Legislature(1995 - 1996)

03/27/1996 01:50 PM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
  SENATE BILL NO. 244                                                          
       An   Act   relating  to   state   foundation  aid   and                 
       supplementary  state aid  for education;  and providing                 
       for an effective date.                                                  
  Co-chairman Halford directed  that SB 244 be  brought on for                 
  discussion.    RICK  CROSS,  Deputy  Commissioner,  Dept. of                 
  Education, came before committee  accompanied by EDDY JEANS,                 
  School Foundation, School Finance, Dept. of Education.                       
  END:      SFC-96, #55, Side 2                                                
  BEGIN:    SFC-96, #56, Side 1                                                
  Mr. Cross referenced the 20 percent test that must be met to                 
  include $35 million in federal funds  in the foundation.  He                 
  further advised that SB 244 deducts 95 percent from REAAs as                 
  opposed to 90  percent of  federal impact aid,  but it  also                 
  redistributes back a  $500.00 unit value to ensure  that the                 
  20 percent disparity test is met.                                            
  Senator  Sharp asked how  the bill would  impact the current                 
  per student rate  flowing to districts.   Mr. Jeans said  it                 
  would increase the per student  allocation in some instances                 
  and decrease it  in others.   He noted that the  legislature                 
  has traditionally provided supplemental  funding for single-                 
  site  school districts.    He pointed  to  the current  $1.2                 
  million supplemental request and said  that it is equivalent                 
  to a $500.00  allocation to  REAAs, per instructional  unit.                 
  The proposed  bill would increase  the impact aid  deduct to                 
  offset that cost.  Mr. Jeans next pointed to an accompanying                 
  fiscal  note  reflecting  a  net  general fund  increase  of                 
  Co-chairman Frank voiced  appreciation for the  department's                 
  attempt to develop an approach that is "somewhat  neutral in                 
  terms of costs and revenues."  He then asked how much of the                 
  cost is attributable to single sites and how much relates to                 
  the new allocation for  disparity.  Is that fully  offset by                 
  the increased  deduct,  except for  the $224.0?   Mr.  Jeans                 
  responded that the fiscal note does not address the  single-                 
  site  allocation  because  it is  currently  built  into the                 
  department K-12 operating  budget.   Increase of the  deduct                 
  from  90  to 95  percent saves  the  state slightly  over $1                 
  million. Single-site funding totals  $3,149.0.  In  response                 
  to  a  further question  from  Co-chairman Frank,  Mr. Jeans                 
  acknowledged disparity costs of $1.2 million in FY 96.                       
  Co-chairman  Frank   asked  if  the   department  considered                 
  increasing disparity to 97 or 98  percent to make it totally                 
  revenue neutral.  Mr. Jeans explained that the increase from                 
  90 to  95 percent was  the recommendation of  the foundation                 
  task force.  That recommendation was  forwarded to the state                 
  board  of   education,  approved,   and  forwarded   to  the                 
  Governor's Office.   Co-chairman Frank referenced resistance                 
  to supplemental funding and a movement  to make SB 244 apply                 
  to  the  FY  96  allocation to  produce  a  revenue  neutral                 
  situation for FY  96 and  the future.   Mr. Jeans  cautioned                 
  that the  situation would  not  be revenue  neutral for  all                 
  school  districts.    A  small  number  would  be  adversely                 
  impacted  by that  approach.   The  problem  relates to  the                 
  increase  in  the  5  percent   deduct  versus  the  $500.00                 
  allocation.  Mr. Jeans next directed attention to the three-                 
  column  spread  sheet  attached  to   the  fiscal  note  and                 
  explained the significance of each column.                                   
  Senator Sharp  noted  that Anchorage  receives $3,847.00  in                 
  state funds per  student while other districts  receive from                 
  $10,000.00 to $24,465.00.  It appears that the proposed bill                 
  would increase that spread rather  than provide a "true fix"                 
  for state aid.   Mr. Jeans acknowledged that  some districts                 
  would benefit from increased revenue per student.   If those                 
  numbers were divided  by the number of students  served, the                 
  increase would  "be very  minimal on  a per-student  basis."                 
  Senator Sharp commented  that all the increases  would go to                 
  districts  that  are "probably  a  little bit  above average                 
  already on ADM."  Mr. Jeans acknowledged that might be true.                 
  Senator  Sharp  next asked  about the  effort to  revamp the                 
  entire foundation  formula.  Mr.  Cross said that  the state                 
  board of education  had met three  times, as a committee  of                 
  the whole,  to work on  the issue.   Two  more meetings  are                 
  scheduled to work on  a new foundation formula that  will be                 
  significantly different from that before members today.                      
  Senator Rieger asked if disregard of 2 mills of local effort                 
  would achieve the  same disparity numbers as  those proposed                 
  in SB 244.  Mr. Jeans explained that the disparity is caused                 
  by excess local contributions that  districts are allowed to                 
  make over and above 4 mills.  Lowering that to 2 mills would                 
  increase disparity.  Local effort would have to be increased                 
  to  lower  disparity.   Senator  Rieger  suggested  that the                 
  excess  could  be taken  off the  top  rather than  from the                 
  required  minimum.   There  are a  variety  of ways  to come                 
  within federal guidelines.                                                   
  Senator Rieger next voiced his  understanding that the state                 
  of Kansas, which is at 25  percent disparity, is planning to                 
  "take it to Congress and get the law changed rather than try                 
  to meet the 20  percent disparity."  Mr. Jeans  concurred in                 
  that understanding.                                                          
  Co-chairman Frank  noted that  it is  difficult to  increase                 
  dollars to districts that appear to  be getting the most per                 
  student.  He then  asked if that results from  a requirement                 
  that disparity be calculated  in the same fashion  as moneys                 
  are distributed.   Mr. Jeans  explained that the  department                 
  could compute the disparity test on a per-pupil basis.  That                 
  standard was computed and,  excluding all exceptions allowed                 
  under federal  law, it came  out worse at  27 percent.   Co-                 
  chairman  Frank  asked  that  computations be  provided  for                 
  committee review.                                                            
  Discussion followed concerning the possibility of changes at                 
  the federal level.  Mr. Jeans  explained that the impact aid                 
  program was reauthorized through 1999.   The disparity drops                 
  to 20 percent for FY 98 and 99.  Mr. Cross stressed that the                 
  administration  believes  the  proposed  bill  is  the  best                 
  solution at this time, rather than for all  time.  Until the                 
  foundation is substantively changed, this is the best way to                 
  meet present rules.                                                          
  In response to a question from Co-chairman Halford regarding                 
  funding for pupil  transportation, Mr. Jeans  explained that                 
  transportation  moneys  are allocated  to a  special revenue                 
  fund  outside  of  the  disparity  standard.   Disparity  is                 
  measured on the  operating fund only.   Capital and  federal                 
  programs are also outside.                                                   
  Co-chairman Frank voiced his  understanding that the single-                 
  site issue is separate from the  disparity issue.  Mr. Jeans                 
  concurred.   He added,  however, that  the department  would                 
  encourage inclusion of the single-site allocation within the                 
  foundation program.   The federal government has  taken note                 
  of the  single-site appropriation outside of  the foundation                 
  formula and has put the department on notice that it appears                 
  Alaska is creating  an entitlement program, and  the state's                 
  determination could be in jeopardy.                                          
  WANDA  COOKSEY,  representing single-site  school districts,                 
  came  before  committee  and  directed  attention   to  file                 
  materials  (copies  on  file in  the  master  Senate Finance                 
  Committee file for SB 244).   She explained that the formula                 
  in Sec.  4 is  the formula the  single-site school  district                 
  consortium has requested for the last  several years.  It is                 
  also the formula used to determine the grant amount.                         
  Ms. Cooksey noted that  there is no fiscal note  relating to                 
  single-site funding because  it does not involve  new money.                 
  It is in the department budget.                                              
  Co-chairman  Halford  asked  for   a  list  of   single-site                 
  districts  and  the  funding  they  receive.    Ms.  Cooksey                 
  directed  attention to  the  attachment  to the  transmittal                 
  letter from the administration.                                              
  In response to a question from Senator Zharoff, Ms.  Cooksey                 
  said  that  the proposal  was agreed  to  by all  the single                 
  sites,  the  state  board  of  education, the  school  board                 
  association, the school administrators association, and NEA.                 
  Co-chairman Halford noted that  additional people who signed                 
  up  to  testify  on the  bill  were  no  longer present  and                 
  suggested that SB 244 be set aside pending their return.                     

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