Legislature(1995 - 1996)
04/02/1996 09:15 AM FIN
* first hearing in first committee of referral
= bill was previously heard/scheduled
= 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 Frank directed that SB 244 be brought on for discussion, advised that it was previously heard, and explained that he had been working on a committee substitute which would include: 1. An attempt to make the bill revenue neutral by increasing the deduct from 95 to 96 percent. 2. Making the bill effective during 1996 to offset supplemental funding. 3. An FY 96 hold harmless for districts that would lose more than they gain in this fiscal year. 4. Removal of the single site addition with the recognition that it would be dealt with in any future foundation formula change. The Co-chairman voiced his hope that members would find the foregoing acceptable as a compromise. He remarked that a draft furnished to him prior to the meeting was incorrect and returned for revisions. Co-chairman Frank suggested that general discussion and feedback from the department and committee members proceed. [Co-chairman Halford arrived at the meeting at this time.] EDDY JEANS, Project Assistant, School Foundation, School Finance, Dept. of Education, came before committee and advised that the foregoing proposal would be acceptable to the department. Senator Rieger voiced his understanding that the idea behind not "going to a 100 percent deduct was that there had to be some small residual in order to induce a school district to apply for PL 874 moneys." If the formula results in an entitlement, PL 874 moneys are deducted from the entitlement. He then questioned whether the residual inducement was necessary. With a 100 percent deduct, a compelling inducement to apply for PL 874 moneys remains because those funds are needed to bring districts to full entitlement. Mr. Jeans explained that the state cannot require school districts to apply for impact-aid funds. The foundation program utilizes impact-aid moneys to determine the state allocation. If school districts do not apply and receive these funds, there is nothing to deduct to "adjust state aid by." Senator Rieger voiced his understanding of the foregoing to mean that the formula does not deduct the entitlement but actual receipt of the funds. Mr. Jeans concurred. In response to a further question from Senator Rieger, Mr. Jeans explained that school districts that apply for impact- aid funds are entitled to a greater amount than they currently receive. Funding is based on an annual appropriation from Congress. That appropriation has been less than entitlement. The foundation statute also clearly states that it is based on funds received in response to the application rather than the entitlement. Senator Zharoff raised a question regarding removal of single site schools. He attested to support for the original legislation on behalf of the state board of education, school board administrators, and NEA and suggested that removal of single site provisions represents a "step backwards." He expressed disappointment with the proposed compromise. Co-chairman Frank acknowledged the concern, but voiced his expectation that single site language would be included in the budget. Senator Zharoff next distributed an amendment (copy on file in the original Senate Finance Committee file for SB 244) and explained that he had been asked to provide it for consideration on behalf of another member of the Senate. The amendment relates to funds identified for preschool children. Speaking to the amendment, Mr. Jeans explained that impact-aid law was amended in 1994 to allow school districts to claim preschool children for impact-aid funds. The proposed amendment would have the state "back those funds out before it considers the impact aid." The arrangement would be similar to the special education add-on and the Indian lands' add-on. The impact-aid program does not currently address preschool funds as incremental funds the state cannot consider. The foundation program does not provide funds for preschool children. That is the reason for the amendment. Co-chairman Frank voiced his understanding that amendment provisions would reduce the state deduct in districts with preschool programs that qualify for federal funds. Mr. Jeans concurred. He added that impact-aid funds are currently paid at a hold harmless level--a percentage of the '94 year. Even though districts could claim these students, they are not receiving funding for them at this time. The department is aware of the issue and will be working with the U.S. Department of Education on how to properly address it. Discussion of proper terminology for former PL 874 moneys followed. Mr. Jeans advised that it is now referred to as "Title 8" moneys. CARL ROSE, Executive Director, Association of Alaska School Boards, came before committee. He noted that he was on record in support of SB 244 but expressed concern regarding the proposed compromise and removal of single site provisions. Many small districts depend on single site funds for 10 to 15 percent of their overall budgets. If this funding remains outside the foundation, "Any kind of a decrease could affect them twice": once through the foundation and a second time due to the possibility of not receiving additional supplemental funding. Mr. Rose voiced need for clarification of the impact from increase of the deduct from 95 to 96 percent. Co-chairman Frank reiterated that it attempts to render the legislation revenue neutral. Co-chairman Halford directed that SB 244 be held in committee pending receipt of the compromise committee substitute.