Legislature(1995 - 1996)

02/18/1995 01:07 PM Senate HES

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
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 SHES - 2/18/95                                                                
                                                                               
           SB  70 PUBLIC SCHOOL FOUNDATION PROGRAM                           
                                                                               
 Number 002                                                                    
                                                                               
 CHAIRMAN GREEN called the work session for Senate Health, Education           
 and Social Services (HESS) Committee to order at 1:07 p.m.  She               
 introduced  SB 70  as the only order of business for the work                 
 session.                                                                      
                                                                               
 JERRY BURNETT, staff to Senator Randy Phillips, explained that                
 SB 70 is a vehicle for providing maximum equity in the foundation             
 formula.  Mr. Burnett highlighted the changes encompassed in SB 70:           
                                                                               
 (1) SB 70 would replace the area cost differential, currently in              
 statute, with the Alaska school price index which would be defined            
 in regulation by the Department of Education.                                 
                                                                               
 (2) SB 70 would increase the required local match to the lesser of            
 4 mills or 50 percent from its current 4 mills or 35 percent.  Mr.            
 Burnett noted that there are currently only three school districts            
 who pay less than 4 mills at the 35 percent level and they would              
 pay more local taxes as a result.                                             
                                                                               
 (3) SB 70 defines the funding community to include no less than 16            
 students in average daily membership.  Currently, approximately 35            
 funding communities have less than 16 students which would result             
 in some loss of funding for those communities.  He suggested that             
 an alternative service delivery system could be used in those                 
 areas.                                                                        
                                                                               
 (4) SB 70 recognizes overcrowding in the larger elementary schools            
 and therefore, changes the divisor in the elementary school formula           
 from 17 to 16 for schools having more than 525 in average daily               
 membership.  This change would effect most of the larger schools              
 and would increase their funding.                                             
                                                                               
 (5) Section 7 of SB 70 would provide for additional funding for               
 single site schools who are not currently acknowledged in the                 
 formula as needing additional funding.  Each year single site                 
 schools are added to the funding bill by the legislature which has            
 caused much grief in the past.                                                
                                                                               
 Number 102                                                                    
                                                                               
 CHAIRMAN GREEN asked if SB 70 addresses how average daily                     
 attendance is determined.  JERRY BURNETT said that SB 70 does not             
 address that other than the change in the timing of the student               
 counts within the school district.                                            
                                                                               
 WANDA COOKSEY, representing Single Site School Districts, informed            
 everyone that there are 21 single site school districts in Alaska             
 with about 6,000 students which add up to be 39 percent of the                
 school districts.  There has been inequity in the funding of single           
 site schools since the foundation formula was written.  Every year            
 single site schools come before the legislature to request for                
 funding.  She clarified that in the past three legislative                    
 sessions, single site schools have received grant funding in the              
 same amount as requested in the proposed formula by these schools.            
 The proposed formula would allow a single funding community to be             
 considered a school district.                                                 
                                                                               
 CHAIRMAN GREEN asked if Ms. Cooksey felt this would be an equitable           
 solution for single site districts.  WANDA COOKSEY explained that             
 the proposed formula for single sites addresses the same percentage           
 as the consortium, with the exception that SB 70 would recognize              
 this problem in schools of average daily membership (ADM) of 900 or           
 fewer, up from the consortiums ADM of 800 or fewer.                           
                                                                               
 SENATOR SALO referred to Section 3 of SB 70 when inquiring as to              
 how much revenue would be generated with the change from 35 percent           
 to 50 percent.  JERRY BURNETT stated that it would generate                   
 approximately $3.5 million per year.  In response, to Senator Salo,           
 Mr. Burnett said that the potential closure of 35 schools with less           
 than 15 students would generate approximately $4,169,000 in revenue           
 next year.                                                                    
                                                                               
 SENATOR SALO asked if the change in Section 5 from 10 to 5 percent            
 of the instructional unit was addressing the Wrangell situation.              
 JERRY BURNETT explained that this change was originally proposed to           
 address the situation in Sitka last year, however, the change would           
 allow a hold harmless situation for some of the smaller schools who           
 lost funding communities under Section 4.  Senator Salo clarified             
 that the change would provide a phase out period for small                    
 population schools that would no longer be funded.                            
                                                                               
 Number 201                                                                    
                                                                               
 SENATOR SALO inquired as to the cost of the change in the                     
 elementary divisor.  JERRY BURNETT said that it is estimated at               
 $11.7 million for 1996 fiscal year.                                           
                                                                               
 SENATOR SALO asked when the school price index was developed.                 
 JERRY BURNETT explained that the school price index would go into             
 effect in the 1997 fiscal year.  He clarified that the reference to           
 1999 on the last line of page 4 of SB 70 referred to the first                
 adjustment in the school price index.  Mr. Burnett, speaking for              
 the sponsor, said that the school price index figures would be                
 similar to the ones developed by the Department of Education.                 
                                                                               
 SENATOR SALO asked if Senator Randy Phillips would be interested in           
 changing the school price index in 1996.  JERRY BURNETT said that             
 he could not speak to that issue.                                             
                                                                               
 LARRY WIGET, Director of Government Relations for the Anchorage               
 School District, stated that the Anchorage School Board adopted the           
 rewriting of the foundation formula as one of its top legislative             
 priorities.  Currently, Anchorage composes 40 percent of Alaska's             
 student population while the district receives 30 percent of the              
 funding.  The rewrite of the formula would address the actual needs           
 of larger districts.  He supported the change in the elementary               
 divisor, the secondary divisor, and full funding of the Alaska                
 School for the Deaf.  To operate the School for the Deaf costs the            
 district $755,000 more than they receive in funding.  He indicated            
 the possibility of increasing the foundation unit.  He urged the              
 legislature and the governor to rewrite the formula in an equitable           
 manner.                                                                       
                                                                               
 Number 270                                                                    
                                                                               
 GEORGE MAYKOWSKI, Superintendent of Schools of the Copper River               
 School District, explained the many goals and programs that the               
 school districts have been working towards in order to improve                
 instructional delivery to students.  There has been much success in           
 these goals and programs which now will face funding cuts.  He felt           
 that the time to review the delivery of fiscal support was once a             
 plan or goal was achieved.  He noted that his district faces the              
 possibility of laying off employees, especially those hired to                
 achieve the goals the legislature had previously urged.  He stated            
 that his district faces a possible $100,000 deficit next year in              
 order to maintain the status quo.  SB 70 has a lot of unknowns.  In           
 conclusion, Mr. Maykowski suggested that the educational system               
 should achieve some of the goals before them and then evaluate the            
 system.                                                                       
                                                                               
 BRAD BRINGGOLD, parent, asked how SB 70 would effect the overall              
 amount of funding for education.  JERRY BURNETT said that SB 70               
 would increase the total amount spent on education by an estimated            
 $9 million.  Mr. Burnett was not aware of any way in which SB 70              
 would change the state's commitment to funding good education.                
                                                                               
 Number 343                                                                    
                                                                               
 DAVID DOSSETT, Southeast Island School District Superintendent,               
 supported the Alaska school price index.  He expressed concern with           
 the minimum of 16 students required for a funding site.  Of the 12            
 schools in the Southeast Island School District one school already            
 faces closure at the current requirements.  The new minimum                   
 requirements in SB 70 would close four other schools and leave two            
 schools in a borderline situation.                                            
                                                                               
 Mr. Dossett explained that most of the schools in this district are           
 located in either fishing or logging communities.  He did not                 
 understand how the state could spend lots of money funding Alaska             
 2000 and then force students to use alternative delivery systems in           
 order to save money.  The state funds the creation of new                     
 communities and then lets them become ghost towns or retirement               
 communities when the schools are closed.  He said that the logging            
 communities and schools are small due to federal restrictions on              
 the industry and state education cuts would hurt these areas.  He             
 urged the committee to keep the economic impact of this new minimum           
 requirement in mind; closing schools with less than 16 students               
 will ultimately cost the state.                                               
                                                                               
 BRUCE STANTON, teacher and parent, stated that he was angry about             
 the state of education.  He pointed out that there is no                      
 inflationary adjustment in education funding; Ketchikan will                  
 receive a $6 per student increase in ten years while inflation has            
 risen by 40 percent.  Mr. Stanton reviewed the American Chamber of            
 Commerce Research Association's cost of living statistics for                 
 cities in Alaska.  He stated that Anchorage was 29.6 percent above            
 the national average of the cost of living while Ketchikan was 56.2           
 percent above the national average; Anchorage should not have the             
 same area cost differential as Ketchikan.  He noted that Ketchikan            
 has reached their local cap for years and now the cap will be                 
 reduced from 20 percent of basic need to 19 percent.                          
                                                                               
 Mr. Stanton asserted that fixing the problems of education will               
 require spending.  SB 70 is a good place to begin the solution.               
 He suggested that if the state does not recognize inflation then              
 the local communities should be allowed to contribute more.  He               
 offered his help in finding a solution to this problem.                       
                                                                               
 Number 444                                                                    
                                                                               
 MIKE HARPOLD, Board of Education member for the Ketchikan Gateway             
 School, appreciated the introduction of SB 70.  He stated that the            
 Ketchikan Gateway Borough fully funds education to the present cap.           
 He pointed out that this district will have to absorb increased               
 costs due to increased inflation while the local contribution will            
 be decreased by 4 percent due to federal regulations.  In order for           
 the Ketchikan Gateway Board of Education to achieve a balanced                
 budget, they must cut revenue by an additional $706,000 over what             
 they are currently attempting to cut.  He noted that last year the            
 board cut music, library, and physical education programs in                  
 elementary schools by 50 percent.  He reviewed the change in the              
 instructional unit and the replacement of the area differential               
 with the school price index.  He pointed out that cost disparities            
 hurt laws requiring equal education across the state.  He said that           
 if there is no change in the application of the formula, then the             
 instructional unit value would need to be increased by $2,050 to              
 $63,050 in order for the Ketchikan Gateway district to fund next              
 year's programs at the same level as this year.                               
                                                                               
 CHAIRMAN GREEN pointed out that any individuals interested in                 
 offering written suggestions or comments on the foundation formula            
 issue are welcomed to do so.                                                  
                                                                               
 SCOTT STERLING inquired as to how the overall increase of spending            
 on education of $9 million would be calculated.  JERRY BURNETT                
 explained that various sections of SB 70 decrease and increase the            
 total amount of funding, but the change in the elementary divisor             
 results in the most significant increase.  That portion increases             
 total funding by $11.7 million.  Mr. Burnett pointed out that the             
 Mat-Su district, with the new elementary divisor, should have an              
 increase of approximately $800,000.                                           
                                                                               
 MELINDA BROOKS, parent and member of the Mat-Su School District               
 Budget Advisory Commission, stated that the commission has given              
 her a look at the possibility of tremendous losses in education.              
                                                                               
 CHAIRMAN GREEN noted that SB 70 was intended as a starting point in           
 dealing with the funding of education.                                        
                                                                               
 MIKE MURPHY, representing the Nome Board of Education, supported              
 some portions of SB 70 such as the inclusion of the single site               
 school issue.  He commented that everyone wants to provide a                  
 quality education for Alaska's children, but difficulties arise               
 when districts are fighting for funding to operate.  He expressed             
 concern with the school price index because it has not been                   
 defined.  Depending upon which price index formula is used, Nome              
 could face a difference in funding from $400,000 to $1.2 million.             
 He reiterated the need to rewrite the foundation formula.  He                 
 stated that inflation is the biggest problem with the foundation              
 formula.  If the foundation formula had kept up with inflation then           
 the funding unit would be approximately $76,000 in today's dollars.           
 He said that the rewrite of the formula will not work without                 
 addressing inflation.                                                         
                                                                               
 CHAIRMAN GREEN noted that Duane Guiley would be giving another                
 presentation explaining the foundation formula.                               
                                                                               
 HARRY ROGERS, Superintendent for Valdez, noted that fair and                  
 equitable seemed to mean when a group received more money.  He                
 expressed concern that the changes encompassed in SB 70 seem to               
 move funding from the rural areas to the urban areas; there is not            
 a lot of money added to the formula.  Any minor changes in SB 70              
 could have tremendous ramifications, especially in small districts.           
 He pointed out that Section 3 changes the required local                      
 contribution from 35 percent to 50 percent which would result in a            
 10 percent decrease in Valdez's operating budget.  Sections 1 and             
 2 regarding area cost differentials would also have major                     
 consequences for small districts.  He did not feel that the                   
 McDowell Study would offer the appropriate numbers to solve the               
 problem.                                                                      
                                                                               
 TAPE 95-6, SIDE B                                                             
                                                                               
 Number 578                                                                    
                                                                               
 REYNE BROCKMAN, President of the PTA of Lottie Sparks, reviewed the           
 growth in enrollment of the school over the past years.  She said             
 that the Lottie Sparks' schools would be in jeopardy if the minimum           
 enrollment changes to 16.  This school is a three hour bus ride               
 into Glenallen and correspondence is not an option for most                   
 families.  She emphasized that consolidation would not be cost                
 effective in this district which encompasses 24,000 square miles.             
 Reducing funding will hurt the needs of smaller rural schools while           
 benefitting the larger schools.  She concluded that the social,               
 economical, and educational effects of closing these smaller                  
 schools would be devastating for those communities.                           
                                                                               
 BOB HARTY, Interim Superintendent for the North Slope, expressed              
 concern with the change in the required local support and the                 
 change from the area cost differential to the school price index.             
 He indicated that the price index's calculation by the Department             
 of Education seems to place greater restrictions on small rural               
 areas while benefitting the urban areas.  He opposed SB 70 as it is           
 currently written as an unequitable burden on the North Slope                 
 Borough.                                                                      
                                                                               
 PATTY GRAVES, Cordova School District, felt that SB 70 place rural            
 areas at a disadvantage.  In rural areas, the cost of education is            
 usually higher and there is a limited tax base from which to draw             
 revenue.  She pointed out that urban areas such as Anchorage could            
 have a sales tax and draw revenue from visitors while rural                   
 communities with a sales tax, like Cordova, have limited access to            
 outside revenue.  She expressed concern with the minimum enrollment           
 requirement change.  She pointed out that Section 5 seems to                  
 contain a set amount of money which would not change even in the              
 face of increased educational costs.  Therefore, districts will               
 receive less money.  She supported the single site portion of                 
 SB 70.                                                                        
                                                                               
 CHRIS CAMPBELL, parent and member of the Valley Park Elementary               
 School PTA Legislative Committee, stated that SB 70 is a good                 
 beginning to providing funds to the school districts.  She                    
 reiterated the need to address an inflation adjustment and local              
 match in SB 70.  She was astonished that Valley Park receives the             
 lowest amount of funding in the state.                                        
                                                                               
 Number 512                                                                    
                                                                               
 NICK FITZGERALD, teacher and parent in Ketchikan, stated that                 
 budget cuts tear communities apart.  He commented that the school             
 price index needs to be a mathematical calculation not a political            
 tool.  He reiterated the budget cuts facing Ketchikan; they will              
 cut about 16 teachers.  SB 70 is a start.                                     
                                                                               
 JOHN ANTONNEN, Executive Director of the Southeast Regional                   
 Resource Center, reiterated Mr. Harry Roger's sentiment that the              
 problem with the foundation funding formula is that equity is in              
 the eye of the beholder.  He suggested increasing the unit value,             
 the inflationary cost in education, while attempting to find a                
 venue out of this inequitable funding formula.  He supported the              
 single site revisions in SB 70.  He felt that the price index with            
 its winners and losers is somewhat better than the area cost                  
 differential.  The winners and losers of the price index could                
 create resistance to changing the formula.  He indicated the need             
 for relief from the 19 percent cap.  This relief from the U.S.                
 Department of Education could happen if Alaska attempts to rewrite            
 the formula.  He urged reviewing the increase in the instructional            
 unit value because it would increase funding for every district in            
 the state.                                                                    
                                                                               
 GEORGE MAYKOWSKI pointed out that seasonal employees like those in            
 his district move about and the school system is set up to                    
 accommodate that movement.  These type of districts would not                 
 benefit from the change in the date of the count of students.  He             
 suggested having an earlier date or having two dates and averaging            
 the student counts in order to receive a true estimate of                     
 enrollment.                                                                   
                                                                               
 JERRY BURNETT explained that Section 11 of SB 70 allows the                   
 Commissioner to permit district's having a different period in                
 which to report the counts for average daily membership.  GEORGE              
 MAYKOWSKI expressed the need for more work on this and offered his            
 services.                                                                     

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