Legislature(2013 - 2014)

04/19/2014 04:03 PM FIN


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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
CS FOR HOUSE BILL NO. 278(FIN) am                                                                                             
                                                                                                                                
     "An Act increasing the base  student allocation used in                                                                    
     the  formula for  state  funding  of public  education;                                                                    
     relating  to  the  exemption   from  jury  service  for                                                                    
     certain  teachers;  relating  to   the  powers  of  the                                                                    
     Department   of   Education  and   Early   Development;                                                                    
     relating to  high school  course credit  earned through                                                                    
     assessment;  relating  to school  performance  reports;                                                                    
     relating to  assessments; establishing a  public school                                                                    
     and  school   district  grading  system;   relating  to                                                                    
     charter  schools and  student transportation;  relating                                                                    
     to residential school  applications; relating to tenure                                                                    
     of  public school  teachers;  relating to  unemployment                                                                    
     contributions for  the Alaska technical  and vocational                                                                    
     education  program;  relating  to earning  high  school                                                                    
     credit for  completion of vocational  education courses                                                                    
     offered   by  institutions   receiving  technical   and                                                                    
     vocational  education  program   funding;  relating  to                                                                    
     schools  operated by  a federal  agency; relating  to a                                                                    
     grant for  school districts; relating to  education tax                                                                    
     credits;   establishing  an   optional  municipal   tax                                                                    
     exemption for  privately owned real property  rented or                                                                    
     leased  for  use as  a  charter  school; requiring  the                                                                    
     Department of Administration to  provide a proposal for                                                                    
     a salary  and benefits  schedule for  school districts;                                                                    
     making  conforming  amendments;  and providing  for  an                                                                    
     effective date."                                                                                                           
                                                                                                                                
4:04:00 PM                                                                                                                    
                                                                                                                                
Vice-Chair Fairclough MOVED to  ADOPT the proposed committee                                                                    
substitute  for HB  278,  Work  Draft 28-GH2716\V  (Mischel,                                                                    
4/19/14). There being NO OBJECTION, it was so ordered.                                                                          
                                                                                                                                
Vice-Chair Fairclough wondered if  the committee should take                                                                    
a  brief  AT  EASE  to distribute  the  CS.  Co-Chair  Meyer                                                                    
replied that there were very few changes in the CS.                                                                             
                                                                                                                                
EDRA  MORLEDGE, STAFF,  SENATOR  KEVIN  MEYER, related  that                                                                    
there were  5 changes in  the CS.  She looked at  Section 7,                                                                    
which   involved  the   procurement  for   the  Personalized                                                                    
Learning Opportunity  Grants. The inserted  language ensured                                                                    
that  school  districts  would use  competitive  procedures,                                                                    
including  seeking bulk  purchase  discounts for  equipment,                                                                    
support, and  training. The section also  clarified that the                                                                    
procurement  process would  provide vendors  with reasonable                                                                    
and equitable  opportunities to participate in  the program.                                                                    
The  section  required  the  Association  of  Alaska  School                                                                    
Boards to  evaluate the effectiveness  of a sub  grant under                                                                    
the program. The section also  required an independent third                                                                    
party evaluation  of the effectiveness  of the  entire grant                                                                    
program, and to provide a report to the legislature.                                                                            
                                                                                                                                
Co-Chair Meyer noted that there  was discussion the previous                                                                    
day  regarding  the  various  types  of  electronic  devices                                                                    
available, and the  intent of the change to  allow for equal                                                                    
opportunities for every company.                                                                                                
                                                                                                                                
Vice-Chair Fairclough  hoped that the Association  of Alaska                                                                    
School Boards  would testify before the  committee, in order                                                                    
to  ensure  understanding  of  the   new  language  and  the                                                                    
legislature's  intent.  Co-Chair  Meyer  replied  that  they                                                                    
would  testify  following  the   presentation  of  the  bill                                                                    
changes.                                                                                                                        
                                                                                                                                
Ms.  Morledge looked  at Section  20, which  related to  the                                                                    
bond  debt  reimbursement   program  through  Department  of                                                                    
Education and  Early Development  (DEED). The  previous bill                                                                    
version's effective  date was  July 1,  2014, but  there was                                                                    
some  concern that  it did  not  include the  municipalities                                                                    
with  fall  elections. The  effective  date  was changed  to                                                                    
January 1,  2015. She explained  that Section 24  outlined a                                                                    
change  to the  required local  contribution of  a city  and                                                                    
borough to  the school district,  changing the mil  tax levy                                                                    
from 2.65 to 2.80 mil rate.                                                                                                     
                                                                                                                                
Co-Chair  Meyer recalled  that  the  local contribution  was                                                                    
changed two years  prior. The mil rate was  changed from 2.9                                                                    
to  2.65,   which  took  the  education   funding  from  the                                                                    
municipalities  to  the state.  He  stated  that the  change                                                                    
shifted  the mil  rate  back to  the  municipality, so  they                                                                    
could greater contribute to education.                                                                                          
                                                                                                                                
4:09:16 PM                                                                                                                    
                                                                                                                                
Ms.  Morledge   explained  that   the  two   teacher  tenure                                                                    
provisions were removed from the bill.                                                                                          
                                                                                                                                
Co-Chair Meyer surmised that the  tenure status had returned                                                                    
to its original term of  three years. Ms. Morledge responded                                                                    
in the affirmative.                                                                                                             
                                                                                                                                
Ms. Morledge  stated that the  last page  of the bill  had a                                                                    
change,  which  required  the Department  of  Administration                                                                    
(DOA) to  present a  proposal for  a statewide  salaries and                                                                    
benefits schedule for school  districts. The current version                                                                    
removed  DOA from  that obligation,  and moved  it into  the                                                                    
LB&A  committee  to present  a  study  on the  salaries  and                                                                    
benefits schedules statewide.                                                                                                   
                                                                                                                                
Vice-Chair Fairclough asked if there  was an analysis on how                                                                    
the mil rate affected  the local communities. Co-Chair Meyer                                                                    
replied  in the  affirmative, and  wondered if  there was  a                                                                    
specific community that should be addressed.                                                                                    
                                                                                                                                
Vice-Chair Fairclough queried the  mil rate for the Aleutian                                                                    
Borough.  Co-Chair  Meyer  replied that  the  Aleutian  East                                                                    
Borough would be required to contribute $34,831.                                                                                
                                                                                                                                
Vice-Chair  Fairclough  wondered  if   the  $34,831  was  in                                                                    
addition  to   the  current  contribution.   Co-Chair  Meyer                                                                    
replied in the affirmative.                                                                                                     
                                                                                                                                
Vice-Chair Fairclough  explained that  there was a  mil rate                                                                    
cap  that was  instituted a  few years  prior. She  surmised                                                                    
that  the  bill's intent  was  to  encourage communities  to                                                                    
participate above  the mil rate cap.  Co-Chair Meyer replied                                                                    
that the state  took $9.2 million by moving the  mil rate to                                                                    
2.65. The legislation  would change the mil rate  to 2.8, so                                                                    
Anchorage  would contribute  an additional  $5.5 million  to                                                                    
education.                                                                                                                      
                                                                                                                                
Vice-Chair Fairclough  asked if  Anchorage could use  its $7                                                                    
million to  help the  school district.  She did  not believe                                                                    
that the  action could occur retroactively,  so she wondered                                                                    
if there could be an  effective date. Co-Chair Meyer replied                                                                    
that the communities would be equally affected.                                                                                 
                                                                                                                                
Vice-Chair Fairclough requested that  the document be posted                                                                    
in the backup  documents attached to the  bill. Ms. Morledge                                                                    
agreed to provide that information.                                                                                             
                                                                                                                                
Vice-Chair  Fairclough asked  that Mr.  Whicker address  the                                                                    
procurement issues of the bill.                                                                                                 
                                                                                                                                
4:14:11 PM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
4:18:00 PM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                
Vice-Chair  Fairclough  remarked  that  the  Association  of                                                                    
Alaska   School  Boards   (AASB)   managed  the   One-on-one                                                                    
Education   Learning  opportunity.   There  was   a  concern                                                                    
regarding the  type of technology that  each school district                                                                    
would utilize,  and the state management  of technology. She                                                                    
wanted  the  lowest  possible  unit  cost  price  to  school                                                                    
districts  to   allow  them   to  utilize   their  preferred                                                                    
platform.                                                                                                                       
                                                                                                                                
ROBERT WHICKER,  DIRECTOR, CONSORTIUM FOR  DIGITAL LEARNING,                                                                    
ASSOCIATION OF ALASKA SCHOOL  BOARDS, JUNEAU, announced that                                                                    
AASB  would be  soliciting  vendors to  seek the  one-to-one                                                                    
solution  set,  and  work  with  school  districts  on  that                                                                    
platform.                                                                                                                       
                                                                                                                                
Vice-Chair  Fairclough  looked  at   page  7,  item  C,  and                                                                    
announced that, if passed, the law would read:                                                                                  
                                                                                                                                
     "Before making  a sub grant  to a school  district, the                                                                    
     Association  of  Alaska  School   Boards  shall  use  a                                                                    
     competitive  process to  solicit  prices from  vendors,                                                                    
     including,  where   possible,  seeking   bulk  purchase                                                                    
     discounts for  the technology, equipment,  support, and                                                                    
     training to be purchased with  the funds from the grant                                                                    
     program."                                                                                                                  
                                                                                                                                
MICHAEL  HANLEY, COMMISSIONER,  DEPARTMENT OF  EDUCATION AND                                                                    
EARLY  DEVELOPMENT,   felt  that  Ms.   Morledge  accurately                                                                    
addressed  the bill  changes. He  remarked that  the changes                                                                    
were small,  but significant, and  would continue to  have a                                                                    
positive impact on education.                                                                                                   
                                                                                                                                
Co-Chair Meyer remarked that the  funding of the legislation                                                                    
had also changed  from the original version.  He stated that                                                                    
the  fiscal notes  would be  discussed, and  hoped that  the                                                                    
conversation  would bring  clarity  to  the bill's  funding.                                                                    
There had  been some  discussion about  the funding  for the                                                                    
upcoming  three  years.  The  $25  million  a  year  funding                                                                    
equated  to  a  $100   base  student  allocation  (BSA).  He                                                                    
stressed  that  the  funding  was  outside  of  the  current                                                                    
funding  formula. He  remarked  that there  were some  other                                                                    
additions to  the funding: broadband,  standardized testing,                                                                    
middle school  pilot program for  Alaska Native  Science and                                                                    
Engineering  Program (ANSEP),  the  charter school  startup,                                                                    
and  the  correspondence  schools. He  reiterated  that  the                                                                    
analysis of  additional funding  depending on  the financial                                                                    
manipulation. He  felt that  there were  substantial changes                                                                    
and additions to the education funding.                                                                                         
                                                                                                                                
4:25:32 PM                                                                                                                    
                                                                                                                                
KELLY  CUNNINGHAM,   FISCAL  ANALYST,   LEGISLATIVE  FINANCE                                                                    
DIVISION,  wondered  if  there  would  be  a  page  by  page                                                                    
discussion  of  the  fiscal   note  packet.  Co-Chair  Meyer                                                                    
replied in the affirmative.                                                                                                     
                                                                                                                                
Co-Chair  Meyer asked  if  there would  be  one fiscal  note                                                                    
substitution. Ms. Cunningham replied in the affirmative.                                                                        
                                                                                                                                
Ms.  Cunningham  announced that  the  fiscal  note from  the                                                                    
Department of  Labor and  Workforce Development  (DLWD), and                                                                    
was an agency wide  allocated appropriation. The fiscal note                                                                    
was only for TVEP, and was applied to eight entities.                                                                           
                                                                                                                                
Senator  Dunleavy inquired  the number  of the  fiscal note.                                                                    
Ms. Cunningham responded that the  fiscal notes had not been                                                                    
numbered.                                                                                                                       
                                                                                                                                
Co-Chair Meyer  announced that the fiscal  note was labeled,                                                                    
"Department of Labor and Workforce Development."                                                                                
                                                                                                                                
Ms.  Cunningham restated  that the  fiscal  note was  agency                                                                    
wide and allocated, and related to eight entities.                                                                              
                                                                                                                                
Ms. Cunningham  related that  the next  fiscal note  was for                                                                    
DOA.  She stated  that the  funding was  originally intended                                                                    
for a study  that the new CS directed LB&A  as the overseer.                                                                    
The note should now be disregarded.                                                                                             
                                                                                                                                
Senator Hoffman wondered if the  funding would be applied to                                                                    
LB&A.  Co-Chair Meyer  responded that  LB&A already  had the                                                                    
funding to conduct the study.                                                                                                   
                                                                                                                                
Vice-Chair Fairclough  announced that LB&A would  attempt to                                                                    
use its existing funds to conduct the study.                                                                                    
                                                                                                                                
Ms. Cunningham stated that there  was a fiscal note from the                                                                    
Tax Division of  the Department of Revenue (DOR),  and was a                                                                    
zero fiscal note.                                                                                                               
                                                                                                                                
Ms.  Cunningham  explained  the fiscal  note  for  the  DEED                                                                    
Boarding Home  Grants for $2.249  million. It  increased the                                                                    
stipend ratio to  the boarding schools. There  was a partial                                                                    
increase the year  prior, and the funding  provided a slight                                                                    
increase to the grant.                                                                                                          
                                                                                                                                
Ms.  Cunningham  announced that  the  fiscal  note for  K-12                                                                    
Support  Foundation was  zero,  because  the actual  dollars                                                                    
were reflected in the public education fund note.                                                                               
                                                                                                                                
Ms.  Cunningham  explained  that  the fiscal  note  for  the                                                                    
Alaska  Library and  Museums was  $7.3 million  for internet                                                                    
support.  She  believed  the funding  would  provide  for  a                                                                    
district  at  which  one  or  more  schools  qualify  for  a                                                                    
discounted rate  for internet services would  be eligible to                                                                    
receive an  amount to bring  their download speed up  to ten                                                                    
megabits per second.                                                                                                            
                                                                                                                                
Vice-Chair Fairclough  asked if  the fiscal note  related to                                                                    
the "e rate",  and whether it including  matching money. Ms.                                                                    
Cunningham replied that the fiscal  note was associated with                                                                    
Senator  Olson's  broadband   legislation.  The  e-rate  was                                                                    
mentioned, but she could not speak further on that topic.                                                                       
                                                                                                                                
4:30:08 PM                                                                                                                    
                                                                                                                                
Senator  Olson  understood  that  the  fiscal  note  related                                                                    
directly to  matching e-rate funds.  He stated that  it also                                                                    
included the  federal portion that  would apply  directly to                                                                    
the school districts.                                                                                                           
                                                                                                                                
Vice-Chair  Fairclough  did  not see  information  regarding                                                                    
matching money in the backup for the note.                                                                                      
                                                                                                                                
Senator Olson observed  that one of the reasons  that it was                                                                    
not in the  note was because the money went  directly to the                                                                    
school district, but was delivered at a four-to-one ratio.                                                                      
                                                                                                                                
Ms. Cunningham spoke to a  zero fiscal note for debt service                                                                    
and  school debt  reimbursement. She  stated that  there was                                                                    
some  reduced cost,  so that  was  the reason  for the  zero                                                                    
note.  The replacement  note was  for the  DEED Student  and                                                                    
School   Achievement.  The   note  added   $3  million   for                                                                    
personalized learning grants.                                                                                                   
                                                                                                                                
Co-Chair  Meyer wondered  if the  revised  fiscal note  also                                                                    
included   a  three-year   pilot  program   for  STEM.   Ms.                                                                    
Cunningham replied in the affirmative.                                                                                          
                                                                                                                                
Senator Dunleavy asked if the  $750,000 in Innovative Grants                                                                    
was  contained in  the revised  fiscal note.  Ms. Cunningham                                                                    
replied in the affirmative.                                                                                                     
                                                                                                                                
Senator Dunleavy announced that  the funding was included in                                                                    
the  DEED submitted  budget. Ms.  Cunningham responded  that                                                                    
the  funding  would  not  be   accepted  at  the  Conference                                                                    
Committee.                                                                                                                      
                                                                                                                                
Co-Chair  Kelly  announced  that  the  adjustment  would  be                                                                    
addressed at the Conference Committee.                                                                                          
                                                                                                                                
Ms. Cunningham                                                                                                                  
                                                                                                                                
Vice-Chair  Fairclough  wondered  if  the  fiscal  note  for                                                                    
$1.794 million  should be disregarded, and  be replaced with                                                                    
$7.550  million should  replace  that  note. Ms.  Cunningham                                                                    
replied in  the affirmative,  and explained that  the backup                                                                    
for  the new  fiscal note  would be  revised to  reflect the                                                                    
changes.                                                                                                                        
                                                                                                                                
Ms.  Cunningham  spoke  to  another   fiscal  note  for  the                                                                    
University of Alaska (UA),  which included technical funding                                                                    
for the TVEP program.                                                                                                           
                                                                                                                                
Senator Bishop  commented that the increase  was a decrement                                                                    
of $204,000  to UA, so  it was  less than what  would appear                                                                    
under the percentage decrement.                                                                                                 
                                                                                                                                
Vice-Chair  Fairclough wondered  if the  funding related  to                                                                    
the penny increase. Senator Bishop  replied that it was 0.16                                                                    
of 1 percent increase.                                                                                                          
                                                                                                                                
Vice-Chair  Fairclough asked  if the  funding was  new money                                                                    
for UA, and if it was  an addition of the expanded programs.                                                                    
Ms. Cunningham deferred to Mr. Teal.                                                                                            
                                                                                                                                
4:37:48 PM                                                                                                                    
                                                                                                                                
DAVID TEAL,  DIRECTOR, LEGISLATIVE FINANCE  DIVISION, stated                                                                    
that the change  was negative, but there was  an increase in                                                                    
total TVEP funding.  He explained that UA had  50 percent of                                                                    
the  funding, but  5  percent  of the  funding  for UAS  was                                                                    
removed, so UA received 45  percent of a larger portion, but                                                                    
was ultimately less money.                                                                                                      
                                                                                                                                
Ms. Cunningham  explained that  the public  education fiscal                                                                    
note  correlated  with  the   K-12  foundation  program.  It                                                                    
included the  correspondence multiplier  change from  0.8 to                                                                    
0.9,  and amends  the charter  school  funding by  providing                                                                    
higher funding starting at the 75 ADM.                                                                                          
                                                                                                                                
Mr. Teal pointed  out that there was still  a missing fiscal                                                                    
note from DEED.                                                                                                                 
                                                                                                                                
Senator  Dunleavy wondered  if the  change in  the mil  rate                                                                    
guaranteed that  the schools  within the  municipality would                                                                    
receive that funding.  Mr. Teal replied that  the change did                                                                    
not guarantee funding for the municipality.                                                                                     
                                                                                                                                
Senator Dunleavy  queried the  impact of  the change  in the                                                                    
mil  rate.  Mr.  Teal  responded  that  communities  had  to                                                                    
contribute another $132 million to school districts.                                                                            
                                                                                                                                
Senator  Dunleavy  wondered  if  "communities"  referred  to                                                                    
recognized  municipalities.   Mr.  Teal  responded   in  the                                                                    
affirmative                                                                                                                     
                                                                                                                                
Vice-Chair Fairclough  stated that  there was  an additional                                                                    
fiscal note from LB&A Committee  for FY 15 only for $650,000                                                                    
to implement a  school district cost factor  study; a school                                                                    
size factor study; and a  study of the salaries and benefits                                                                    
that were paid through the State of Alaska.                                                                                     
                                                                                                                                
Senator Dunleavy asked  what the total package  would be for                                                                    
each  year  of  the  proposed  legislation.  Ms.  Cunningham                                                                    
replied that there was $22.695 million in FY 15.                                                                                
                                                                                                                                
Senator  Dunleavy  asked  that   she  be  more  specific  by                                                                    
announcing specific dollars.                                                                                                    
                                                                                                                                
4:42:33 PM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
4:45:48 PM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                
4:45:53 PM                                                                                                                    
                                                                                                                                
Ms. Cunningham stated that part  1 of the total package cost                                                                    
was $100  million in  FY 15,  and the  fiscal notes  were an                                                                    
additional $23 million, with a  $12 million savings from the                                                                    
change in  the mil rate. The  total extra cost in  FY 15 was                                                                    
approximately $11 million in addition to the $100 million.                                                                      
                                                                                                                                
Senator Dunleavy surmised that the  total cost for FY 15 was                                                                    
$111 million. Ms. Cunningham agreed.  She furthered that the                                                                    
cost would  continue into FY  16 and  FY 17, except  for the                                                                    
$650,000 the LB&A studies.                                                                                                      
                                                                                                                                
Co-Chair Meyer thought  that the figure was  pretty close to                                                                    
his own estimate. He felt that  it was almost a $500 BSA. He                                                                    
stated  that  a  large  portion   of  the  funding  was  for                                                                    
broadband.                                                                                                                      
                                                                                                                                
Senator  Dunleavy announced  that it  $111 million  per year                                                                    
for   the  following   three  years   and  $2   billion  was                                                                    
appropriated  for the  Public  Employees' Retirement  System                                                                    
(PERS).  He felt  that the  proposed legislation  would stop                                                                    
the  argument   that  the  state  was   not  funding  public                                                                    
education.                                                                                                                      
                                                                                                                                
Co-Chair Meyer  wondered if the  legislation funding  was in                                                                    
addition to  the overall spending  for $1.2 billion  to $1.3                                                                    
billion. Mr. Teal replied in the affirmative                                                                                    
                                                                                                                                
Co-Chair  Meyer  asked  if  it  was  $1.2  billion  or  $1.3                                                                    
billion. Mr. Teal replied that it was almost $1.3 billion.                                                                      
                                                                                                                                
Vice-Chair Fairclough noted that there  were a lot of public                                                                    
interest based on an expectation  of an increase to the BSA.                                                                    
She commented that  she was willing to  participate with the                                                                    
organizations for  three years  to solve the  schools issues                                                                    
in urban and rural Alaska.                                                                                                      
                                                                                                                                
4:51:32 PM                                                                                                                    
                                                                                                                                
Co-Chair Kelly  MOVED to REPORT SCSCSHB  278(FIN) as amended                                                                    
out  of committee  with individual  recommendations and  the                                                                    
accompanying and  forthcoming fiscal  notes. There  being NO                                                                    
OBJECTION, it was so ordered.                                                                                                   
                                                                                                                                
SCSCSHB 278(FIN)  was REPORTED out  of committee with  a "do                                                                    
pass" recommendation and with a  new fiscal impact note from                                                                    
the  Department of  Education and  Early Development,  a new                                                                    
fiscal  impact note  from the  Department  of Education  and                                                                    
Early Development,  a new zero  fiscal note  from Department                                                                    
of  Education and  Early Development,  a  new fiscal  impact                                                                    
note from the Senate  Finance Committee for the Legislature,                                                                    
a new  fiscal impact note  from the University of  Alaska, a                                                                    
new indeterminate  fiscal note the Department  of Revenue, a                                                                    
new  fiscal impact  note from  the Senate  Finance Committee                                                                    
for  the Department  of Labor  and Workforce  Development, a                                                                    
new fiscal impact note from  the Department of Education and                                                                    
Early  Development,  a  new  fiscal  impact  note  from  the                                                                    
Department of  Education and Early  Development, a  new zero                                                                    
fiscal  note  from the  Department  of  Education and  Early                                                                    
Development, and a new zero  fiscal note from the Department                                                                    
of Education and Early Development.                                                                                             
                                                                                                                                
4:51:55 PM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
5:19:41 PM                                                                                                                    
RECONVNED                                                                                                                       
                                                                                                                                
Co-Chair Meyer handed the gavel over to Vice-Chair                                                                              
Fairclough                                                                                                                      
                                                                                                                                

Document Name Date/Time Subjects