Legislature(2001 - 2002)

04/27/2001 01:37 PM Senate HES

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
         HB 203-SPECIAL APPROP: SCHOOL DIST. COST FACTORS                                                                   
                                                                                                                                
CHAIRWOMAN GREEN announced HB 203 to be up for consideration.                                                                   
                                                                                                                                
SENATOR  WILKEN  moved  to  adopt  the  SCS  CSHB  203(HES)  version                                                            
O/Cramer/4/26/01.  There were no objections  and it was so  ordered.                                                            
                                                                                                                                
SENATOR WILKEN said that  he and Representative Wilson had gone over                                                            
this bill and agreed on all items but one.                                                                                      
                                                                                                                                
REPRESENTATIVE  PEGGY WILSON, sponsor of HB 203, explained  that the                                                            
study is on school  district cost factors. She said  she didn't have                                                            
a problem with  Legislative Budget  and Audit overseeing  the study.                                                            
She said that section 1  was the same, although the wording has been                                                            
changed.                                                                                                                        
                                                                                                                                
She said she called Mr.  David Cottrell, a school auditor, and asked                                                            
him if the  study could be  done in the stated  amount of time.   He                                                            
thought it  could. A McDowell Group  spokesman said the study  could                                                            
be done  and Senator Therriault,  Chairman  of the Budget and  Audit                                                            
Committee, said  he knew everyone wanted this study  and it would be                                                            
something the auditors could get to right away.                                                                                 
                                                                                                                                
REPRESENTATIVE  WILSON  recommended that  the committee  change  the                                                            
date back to next year  and say that a preliminary report be done by                                                            
January 30, with a final report due April 1.                                                                                    
                                                                                                                                
SENATOR LEMAN moved to  adopt those dates and an immediate effective                                                            
date on page 1, line 9.                                                                                                         
                                                                                                                                
SENATOR WILKEN objected  saying that this study is really important.                                                            
It affects how schools  get funded across the state. He thought they                                                            
needed to sort  some things out first.  In 1998, the McDowell  Group                                                            
found that the  53 school districts didn't even have  a common chart                                                            
of accounts.  This will  be the  third year that  two auditors  have                                                            
been out trying  to get the accounts aligned, so people  can compare                                                            
costs between  districts. He  felt the chart  of accounts should  be                                                            
aligned across the state and working as they should be.                                                                         
                                                                                                                                
He explained when they  get some cost comparisons, they boil it down                                                            
to a model  that projects numbers  that are valid for the  53 school                                                            
districts.  Then it has to get tested  to see how real data  reacts.                                                            
He didn't think  that they wanted the preliminary  report next year,                                                            
an election  year, where  it will  get bogged  down in politics.  He                                                            
said that this  would definitely shift some money  around and no one                                                            
knew where it would go.                                                                                                         
                                                                                                                                
SENATOR WILKEN concluded  saying, "First of all we need to make sure                                                            
the system  is in  place to measure  and, secondly,  that the  model                                                            
works and that  it's valid and we  have confidence in it.  When that                                                            
happens,  then  in '03  we  can go  ahead  and  work this  into  the                                                            
foundation formula ...."                                                                                                        
                                                                                                                                
CHAIRWOMAN GREEN asked  if he was assuming that the information that                                                            
comes in will somehow be part of an every other year correction.                                                                
                                                                                                                                
SENATOR WILKEN answered in his mind he thought so.                                                                              
                                                                                                                                
MR. EDDY JEANS,  School Finance and  Facilities Section,  Department                                                            
of Education  and Early  Development (DOEED),  commented that  SB 36                                                            
requires  DOEED to review  and update the  cost differentials  every                                                            
other  year and to  make recommendations  to  the legislature.  This                                                            
year, DOEED's  report used  the McDowell methodology  (in SB  36) to                                                            
update the cost  differentials, but DOEED found the  methodology was                                                            
flawed. DOEED  took revised calculations back to the  McDowell Group                                                            
and asked them  to review them.  The McDowell Group  agreed that the                                                            
methodology  can no longer  be used.  Subsequently,  the  Governor's                                                            
Education Funding  Task Force has recommended that  a new cost study                                                            
be done.                                                                                                                        
                                                                                                                                
SENATOR  WILKEN asked  which  year he was  comfortable  using for  a                                                            
report date.                                                                                                                    
                                                                                                                                
MR. JEANS replied  January 15, 2003. He thought that  studies in the                                                            
past had  been hurried projects,  which has  led to questions  about                                                            
the validity of  the differentials. He didn't expect  the cost study                                                            
to be based  on audited expenditures  as previous studies  had done.                                                            
He envisioned  the study to be based on other types  of indices that                                                            
demonstrate the variance  in cost of delivering education around the                                                            
state.                                                                                                                          
                                                                                                                                
CHAIRWOMAN GREEN announced a brief at-ease.                                                                                     
                                                                                                                                
CHAIRWOMAN  GREEN  called  the  meeting  back  to  order  and  asked                                                            
Representative Wilson if she wanted to comment on the amendment.                                                                
                                                                                                                                
REPRESENTATIVE  WILSON said she talked  to Senator Therriault  about                                                            
the Request  for Proposal  process and is  ready to work at  getting                                                            
the education community on board when session is over.                                                                          
                                                                                                                                
SENATOR LEMAN  said he thought the amendment provided  adequate time                                                            
or he wouldn't have offered it.                                                                                                 
                                                                                                                                
CHAIRWOMAN  GREEN called for a roll  call vote. SENATOR LEMAN  voted                                                            
yes; SENATORS  WILKEN, DAVIS, and GREEN voted no;  and the amendment                                                            
failed.                                                                                                                         
                                                                                                                                
MR.  DARROLL  HARGRAVES,  Executive   Director,  Council  of  School                                                            
Administrators,  said SB  203 has  support and looks  like an  issue                                                            
they can  look forward to  working with in  the next few months.  He                                                            
said the Council supports  this bill. "I do know that there are very                                                            
few states  in the Union  who have attempted  to take a snapshot  of                                                            
what's  actually  happening  in  schools  to  set  this  kind  of  a                                                            
differential.   Theoretically,  charts   of  accounts  are   current                                                            
expenditures  and  should  have  nothing  to do  with  setting  cost                                                            
differentials.  It  should be  based  on what  is happening  in  the                                                            
communities' economy."                                                                                                          
                                                                                                                                
He said  that in the early  '80s, they hired  the Stanford  Group to                                                            
do the foundation  funding study for us. It collapsed  under its own                                                            
weight as it did in other  places. They attempted to describe school                                                            
districts in terms  of money. He cautioned that the  language in the                                                            
bill will set  the philosophy for the direction of  the study and is                                                            
extremely critical to the results they are going to get.                                                                        
                                                                                                                                
CHAIRWOMAN  GREEN asked what  language he  thought was important  to                                                            
get.                                                                                                                            
                                                                                                                                
MR. HARGRAVES  replied, "These  terms reflect  what you're  going to                                                            
spend to  keep your  household going….  I look at  what the  cost of                                                            
those items are to get things into the community…."                                                                             
                                                                                                                                
CHAIRWOMAN  GREEN asked  him to  look at  line 10 to  see if  that's                                                            
improved language.                                                                                                              
                                                                                                                                
MR. HARGRAVES said he thought it was an improvement.                                                                            
                                                                                                                                
CHAIRWOMAN GREEN  said she didn't understand what  he was advocating                                                            
for.                                                                                                                            
                                                                                                                                
MR. HARGRAVES  summed it  up by saying, "Don't  look at the  audited                                                            
budgets of school districts to set cost differentials."                                                                         
                                                                                                                                
CHAIRWOMAN  GREEN  asked  if that  was  the issue  that  caused  the                                                            
McDowell study to be called into question.                                                                                      
                                                                                                                                
SENATOR WILKEN  answered that it was a matter of opinion.  It wasn't                                                            
perfect, but  it was a quantum leap  over the report from  1982.  He                                                            
agreed with  Mr. Hargraves.  "It's not a question  of what  we spend                                                            
today, but  what should we spend.  I think that's addressed  in line                                                            
10  when  it  says, 'Should   be based  on  the  cost  providing  an                                                            
education in each school district."                                                                                             
                                                                                                                                
SENATOR WILKEN  said he wasn't  sure they  could do this report.  He                                                            
was  concerned  that they  were  imposing  what the  schools  boards                                                            
should be doing  from the top down.   He didn't think that  meant it                                                            
shouldn't be started.                                                                                                           
                                                                                                                                
MR. HARGRAVES  said he thought the  language was O.K. as  long as it                                                            
has the  right philosophy  behind it. He  repeated his major  point,                                                            
"The chart  of accounts  and audited budgets  really shouldn't  have                                                            
much play in setting a cost differential."                                                                                      
                                                                                                                                
CHAIRWOMAN  GREEN said she  didn't know how  they could avoid  that.                                                            
                                                                                                                                
SENATOR  WILKEN said  he thought  it was  part of  the equation.  He                                                            
agreed  with Mr. Hargraves  that the  study shouldn't  be driven  by                                                            
what is being spent, but on what should be spent.                                                                               
                                                                                                                                
CHAIRWOMAN GREEN  said she didn't think the language  expressed what                                                            
he  way  saying.  She  asked  everyone  for  suggestion  for  better                                                            
language.                                                                                                                       
                                                                                                                                
Number 1169                                                                                                                     
                                                                                                                                
MR.  JEANS  said   that  he  didn't  think  more  wordsmithing   was                                                            
necessary.  It provides a  little guidance  highlighting some  areas                                                            
that need  to be  looked at when  considering  the indices for  cost                                                            
differentials.   He  thought  cooperative   effort  was   needed  in                                                            
developing  the RFP  to ensure  that it  does what  they want  it to                                                            
before it hits the street.                                                                                                      
                                                                                                                                
CHAIRWOMAN  GREEN asked  if the  language  in section  1 gave  DOEED                                                            
authority to work with the study.                                                                                               
                                                                                                                                
MR.  JEANS  said he  thought  it did  and  that  item 1  gives  them                                                            
additional  guidance.   He thought   they  shouldn't  get  any  more                                                            
prescriptive.                                                                                                                   
                                                                                                                                
CHAIRWOMAN GREEN  asked what language allowed them  to work with the                                                            
different school districts.                                                                                                     
                                                                                                                                
MR.  JEANS  replied  that  he  intended   to  do  that  through  the                                                            
Department of Education and that was in the intent language.                                                                    
                                                                                                                                
SENATOR WILKEN  moved amendment #2 on page 1, line  6, to delete "to                                                            
prepare and contract for  the preparation" and to insert "enter into                                                            
a contract for"  and, on page 2, to delete line 4  to conform with a                                                            
Department of Law concern.                                                                                                      
                                                                                                                                
SENATOR  LEMAN suggested  deleting "and"  on page  2, line 4  and to                                                            
insert "and" on  line 1 and change the semicolon into  a period. The                                                            
committee indicated approval of the change in wording.                                                                          
                                                                                                                                
CHAIRWOMAN GREEN  asked if there were any further  objections. There                                                            
were no further objections and amendment #2 was adopted.                                                                        
                                                                                                                                
SENATOR  LEMAN moved  amendment  #3 on  page  1, line  14 to  delete                                                            
"between" and  insert "among" and do the same thing  on page 2, line                                                            
3.  He  also  asked  on  page  1, line  12,  if  there  was  a  cost                                                            
differential for the shipping of school materials and supplies.                                                                 
                                                                                                                                
REPRESENTATIVE  WILSON replied  that it depends  on several  things,                                                            
but if you run  out of something and have to run to  the local store                                                            
to get it, it will cost more in some areas than in others.                                                                      
                                                                                                                                
SENATOR LEMAN said he wanted  to compare costs in more than a lineal                                                            
way.  He wanted  to  compare more  than  Anchorage to  Wrangell;  he                                                            
wanted to  compare Wrangell  to Petersberg  and Barrow to  Ketchikan                                                            
and Bethel.                                                                                                                     
                                                                                                                                
CHAIRWOMAN  GREEN asked  if there  was opposition  to amendment  #3.                                                            
There were no objections and it was adopted.                                                                                    
                                                                                                                                
CHAIRWOMAN GREEN  asked on page 1, line 10, if specifically  saying,                                                            
"the cost of shipping  school materials and supplies,"  implies that                                                            
that's the only  extraordinary cost you would consider?  She thought                                                            
it would make much more  sense to say, "the cost of the school lunch                                                            
program,  the  cost of  school  materials  and  supplies,  shipping,                                                            
transportation costs."                                                                                                          
                                                                                                                                
She would have  preceded that with a phrase "such  as" so they don't                                                            
get so narrow in meaning.                                                                                                       
                                                                                                                                
REPRESENTATIVE  WILSON replied that the language at  the end of line                                                            
12,  "other  costs  that  relate  directly   or  indirectly  to  the                                                            
operation of the school," covers a multitude of things.                                                                         
                                                                                                                                
MR.  JEANS said  he  thought  the language  allowed  them  a lot  of                                                            
flexibility.                                                                                                                    
                                                                                                                                
CHAIRWOMAN  GREEN  said  she  wanted  it on  the  record  that  this                                                            
language was meant to be very, very inclusive.                                                                                  
                                                                                                                                
SENATOR LEMAN  moved amendment  #4 to delete  "shipping" on  page 1,                                                            
line 12. There were no objections and it was so ordered.                                                                        
SENATOR WILKEN  moved to pass SCS CSHB 203(HES) from  committee with                                                            
attached fiscal notes and  individual recommendations. There were no                                                            
objections and it was so ordered.                                                                                               

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