Legislature(2007 - 2008)SENATE FINANCE 532
05/12/2007 09:00 AM Senate FINANCE
| Audio | Topic |
|---|---|
| Start | |
| HCR6 | |
| HB113 | |
| HB162 | |
| HB90 | |
| HB166 | |
| HB90 | |
| SB178 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 177 | TELECONFERENCED | |
| + | HCR 6 | TELECONFERENCED | |
| + | HB 113 | TELECONFERENCED | |
| + | HB 90 | TELECONFERENCED | |
| += | HB 162 | TELECONFERENCED | |
| + | HB 166 | TELECONFERENCED | |
| + | TELECONFERENCED |
SENATE BILL NO. 178
"An Act relating to school funding, the base student
allocation, district cost factors, the local contribution,
and the intensive services adjustment for state funding of
public education; providing for an effective date by
repealing the delayed effective date of sec. 6, ch. 41, SLA
2006; and providing for an effective date."
This was the first hearing for this bill in the Senate Finance
Committee.
AT EASE: 5:19:54 PM / 5:20:04 PM
EDDY JEANS, Director, School Finance and Facilities Section,
Department of Education and Early Development, conducted an
overview of the bill. He also provided a handout titled "Two-
Year Education Funding Proposal SB 178" [copy on file] which
provided a written analysis of the bill sections.
Mr. Jeans noted that Section 1 of the bill "adds a hold harmless
provision to the foundation program. It's there to assist school
districts that have decline enrollment." This section is
addressed in item number four on the aforementioned handout.
Mr. Jeans continued that the hold harmless provision in Section
1 would accommodate school districts that might be consolidated
for efficiency and those whose funding might change due to the
funding formula, specifically as this bill would specify that a
community with an enrollment of more than 100 students would
receive funding equivalent to two schools. A community whose
enrollment is below 100 would be funded as one school. "The
adjustment in that is pretty substantial" and Section 1 would
provide some "transition money for a three year period to allow
districts to adjust for that".
5:21:44 PM
Mr. Jeans directed attention to language in Section 1 subsection
(b)(2) on page 3 beginning on line 15. This provision would
change the local city or borough contribution to its school
district from a four mill tax levy to a three mill tax levy.
This provision would be further clarified in forthcoming
remarks.
Mr. Jeans then addressed the intensive needs funding for school
districts as specified in Section 2 subsection (a)(2)(A) on page
4 line 2. This provision would provide "a two percent block
funding approach for school districts with a student enrollment
of 1,000 or more." This calculation would involve "taking the
districts average daily membership" and multiply that by two
percent in order to determine how many students would be funded
under this component.
Mr. Jeans communicated that the funding level for this component
would continue as specified in current State Statute at "five
times the base student allocation".
5:23:06 PM
Senator Elton contended that a technical amendment would be
required in this regard as the current Statute does not specify
a two percent funding mechanism limitation on special needs
student funding; it specifies that anything over two percent
would be subject to an audit. The proposed language would be
problematic for some school districts. For example, the current
special needs student component in the Juneau School District is
2.9 percent. He would work with the Department to further the
original intent of this consideration.
5:23:59 PM
Mr. Jeans affirmed that Senator Elton's statement was correct.
Mr. Jeans stated that Section 3 beginning on page 4, line 7
through page 6 line 2 depicts districts' cost differentials as
recommended by the Institute of Social and Economic Reform
(ISER) report.
Mr. Jeans stated that the base student allocation would be
increased from $5,380 to $5,580 as specified in Section 4 page 6
lines 3 through 5 effective with Fiscal Year 2009 (FY 09).
Mr. Jeans noted that the handout also depicts the costs
anticipated for the changes proposed in the bill.
Mr. Jeans stated that Section 5 of the bill also instructs that
the local contribution equate to a minimum of three percent.
Mr. Jean continued. Section 6 would repeal the current provision
that requires the Department to only count 50 percent of the
increased property values since the year 1999. This would return
districts "to a level playing field of applying three mills
across the board for all municipalities in the State of Alaska
as their required contribution under the foundation program."
5:25:35 PM
Senator Dyson asked for clarification as to which section
repealed the 50 percent match.
Co-Chair Stedman specified that the provision in question is
addressed by Section 6 on page 6 line 14.
5:25:59 PM
Mr. Jeans directed attention to the bill's cost estimates as
depicted on the handout. Going to three mills in FY 2008 would
cost the State approximately $9,900,000. Going to the two
percent block funding for school districts with 1,000 or more
students would increase that component by approximately
$18,700,000. The implementation of 50 percent of a district's
cost factor would amount to approximately $48,600,000. Based on
current FY 08 student projections, the hold harmless provisions
would cost the State approximately $400,000. Thus the total
formula increase would be approximately $77,600,000.
Mr. Jeans noted that Governor Sarah Palin's FY 08 operating
budget included a one-time grant funding of $34,600,000. Thus,
once that amount is subtracted from the projected $77,600,000
total, the general fund increase in FY 08 would be approximately
$43 million.
Mr. Jeans noted that the FY 08 funding contribution for the
Teachers Retirement System (TRS) contribution is anticipated to
$77,500,000. That increased funding combined with the Total Two-
Year Education Funding proposed in this bill would amount to
approximately $120,500,000.
5:27:21 PM
Co-Chair Hoffman noted that the Committee and the Senate as a
whole had eliminated the aforementioned $34,600,000 proposed in
the Governor's Operating Budget. Therefore, that amount should
be added to the $120,500,000. Thus, the total affect to the
Operating Budget adopted by the Senate would be $155 million.
Mr. Jeans affirmed.
5:28:03 PM
Mr. Jeans noted that neither of these items has yet been
addressed by the Operating Budget Conference Committee.
Co-Chair Hoffman verified this to be true.
5:28:16 PM
Mr. Jeans noted that increasing the Base Student Allocation
(BSA) from the current $5,380 to $5,580 would result in a
$23,700,000 increase in the FY 2009 budget.
5:28:38 PM
Co-Chair Stedman deduced therefore that the BSA for FY 08 would
remain level.
Mr. Jeans confirmed that a BSA of $5,380 would remain in effect
for FY 08.
5:28:57 PM
Senator Dyson understood that eliminating the 50/50 match would
increase the Municipality of Anchorage's property tax obligation
by approximately $34 million and the Matanuska-Susitna Borough's
by approximately $40 million over the next five years.
Mr. Jeans could not speak to how this legislation might affect
an area's local tax base. "The required local effort within the
foundation program may change in those amounts that you've
suggested there."
5:29:53 PM
Mr. Jeans recalled having shared with the Committee, during a
separate presentation on the foundation funding program, that
the existing provision was "creating a disparity in the required
local contribution amongst our municipalities." This will "bring
uniformity back to that required local effort."
5:30:07 PM
Co-Chair Hoffman recalled that when that [unspecified]
legislation was being considered by the Legislature, the
Department had not been supportive of it.
Mr. Jeans could not recall the Department's position in that
regard.
Co-Chair Hoffman stated that he would research the matter.
There being no further questions from the Committee, Co-Chair
Stedman ordered the bill HELD in Committee.
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