Legislature(1995 - 1996)

04/02/1996 09:15 AM 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 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                 
  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                 
  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                 

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