NOTE: At this point, a brief and indiscernible dialogue between
Senator Bunde and the testifier transpired.]
Senator Bunde asked whether a "guarantee of results" such as the
majority of high school students passing the State's High School
Graduation Qualifying Examination (HSGQE), could be provided were
this funding request approved.
Mr. Alcantra remarked that education standard requirements are
important. He stated that no guarantees could be provided to ensure
that all students, including those identified by measures such as
the federal No Child Left Behind Act, would pass the high school
exit exam; however, he avowed that an appropriate education funding
level would assist districts in providing the most important aspect
of an education which is providing quality teachers, quality
support professionals and other necessary resources.
Co-Chair Wilken mentioned that Senator Bunde was one of the prime
sponsors of the HSGQE legislation.
BRUCE JOHNSON, Representative, the Alaska Association of School
Boards, thanked the Committee for consolidating the Learning
Opportunity Grants into the total funding allocated to the base
student allocation formula as it would assist school district
funding. He testified that while the issue of flat funding remains,
it could be addressed at another time.
Senator Hoffman voiced concern regarding "the eroding floor" of
unmet funding needs, as referenced in the "Change to Floor" column
in the Department's fiscal note #1 analysis. He noted that were
this legislation adopted, $1.4 million would be allocated toward
that eroding floor; however, he asked the Department to provide the
Committee with the remaining "unmet" funding need level for each
school district.
Co-chair Wilken stated that the Department of Education and Early
Development would address Senator Hoffman's concern during its
forthcoming testimony.
MARY FRANCIS, Representative, Alaska School Administrators
Association, testified that the administrators "add their voice to
those who support the increase in the base student allocation" as
it assists in addressing the funding "erosion" that has been taking
place. She avowed that, "this is a more protected mechanism for
raising the student allocation
Co-Chair Wilken stated that this concludes the testimony regarding
the base student allocation funding. He specified that the
transportation component of the bill would now be addressed.
EDDY JEANS, School Finance Manager, Department of Education and
Early Development, responded to Senator Hoffman's "eroding floor"
question by stating that the Department would develop and
distribute to Members a schedule that would reflect "the remaining
balance of the supplemental funding floor" were this bill to take
effect. He estimated that, were this legislation adopted,
approximately $1.5 million could be allocated toward the remaining
supplemental funding floor balance of approximately $9.5 million.
Co-Chair Wilken read from a school transportation cost schedule
[not provided] that denoted the increase in pupil transportation
expenses from FY 97 to FY 03. He stated that transportation costs
in FY 97 amounted to $32.8 million in general funds and a total of
$53.9 million in general funds in FY 03. He stated that this
equates to an eleven-percent increase per year. He stated that
numerous options, such as awarding contracts, are being proposed to
address this expense.
Mr. Jeans explained that currently the State reimburses districts
for transportation expenses according to specified percentage
levels that are determined by such things as whether the route
meets the minimum distance from a school or meets the minimum
number of students per route requirements. He pointed out that
exceptions are currently in place to allow reimbursement for
situations wherein a local school board might authorize a bus route
in an area that does not meet the minimum distance requirement but
is deemed to have hazardous conditions.
Mr. Jeans stated that, in an effort to contain transportation
expenses, this proposal would provide a grant to each district
based on the total amount of the district's FY 03 transportation
expenses divided by the number of students enrolled that year. He
continued that the resulting number would be identified as the base
per student dollar. This base dollar amount, he continued, would
then be multiplied by the current year's enrollment to determine
the grant total, specific to that district. He mentioned that were
the district to lower its transportation costs by, for instance,
consolidating routes, the resulting savings could be used by the
district for other purposes.
Mr. Jeans pointed out that, even though the Department has
encouraged districts to seek transportation efficiencies, costs
have continued to increase. He noted that in addition to
reimbursing districts for their transportation expenses, the
current program includes a provision that provides a built-in
inflation factor allowance.
Mr. Jeans attested, that, in his experience, these transportation
contracts have not provided savings because "there was little
incentive" to the school district to negotiate the price of the
contract with the transportation provider. He stated that this
grant program would provide the district with "the flexibility" to
negotiate with the provider.
Co-Chair Wilken referred the Committee to the Department of
Education and Early Development fiscal note #2 which denotes the
impact of the grant program on each school district.
Co-chair Wilken asked Mr. Jeans to explain the "$1,200 cap per
student" as noted in the fiscal note #2 spreadsheet.
Mr. Jeans responded that the Department is making a "policy
statement" by specifying $1,200 as the maximum limit the State
would pay per student for transportation expenses. He communicated
that five districts currently exceed this limit: the Alaska Gateway
District with a rate of $1,464 per student; the Bristol Bay
District with a rate of $1,322; the Copper River District with a
rate of $1,300; the Delta/Greely District with a rate of $1,351;
and the Southeast Island District with a rate of $1,234. He pointed
out that private entities are under contract in these districts to
provide student transportation. He commented that, "it is
conceivable" that districts could reduce transportation costs by
conducting that service "in-house."
Mr. Jeans allowed that costs would be more difficult to negotiate
in areas where there is a single bidder or limited competition.
Senator Taylor summarized that this legislation would allow
individual school districts to receive transportation funding, but
at a level based upon their FY 03 funding.
Mr. Jeans affirmed that the determination would be based on the FY
03 per student transportation funding amount as it relates to
current student enrollment. He voiced that were student enrollment
to lower or increase, the amount allocated would follow suit.
Co-Chair Wilken opined that this methodology, if adopted, would
continue until such time as the Legislature changes it.
Mr. Jeans concurred. He forecast that the Legislature might alter
the amount as a result of school district lobbying for a percentage
increase that would be allocated across the board.
Senator Taylor asked whether this legislation could "lock in a
number" on a statewide basis.
Mr. Jeans stated that rather than designating a specific amount,
the grant level would fluctuate according to a district's student
enrollment each year. He stated that this proposal is projected to
cost the State $54 million in FY 04.
Senator Taylor surmised that were the number of students to remain
the same, the grant total would remain constant.
Mr. Jeans concurred.
Senator Taylor argued, therefore, that this proposal would reward
districts with increasing enrollment and "punish" those with
lowering enrollment.
Mr. Jeans countered that the current reimbursement program is
viewed by school districts as a punishment "because their contracts
have inflationary adjustments built into them." He stated that this
"vested interest" proposal would provide districts with the ability
to negotiate contracts and to revisit their current transportation
system in order to reduce costs or generate savings. These savings,
he attested, could then be used for other purposes in the district.
Mr. Jeans expressed that, under the current system, were the
Municipality of Anchorage to lower its transportation costs, the
savings generated at the State level would then be distributed to
other areas of the State as opposed to being allocated toward other
Anchorage expenses. He stated that were this legislation adopted,
in this scenario, Anchorage would retain those savings and could
use them as determined by the district.
SFC 03 # 80, Side A 10:37 AM
Senator Taylor agreed that this would be beneficial to districts
that have this ability; however, he expressed that districts
experiencing a declining enrollment would suffer. He argued that
the proposal does not address the fact the districts with declining
enrollment would still be required "to pick up students at the end
of the road." Districts with declining enrollment, he attested,
would receive "a double hit" as they would receive less
transportation money and less money from the base student
allocation factor. He stated that this proposal should include a
hold harmless clause for districts with decreasing enrollment.
Senator Hoffman acknowledged Senator Taylor's concern regarding the
expenses and requirements that face districts with declining
enrollment. Furthermore, he voiced concern that this legislation
would punish rather than reward those districts that have already
lowered their transportation expenses, by receiving a lower per
student amount than awarded to those districts that have exerted
little effort toward addressing the issue. He commented that this
raises a question of fairness.
Mr. Jeans verified that the proposal is based on current district
expenditures. He acknowledged that some districts with single
transportation bidders have experienced substantial increases in
expenses as opposed to districts with competitive situations. He
continued that, by providing their own transportation, some
districts might experience "cheaper transportation."
Mr. Jeans remarked that the Administration's position is that the
current reimbursable system does not promote cost containment, and
he commented that this proposal would allow local districts to make
independent decisions regarding transportation. Furthermore, he
stated that current regulations allow districts to charge user
fees, but he remarked that because districts are reimbursed for
their expenses, this option is not utilized. He stated that this
option would continue to be available under the new system.
Senator Hoffman reiterated that districts whose expenses approach
the $1,200 per student limit could realize "substantial savings;"
however, he contested that the districts "that are well below" that
limit would not have similar options. He suggested that a flat rate
per student be provided to all districts as he attested this might
address the inherent problem with this proposal.
STEVE KALMES, Director of Transportation, Anchorage School District
testified via teleconference from Anchorage to voice that contrary
to the Department's testimony, he does not contribute the rising
costs of student transportation to the current reimbursement
program, as he contended, such things as the cost of buses, wages,
driver training, fuel, and insurance drive expenses. He noted that
adherence to the Department of Education and Early Development's
mandate that transportation must be provided for special needs
students incurs enormous expense to the District.
Mr. Kalmes disclosed that, in order to contain costs, the District
has actively sought bidders and, with five bidders, "the prices
were what they were." He communicated that one of the District's
largest concerns regarding this grant proposal is how to address
the high cost of transporting special needs students. He disclosed
that the costs associated with transporting special needs students
amount to approximately 42 percent of the District's total
transportation expenses and equates to ten times the cost of
transporting a regular program child. He exampled that "the most
expensive route in the district" is the one that transports special
needs students from the Mat-Su valley to the Alaska State School
for the Deaf that the District operates for the Department of
Education and Early Development.
Mr. Kalmes understood that the grant amount would increase as
enrollment climbed; however, he voiced surprise that funding would
decrease were the opposite to occur. He stated that as enrollment
increases, those students are absorbed within an existing bus
route. However, he contended that were the number of students on a
particular route to decline, that route would still be required to
operate. He suggested that, were the grant program implemented, the
FY 03 base level be used as the level that funding not drop below.
Co-Chair Green communicated that she had served on a committee that
addressed the needs of special education programs in the State. She
noted that the Anchorage School District met with that committee
regarding the numerous education programs the District conducted.
She identified that many of those programs were optional rather
than mandatory programs. Therefore, she asked whether the District
was mandated to operate the Alaska School for the Deaf (ASD).
Mr. Kalmes responded that the District is under contract with the
Department of Education and Early Development to operate the ASD.
He could not verify whether the program was mandated or optional.
Co-Chair Green identified ASD as being an optional program, and she
asserted that the costs associated with running that program,
including transportation costs, are included in the base student
allocation calculation. She stated that the District should
identify which programs are conducted on an optional, contractual
basis verses those that are mandated.
Senator Olson asked whether the special needs bus transportation is
provided by the District.
Mr. Kalmes responded that the transportation is comprised of a
combination of District and contracted routes.
BARBARA SCHUHMANN, Parent, testified via teleconference from
Fairbanks to suggest that the Department of Education and Early
Development leave the current program in place. She opined that
other cost containment options such as a route analyses, exist. She
continued that this legislation contains assumptions such as that
the same percentage of students rides buses in every district and
that all costs are equal in all districts. She specified that
parents rely on school bus service, and she expressed that the
service should be viewed as a transportation and public safety
service rather than being viewed as an education system service.
She stressed that the risks involved in reducing routes should be
investigated.
Senator Bunde asked whether school districts, particularly the
Anchorage School District, have considered charging user fees to
assist in offsetting the cost of school transportation.
Mr. Kalmes responded that an Anchorage citizen review panel
recently asked the Department of Education and Early Development
how a user fee program would affect the current reimbursement
system. He commented that the current policy tends to be a
disincentive to this approach because the Department determined
that the reimbursement amount would be lowered by the same amount
collected from the user fees.
Mr. Jeans verified that other districts have not pursued this
option for that very reason.
Senator Bunde asked whether this option would be possible under the
grant program system being proposed.
Mr. Jeans responded that a rider fee could be collected without an
impact on the proposed grant system.
Senator Taylor countered that there is no language in the proposed
grant system that would require a transportation system to be
operated; therefore, he declared that a District could eliminate
transportation and keep the money.
Co-Chair Wilken stated that this scenario would be a local issue.
Co-Chair Wilken ordered the bill HELD in Committee.
RECESS 10:56 AM / 5:38 PM
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