Legislature(2015 - 2016)Anch LIO AUDITORIUM

07/22/2015 09:30 AM LEGISLATIVE BUDGET & AUDIT

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Audio Topic
09:36:28 AM Start
09:42:46 AM Presentation of the Public Education K-12 Funding Study: Review of Alaska's School Funding Program
11:34:14 AM Report Status Update - School Design and Construction
11:46:38 AM Report Status Update - Evaluation of Salary and Benefits Schedule for School Districts
11:53:51 AM Other Committee Business
11:59:28 AM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
-- Agenda Change --
EXECUTIVE SESSION:
- Medicaid Reform & Expansion Consultant
Procurement
PUBLIC SESSION:
-- Testimony <Invitation Only> --
+ - Presentation of Public Education K-12 Funding TELECONFERENCED
Study by Augenblick, Palaich and Assoc. (APA)
- Report Status Update: School Design and
Construction by Dept. of Education & Early
Development
- Report Status Update: Evaluation of Salary and
Benefits Schedule for School Districts by
Dept. of Administration
- Other Committee Business
NOTE: The Medicaid RPL's will NOT be taken up at
this meeting.
The Beltz Room in Juneau will be available for
audio (listen only).
The Beltz room is located in the Thomas Stewart
Legislative Office Building accessible by
the sky bridge on the 2nd floor of the Capitol.
**Meeting will be Streamed live on AKL.tv**
                    ALASKA STATE LEGISLATURE                                                                                  
             LEGISLATIVE BUDGET AND AUDIT COMMITTEE                                                                           
                       Anchorage, Alaska                                                                                        
                         July 22, 2015                                                                                          
                           9:36 a.m.                                                                                            
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Mike Hawker, Chair                                                                                               
Senator Anna MacKinnon, Vice Chair                                                                                              
Representative Kurt Olson (via teleconference)                                                                                  
Representative Lance Pruitt                                                                                                     
Representative Steve Thompson                                                                                                   
Representative Sam Kito                                                                                                         
Senator Lyman Hoffman                                                                                                           
Senator Cathy Giessel                                                                                                           
Senator Pete Kelly (alternate)                                                                                                  
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Senator Bert Stedman                                                                                                            
Senator Click Bishop                                                                                                            
Representative Mark Neuman                                                                                                      
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
PRESENTATION OF THE PUBLIC EDUCATION K-12 FUNDING STUDY                                                                         
 "Review of Alaska's School Funding Program"                                                                                    
REPORT STATUS UPDATE - School Design and Construction                                                                           
REPORT STATUE UPDATE - Evaluation of Salary and Benefits                                                                        
 Schedule for School Districts                                                                                                  
OTHER COMMITTEE BUSINESS                                                                                                        
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                                
NO PREVIOUS COMMITTEE ACTION                                                                                                    
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
JUSTIN SILVERSTEIN, Vice President                                                                                              
Augenblick, Palaich and Associates (APA) Consulting                                                                             
Denver, Colorado                                                                                                                
POSITION STATEMENT:  Co-presented results of a review of school                                                               
funding in Alaska, with a focus on recommendations.                                                                             
                                                                                                                                
AMANDA BROWN, Senior Associate                                                                                                  
Augenblick, Palaich and Associates (APA) Consulting                                                                             
Denver, Colorado                                                                                                                
POSITION STATEMENT:   Co-presented results of a  review of school                                                             
funding in Alaska, with a focus  on the study approaches taken by                                                               
APA to examine Alaska's school finance structure.                                                                               
                                                                                                                                
ELIZABETH SWEENEY NUDELMAN, Director                                                                                            
School Finance & Facilities                                                                                                     
Department of Education & Early Development (DEED)                                                                              
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:   Presented a brief update  on a construction                                                             
report.                                                                                                                         
                                                                                                                                
DIANE HIRSHBERG, Director                                                                                                       
University of Alaska Anchorage (UAA)                                                                                            
Center for Alaska Education Policy Research (CAEPR)                                                                             
Anchorage, Alaska                                                                                                               
POSITION  STATEMENT:   Presented an  update regarding  salary and                                                             
benefit schedules for school districts.                                                                                         
                                                                                                                                
LIZ BROOKS, Research Analyst                                                                                                    
Division of Personnel & Labor Relations                                                                                         
Department of Administration (DOA)                                                                                              
Juneau, Alaska                                                                                                                  
POSITION  STATEMENT:   Introduced  the study  related salary  and                                                             
benefit schedule for school districts.                                                                                          
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
9:36:28 AM                                                                                                                    
                                                                                                                                
CHAIR  MIKE  HAWKER  called  the  Legislative  Budget  and  Audit                                                             
Committee  meeting  to order  at  9:36  a.m.   Senators  Giessel,                                                               
Hoffman, Kelly,  and MacKinnon,  and Representatives  Kito, Olson                                                               
(via teleconference),  Thompson, Pruitt, and Hawker  were present                                                               
at the  call to order.   Also in attendance were  Senator Stevens                                                               
and   Representatives  Edgmon   (via  teleconference),   Johnson,                                                               
Reinbold, Tarr, and Vazquez.                                                                                                    
                                                                                                                                
The committee took an at-ease from 9:37 a.m. to 9:40 a.m.                                                                       
                                                                                                                                
CHAIR HAWKER  announced that  a quorum had  been met  without the                                                               
alternate,  and  he  reminded  members that  as  outlined  in  AS                                                               
24.20.165,  the alternate  members  only vote  when necessary  to                                                               
provide a quorum.                                                                                                               
                                                                                                                                
CHAIR HAWKER announced that the  committee would not hear an item                                                               
on  the agenda:    the  Procurement of  the  Medicaid Reform  and                                                               
Expansion  Consultant.    He  emphasized   the  agenda  item  was                                                               
different  from  anything  related   to  Governor  Bill  Walker's                                                               
executive order in determining that  he would unilaterally accept                                                               
additional Medicaid funding.  He  said the committee had publicly                                                               
noticed that  it would not  be taking  up the governor's  RPLs or                                                               
any  requests  regarding  the   decision  to  implement  expanded                                                               
Medicaid.   He  explained that  at the  last minute,  following a                                                               
review, a  request was made  for more  time to consider  a couple                                                               
matters  that  may have  affected  the  outcome of  the  proposal                                                               
evaluation.                                                                                                                     
                                                                                                                                
^PRESENTATION  OF  THE  PUBLIC   EDUCATION  K-12  FUNDING  STUDY:                                                               
Review of Alaska's School Funding Program                                                                                       
    PRESENTATION OF THE PUBLIC EDUCATION K-12 FUNDING STUDY:                                                                
           Review of Alaska's School Funding Program                                                                        
                                                                                                                                
9:42:46 AM                                                                                                                    
                                                                                                                                
CHAIR  HAWKER   announced  that   the  committee  would   hear  a                                                               
presentation of the public education  K-12 funding study, "Review                                                               
of Alaska's  School Funding Program."   He directed  attention to                                                               
documents pertaining  to presentation [included in  the committee                                                               
packet].                                                                                                                        
                                                                                                                                
9:44:53 AM                                                                                                                    
                                                                                                                                
JUSTIN  SILVERSTEIN,  Vice  President,  Augenblick,  Palaich  and                                                               
Associates  (APA) Consulting,  began  a PowerPoint  presentation.                                                               
As  shown on  slide  2, he  relayed that  APA  is a  Denver-based                                                               
education  policy  consulting firm,  founded  in  1983, that  had                                                               
worked  in all  50 states  to  review school  finance issues  and                                                               
suggest  improvement  to  systems.    He said  APA  had  a  broad                                                               
knowledge  of how  states around  the  country addressed  various                                                               
types of  student needs.  He  said the committee would  see about                                                               
45  slides depicting  highlights of  information included  in the                                                               
135-page report.   He thanked the legislature,  staff, and school                                                               
districts across the  state for their cooperation  and turned the                                                               
PowerPoint presentation over to his colleague, Amanda Brown.                                                                    
                                                                                                                                
9:47:06 AM                                                                                                                    
                                                                                                                                
AMANDA   BROWN,  Senior   Associate,   Augenblick,  Palaich   and                                                               
Associates  (APA) Consulting,  directed attention  to information                                                               
shown on slide  3 of the PowerPoint  presentation, which outlined                                                               
what the committee would hear,  beginning with an overview of the                                                               
study  and followed  by information  about:   the interviews  APA                                                               
conducted  with school  district  leaders;  reviews performed  of                                                               
funding system  components; an  equity analysis;  a study  of the                                                               
relationship    between    performance,   student    need,    and                                                               
expenditures;  a  consideration  of  fiscal  sustainability;  and                                                               
APA's recommendations.                                                                                                          
                                                                                                                                
MS. BROWN  directed attention to  slide 4, which showed  that the                                                               
study  was focused  on  reviewing the  structure  of the  current                                                               
funding  system.    She  explained  that APA  was  not  asked  to                                                               
consider the  total number of  dollars that would be  adequate to                                                               
ensure  the  success of  all  students  or to  determine  whether                                                               
specific  adjustments   in  the   formula  were  correct.     The                                                               
consultants were focused  on whether something should  be part of                                                               
the current  funding system,  rather than  recalculating district                                                               
cost factors.   She said  APA knew  about the current  lawsuit in                                                               
Ketchikan  considering the  constitutionality of  having a  local                                                               
contribution requirement, but APA was  tasked with looking at the                                                               
current system  and governing structure; therefore,  the issue in                                                               
Ketchikan was outside its purview.                                                                                              
                                                                                                                                
MS. BROWN directed attention to  slide 5, which showed that APA's                                                               
objectives  were a  strong education  funding  system, which  was                                                               
equitable;  responsive to  the needs  of  students, schools,  and                                                               
districts; adequate  and efficient in the  resources it provided;                                                               
and flexible  - giving  local control  to districts  to determine                                                               
how best  to use  resources.   She said  APA believed  that these                                                               
resources  were a  reasonable starting  point  for examining  any                                                               
state  system.    She  noted   that  while  adequacy  was  a  key                                                               
component, it was not the focus of the study.                                                                                   
                                                                                                                                
9:50:17 AM                                                                                                                    
                                                                                                                                
MS. BROWN turned to slide 6,  which showed that APA undertook the                                                               
study from  late February  through July,  during which  time APA:                                                               
reviewed   Alaska's   current    funding   structure;   conducted                                                               
interviews  with  district  stakeholders to  understand  how  the                                                               
current  school finance  structure affects  individual districts;                                                               
examined  other states'  approaches to  school funding;  examined                                                               
the equity  of the current  system, looking at both  district and                                                               
taxpayer  equity;  analyzed  student performance  across  Alaska,                                                               
including the relationship between  performance and student need;                                                               
examined   the  state's   sources  of   revenue;  and   developed                                                               
recommendations for the State of Alaska to consider.                                                                            
                                                                                                                                
MS. BROWN discussed  the interview process, as shown  on slides 7                                                               
and 8.   She said APA  provided the opportunity for  leaders from                                                               
all districts to  provide input for the study through:   a public                                                               
listening  session,  which  allowed  for  feedback;  group  phone                                                               
interviews,  with  districts  broken  into  categories,  such  as                                                               
rural,  urban, distant,  and single-site;  a series  of in-person                                                               
interviews  conducted by  two teams  covering  11 districts;  and                                                               
follow-up individual interviews by phone.   She said leaders from                                                               
31 school districts participated.   She said APA also interviewed                                                               
other stakeholders, including Alaska  Department of Education and                                                               
Early Development  (DEED) staff.   All of the  interviews focused                                                               
on gaining a  better understanding of the  current funding system                                                               
and its  impact on school  districts, as well as  Alaska's unique                                                               
context.   She said  the interviewees  were generally  happy with                                                               
the current  funding system  and its  components of  the formula,                                                               
although  there  was concern  that  any  changes to  the  current                                                               
structure would  be part of a  "zero sum game," which  meant that                                                               
without additional dollars available,  to give additional dollars                                                               
to one district would mean taking  it from another.  She said the                                                               
interviewees understood the complexity  of funding in Alaska, and                                                               
"they  thought  that the  system  was  doing  a good  job  really                                                               
thinking through that complexity."                                                                                              
                                                                                                                                
9:53:10 AM                                                                                                                    
                                                                                                                                
MS.  BROWN directed  attention  to slide  9,  which reviewed  the                                                               
funding system components.  She  said APA examined each component                                                               
of  the  current funding  system  by:   gathering  feedback  from                                                               
interviewees; comparing the component  to funding approaches used                                                               
in  other states;  and analyzing  relevant  data.   She said  the                                                               
results of  the review would be  discussed in the context  of the                                                               
recommendations.                                                                                                                
                                                                                                                                
MS. BROWN turned to slide  10, entitled, "Alaska's School Funding                                                               
Program" and stated that under  the current formula, a district's                                                               
funding -  its "basic need"  - was determined by  multiplying the                                                               
base student  allocation (BSA) by the  [district adjusted average                                                               
daily membership  (DAADM)].  She  said that figure  is calculated                                                               
through a  series of  adjustments, shown across  one line  on the                                                               
slide as:   the average  daily membership of the  district, based                                                               
on  the size  of its  schools and  taking into  consideration the                                                               
size of the  community; the district cost  factor, which accounts                                                               
for differences  of location  and remoteness  and can  range from                                                               
1.0 in  Anchorage up to  "over 2  in other locations;"  a special                                                               
needs  factor of  an additional  20 percent  to account  for four                                                               
categories  of students  -  vocational/career  & technical,  non-                                                               
intensive special  education, bi-lingual/bi-cultural,  and gifted                                                               
& talented;  and a  vocational and  technical (VT)  adjustment of                                                               
1.5 percent.  She explained that  "each of the adjustments in the                                                               
first  line is  multiplied  against the  preceding."   She  noted                                                               
there were  two student counts:   the intensive  services student                                                               
count,   where  each   student  is   counted  as   13;  and   the                                                               
correspondence student  count, which  counts every student  as .9                                                               
for the  purposes of  funding.  Outside  of this  funding formula                                                               
was the funding for transportation and capital.                                                                                 
                                                                                                                                
MS. BROWN  directed attention to  slides 11-14,  regarding equity                                                               
analysis.    She said  that  in  the  equity analysis,  the  data                                                               
examined   included    demographics,   wealth,    revenues,   and                                                               
expenditures  of  districts.   The  APA  study team  focused  on:                                                               
horizontal  equity  with  regard  to how  equally  resources  are                                                               
allocated  to  districts  or   students  in  similar  situations;                                                               
vertical  equity  measured how  well  the  school finance  system                                                               
takes into  account varying student needs;  and fiscal neutrality                                                               
assessing  the  link  between  local wealth  and  the  amount  of                                                               
revenue available  to support  a school  district.   She remarked                                                               
that  it  was challenging  to  consider  the equity  of  Alaska's                                                               
current system due  to extreme variations of  size and remoteness                                                               
of  districts,  and there  were  significant  adjustments in  the                                                               
current system to  account for those differences.   She indicated                                                               
that one  determination of  equity was  made based  upon property                                                               
wealth;  however,  because only  city  and  borough districts  in                                                               
Alaska have  local wealth, APA  had to  create a wealth  proxy to                                                               
take  into  account the  impact  data  available to  include  all                                                               
districts  in the  state.   She  noted that  APA  also used  some                                                               
weighted student  counts to account  for student  differences and                                                               
those  differences due  to  size and  location  that the  current                                                               
system  is picking  up.   She indicated  they did  the best  they                                                               
could to get  every district on an even playing  field to compare                                                               
against each other.                                                                                                             
                                                                                                                                
9:57:14 AM                                                                                                                    
                                                                                                                                
MS. BROWN  stated that  APA found  a high  level of  variation in                                                               
horizontal  equity findings  across Alaska,  which means  various                                                               
districts were  funded differently,  and it  was expected  as the                                                               
coefficient of  variation measured  the difference.   In general,                                                               
an excepted coefficient of variation  would be approximately .10,                                                               
but APA  discovered the variation  in Alaska was between  .32 and                                                               
.40.    She said  APA  looked  at  both total  and  instructional                                                               
expenditures.   In terms of  vertical equity findings,  Ms. Brown                                                               
reported that  APA wanted to  determine how much of  the spending                                                               
differences across districts could be  accounted for by the needs                                                               
of the  students, the  size, or  location of  the district.   The                                                               
consultants found  that after accounting for  student need, there                                                               
were  still high  levels of  variation.   She  added, "They  were                                                               
reduced from what  we saw when we didn't consider  that, but they                                                               
were  still higher  than  what would  be  a generally  acceptable                                                               
standard  for either  total or  instructional expenditure."  With                                                               
regard to fiscal neutrality findings,  she stated that the common                                                               
benchmark was  set at a  .50 correlation  between wealth -  or in                                                               
this case  the wealth proxy  - and  how much money  was available                                                               
locally.   She reported  that Alaska's  current system  was below                                                               
the  .50  metric, which  means  it  meets the  fiscal  neutrality                                                               
threshold.                                                                                                                      
                                                                                                                                
CHAIR  HAWKER noted  that Ms.  Brown was  giving the  committee a                                                               
"high  level  abstract" of  a  detailed  report included  in  the                                                               
committee packet.                                                                                                               
                                                                                                                                
MS. BROWN confirmed that was correct.                                                                                           
                                                                                                                                
10:00:13 AM                                                                                                                   
                                                                                                                                
MS. BROWN returned to the  PowerPoint presentation, slides 15-17,                                                               
regarding  data   analysis  of  performance,   expenditures,  and                                                               
student  need.   She  indicated that  the  analysis examined  the                                                               
relationship between  student need  - demographics  including how                                                               
many  students  had  language  issues,   such  as  Alaska  Native                                                               
students or  special education students  - and performance.   She                                                               
said  APA   used  linear  regression   to  determine   whether  a                                                               
district's  demographics   had  a  significant   relationship  to                                                               
overall  performance.     Three  demographic  variables   with  a                                                               
relationship were:   students with disabilities,  limited English                                                               
proficiency  (LEP) students,  and  Alaska Native  students.   She                                                               
said, "So  what this  means [is]  that ...  as the  percentage of                                                               
students  in   these  population  groups  increased   within  the                                                               
districts, their performance  on the [standards-based assessments                                                               
(SBA)] decreased, so  it was a negative  relationship between the                                                               
two."    She said  the  analysis  also  found  a high  degree  of                                                               
variation  in the  percentages of  students  in those  categories                                                               
between districts.                                                                                                              
                                                                                                                                
SENATOR  MACKINNON asked  Ms. Brown  to clarify  whether she  was                                                               
saying  that  the  more  resources an  area  received,  the  more                                                               
negative the results were.                                                                                                      
                                                                                                                                
MS. BROWN  clarified that APA  was not looking at  the associated                                                               
expenditures,  rather   at  the  relationship   between  existing                                                               
demographics  and performance.   In  other words,  she explained,                                                               
the higher  number of students  in the  aforementioned categories                                                               
meant a decrease in performance.                                                                                                
                                                                                                                                
MS.  BROWN said  the study  team next  examined the  relationship                                                               
between  performance  and expenditures  and  pointed  out that  a                                                               
regression   analysis    examined   the    relationship   between                                                               
proficiency levels and both  instructional expenditures and total                                                               
expenditures.    She  said total  expenditures  included  several                                                               
operational expenses not necessarily related to instruction.                                                                    
                                                                                                                                
CHAIR HAWKER asked Ms. Brown  to clarify how APA determined which                                                               
expenditures were instructional.                                                                                                
                                                                                                                                
10:02:39 AM                                                                                                                   
                                                                                                                                
MS.  BROWN  answered,  "The  instructional  expenditures  were  a                                                               
reporting line  of [EED's] data; it's  the instructional services                                                               
category of  expenses."  As  shown on  slide 16, Ms.  Brown said,                                                               
APA  found  that  higher   instructional  expenditures  showed  a                                                               
statistically    significant,    positive    relationship    with                                                               
performance.    There  was  not   a  relationship  between  total                                                               
expenditures   and  performance,   but  that   was  not   unusual                                                               
considering   the   total   expenditures   included   operational                                                               
expenditures, she  pointed out.   Ms. Brown stated that  the last                                                               
data  analysis   performed  examined  the   relationship  between                                                               
student  need  and the  current  adjustments  within the  funding                                                               
system.    She  explained  that even  though  the  special  needs                                                               
adjustment  was 20  percent  for all  districts,  because it  was                                                               
multiplied  against the  district's size  and cost  factor, there                                                               
was an  "imputed" weight for  each district.  She  explained that                                                               
the additional ADM generated after  the special needs, divided by                                                               
the original ADM,  equals a unique adjustment  for each district.                                                               
For  example,  in one  district  with  a size  adjustment  factor                                                               
equivalent  to 1.10  and a  district  cost factor  of 1.44  would                                                               
result in  an imputed special  needs adjustment  of approximately                                                               
32  percent, she  said.    Another district  with  a higher  size                                                               
adjustment of 1.2 and a higher  district cost factor of 1.8 would                                                               
end  up with  a 43  percent adjustment  for special  needs, as  a                                                               
result  of  "that   multiplying  nature  of  the   first  set  of                                                               
adjustments in the formula."                                                                                                    
                                                                                                                                
SENATOR MACKINNON asked whether APA  noted a higher investment in                                                               
operating expense  dollars versus instructional  expense dollars,                                                               
in  regard to  the  aforementioned  three demographic  variables,                                                               
[students  with disabilities,  limited English  proficiency (LEP)                                                               
students, and Alaska Native students].                                                                                          
                                                                                                                                
10:05:42 AM                                                                                                                   
                                                                                                                                
MR.   SILVERSTEIN   answered  that   APA   did   not  make   that                                                               
consideration as the  analysis was focused on two  data points on                                                               
expenditure   and   regressing    those   data   points   against                                                               
characteristics of the  district in order to figure  out which of                                                               
the  demographic  variables   showed  "statistically  significant                                                               
impacts" on student  performance.  He indicated that  it would be                                                               
difficult with the  data gleaned by APA to  know the expenditures                                                               
related to certain populations, because  that was not part of the                                                               
funding system.                                                                                                                 
                                                                                                                                
SENATOR  MACKINNON  clarified  she  was  asking  about  operating                                                               
expense, not  the instructional  dollar.   She stated,  "[If] the                                                               
operating expense  of the facility  is not variable,  they should                                                               
be  fixed   numbers,  and  if   you  pull  out   the  instruction                                                               
[component] - I don't know if it's  as simple as that - you would                                                               
come up  with an  operating [cost]  for a  particular item.   And                                                               
where  I'm  driving  to  is  if  there's  fixed  cost  and  other                                                               
communities aren't  able to invest in  instruction, I'm wondering                                                               
if it has an impact on  the overall system because we've had that                                                               
conversation at this committee and  others whether we should look                                                               
at fixed cost.  So, my  follow-up question then, looking at fixed                                                               
costs  and  how  they're  different, by  district,  depending  on                                                               
what's happening,  is whether you  considered, under  those fixed                                                               
cost  expenses  of  your  overall   spend  for  a  district,  the                                                               
additional one-time  money that we've  provided for at  least six                                                               
if not  ten years,  under the leadership  of Chairman  Hawker and                                                               
others - energy  cost equalization, basically; we  were trying to                                                               
provide one-time funding for those  districts - and so that's why                                                               
I  posed the  question:   If, in  fact, the  instructional dollar                                                               
going into  the classroom has a  benefit for the students  in our                                                               
population, but  the challenge  for the  district is  their fixed                                                               
cost, it's  important for us  to know that.   And the  Senate did                                                               
have, under  the leadership of Senator  Dunleavy, quite extensive                                                               
conversations about the fixed costs."                                                                                           
                                                                                                                                
MR. SILVERSTEIN  responded that  during the  interviews conducted                                                               
by APA,  "that point was  highlighted frequently."  He  said that                                                               
as  operating  expenditures  become  a higher  percent  of  total                                                               
expenditures, it  can drive  dollars away  from instruction.   He                                                               
said this was  of particular concern to  districts with declining                                                               
enrollment but  with similar fixed  structures.  He said  APA did                                                               
not do a data analysis on the issue posed by Senator MacKinnon.                                                                 
                                                                                                                                
10:08:52 AM                                                                                                                   
                                                                                                                                
MS.  BROWN  continued with  slide  17.    She said  APA  examined                                                               
whether  the imputed  weights were  correlated with  student need                                                               
levels in  districts and a high  correlation was not found.   She                                                               
directed  attention  to  slides   18  and  19,  regarding  fiscal                                                               
sustainability.  She said Alaska had  a very high reliance on oil                                                               
revenues, which could be a  sustainability issue with falling oil                                                               
revenues.  She said Alaska was  one of only seven states that did                                                               
not have an  income tax and one  of only five states  that had no                                                               
state sales  tax.  Other states  more reliant on oil  revenue had                                                               
either a state sales  tax or income tax as a  buffer.  Alaska had                                                               
the  highest  percentage  reliability  on [oil  revenues]  at  83                                                               
percent,  with approximately  12 percent  in corporate  income or                                                               
property  tax; however,  a  majority of  those  taxes were  still                                                               
being levied on oil and gas  and noted the information source was                                                               
the U.S. Census Bureau.  Ms.  Brown said APA observed that Alaska                                                               
was  relatively  wealthy, in  terms  of  annual personal  income,                                                               
slightly  higher than  the  national average,  but  is among  the                                                               
lowest in  local taxes.   She said APA reviewed  Alaska's revenue                                                               
stream between 2005 and 2012 and  found it had been more volatile                                                               
than the  national average.   She said  Alaska had  two potential                                                               
sources  of revenue  to help  stabilize funding  until additional                                                               
revenue  sources   were  available,  and  she   deferred  to  Mr.                                                               
Silverstein  to  delve  into   further  details  regarding  APA's                                                               
recommendations for the State of Alaska.                                                                                        
                                                                                                                                
10:12:25 AM                                                                                                                   
                                                                                                                                
MR.  SILVERSTEIN  advised he  would  attempt  to incorporate  the                                                               
information gleaned from  the aforementioned interviews conducted                                                               
by APA into  the recommendations.  He emphasized  that the intent                                                               
of  recommendations  is to  strengthen  the  current formula  and                                                               
ensure that  the system is equitable,  responsive, efficient, and                                                               
flexible.   He said  APA would not  recommend specific  levels of                                                               
funding as  that would be  the responsibility of  the legislature                                                               
to determine;  however, APA focused  on adjustments the  State of                                                               
Alaska  could make  to its  structure  and would  cover what  APA                                                               
heard and saw, in addition to covering the recommendations.                                                                     
                                                                                                                                
CHAIR   HAWKER   asked   Mr.   Silverstein   to   reiterate   his                                                               
"appreciation  for  the  fiscal  sustainability  relationship  to                                                               
this"  and how  he  may  recognize the  difficulty  the State  of                                                               
Alaska is currently facing.                                                                                                     
                                                                                                                                
MR. SILVERSTEIN,  in response, moved  to slide  21.  He  said any                                                               
change  APA may  recommend  must take  into  account the  current                                                               
fiscal  environment.   He indicated  that interviewees  expressed                                                               
concern that  "if you  make a change  in a  zero-sum environment,                                                               
then there's  by definition a winner  and a loser."   He said APA                                                               
analyzed whether  Alaska's structure  was sound,  considering the                                                               
differences  it   faced  as  a   state;  therefore,   there  were                                                               
recommendations  that could  have  fiscal impact.    He said  APA                                                               
understood the  current construct  and the difficulty  of "trying                                                               
to implement  within that zero-sum  game."  Mr.  Silverstein said                                                               
he  thought the  best  news  was that  overall,  APA thought  the                                                               
current  structure of  Alaska's funding  system is  strong taking                                                               
into account student  and district needs.  He  specified that the                                                               
vast  majority  of recommendations  are  for  changes within  the                                                               
current  structure,  not  changes to  the  structure;  therefore,                                                               
although the type  of adjustments the state is  making are sound,                                                               
APA  suggested  the  state  may  want  to  address  the  how  the                                                               
adjustments are being made to better serve students.                                                                            
                                                                                                                                
SENATOR  MACKINNON asked  whether other  components were  used in                                                               
other states  that Alaska  had not  considered and  whether those                                                               
components would be shown during the presentation.                                                                              
                                                                                                                                
MR. SILVERSTEIN answered  that APA did look at  what other states                                                               
were  doing.   He indicated  that the  recommendations to  adjust                                                               
Alaska's current  plan would  expand the  plan, which  would then                                                               
include more of what other states did.                                                                                          
                                                                                                                                
MR. SILVERSTEIN, as  shown on slide 21, related  that the formula                                                               
adjusted  for  variations  in needs  across  the  state  through:                                                               
school size  adjustment (SSA), district  cost factor  (DCF), hold                                                               
harmless, special needs funding,  vocational career and technical                                                               
education   (CTE)  funding,   intensive  services   funding,  and                                                               
correspondence program  funding.   He said  there would  be other                                                               
general recommendations,  including those related to  capital and                                                               
transportation.                                                                                                                 
                                                                                                                                
10:18:20 AM                                                                                                                   
                                                                                                                                
MR. SILVERSTEIN  directed attention to  slide 22.  He  said there                                                               
were  a couple  of spots  in  Alaska's current  formula that  APA                                                               
described  as  cliff  points,  where  small  changes  in  student                                                               
enrollment  could  lead  to  a  large  change  in  funding.    He                                                               
reiterated that the standards  based assessment (SBA) performance                                                               
data showed that a  district's student characteristics, including                                                               
its  percentage  of special  education,  LEP,  and Alaska  Native                                                               
students,  was an  indicator of  the  district's SBA  proficiency                                                               
levels  and   the  higher  the   number  of  students   in  those                                                               
categories, the lower  the district's performance would  be.  Mr.                                                               
Silverstein pointed  out that compared to  other states, Alaska's                                                               
funding system  does not  differentiate on a  student basis.   He                                                               
acknowledged  that   it  was  called  a   student-based  formula;                                                               
however, he emphasized  that the funding system did  not fund any                                                               
specific  students,   such  as   the  aforementioned   groups  of                                                               
students, "at the  student level."  He said that  brings back the                                                               
point that the  special needs weight of .20 was  applied the same                                                               
across all  districts, regardless  of the  number of  students in                                                               
those categories.   He explained  that other states  with special                                                               
needs funding is tied to actual student numbers or percentages.                                                                 
                                                                                                                                
MR.  SILVERSTEIN, as  shown on  slide 23,  said a  couple of  the                                                               
formula's  existing adjustments  for student  characteristics had                                                               
not  been addressed  in many  years,  school size  in almost  two                                                               
decades and district  cost factor in approximately a  decade.  He                                                               
said APA has equity concerns  that arise around the difficulty in                                                               
comparing wealth  across districts.   He explained  that regional                                                               
education  districts,  and  city  and  bureau  districts,  having                                                               
different  tax,  policy,  and structure,  creates  a  barrier  to                                                               
evaluating  equity  especially at  the  fiscal  tax payer  equity                                                               
level.  Finally,  he said, revenues from oil  taxes have declined                                                               
and predicted  to remain lower  than previous  projections, which                                                               
creates issues for fiscal sustainability.                                                                                       
                                                                                                                                
10:22:14 AM                                                                                                                   
                                                                                                                                
MR.  SILVERSTEIN directed  attention  to slide  24, which  showed                                                               
APA's first recommendation that  Alaska should consider not using                                                               
school size adjustment (SSA) in  larger districts.  He said other                                                               
states  often  adjust for  "necessarily  small  schools" -  those                                                               
schools  in a  setting  where  they are  the  only population  of                                                               
schools.   He added, "And  so, if there  is a small  school, it's                                                               
there; it's the only school that's  going to be able to serve the                                                               
students, and so,  you're going to adjust for size."   He advised                                                               
that  as they  get  into  larger districts,  they  don't tend  to                                                               
adjust  as  frequently  for  small  schools,  whereas  in  larger                                                               
setting  where  there  may  be more  capacity  to  build  through                                                               
operations  and  some  economies   of  scale.    Mr.  Silverstein                                                               
clarified  that APA  was  not saying  that  funding for  Alaska's                                                               
largest districts should  "go down at the  school size adjustment                                                               
level," but rather that there  could be some intrinsic incentives                                                               
to building smaller  schools because there would  be more dollars                                                               
per student with a smaller school  population.  He said there are                                                               
also  students in  larger schools  of larger  districts that  are                                                               
actually being funded  at the school size  adjustment level below                                                               
1.0.   He said APA recommends  that Alaska take into  account the                                                               
cost  structures needed  in the  larger  districts, while  making                                                               
sure  not to  provide  incentives to  have  capital campaigns  to                                                               
build  certain   sizes  of  schools  that   are  not  necessarily                                                               
efficient or effective school sizes in a larger district.                                                                       
                                                                                                                                
SENATOR  MACKINNON   noted  that   when  Alaska  took   over  the                                                               
educational responsibilities  from the federal  government, there                                                               
was  an issue  regarding equitable  funding, which  she specified                                                               
was different from  equal funding.  She said the  state is trying                                                               
to reach  its "highest compliance"  with federal  requirements in                                                               
regard  to students.    She  asked, "This  does  not violate  the                                                               
equitable  clause?"   She said  APA's comments  were accurate  in                                                               
that larger cities  with taxing capacity want to tax  at a higher                                                               
rate.   She said,  "And so,  we've fixed what  they could  tax on                                                               
themselves to try to make sure  that we kept this equitable issue                                                               
in the forefront of our thoughts."                                                                                              
                                                                                                                                
MR.  SILVERSTEIN responded  that APA  did consider  the issue  of                                                               
equity and  the impact of  "that federal  lens" more in  terms of                                                               
the overall  funding system  and when looking  at "those  caps on                                                               
the ...  additional local  - that  can be  provided."   He stated                                                               
that  most  of APA's  recommendations  were  targeted to  student                                                               
need, and stated  that being equitable really  was about "serving                                                               
students at their level of need."   He said these adjustments are                                                               
used across the  country and had been, in general,  accepted as a                                                               
way to achieve  an equitable formula.  He continued,  "And so for                                                               
us there  was a  little bit  of a  separation between  when we're                                                               
looking  at the  funding side  and  ensuring ...  the 25  percent                                                               
differential on  expenditure but that  wasn't ... or  on revenue.                                                               
That didn't  play into  this specific  recommendation, but  as we                                                               
put in  our recommendation about  how to fund  districts, they're                                                               
all about equity of students -  how best to serve the differences                                                               
of students or schools or districts across the state."                                                                          
                                                                                                                                
10:26:42 AM                                                                                                                   
                                                                                                                                
MS. BROWN  added that before the  State of Alaska adopted  any of                                                               
APA's recommendations to make changes  to any of the adjustments,                                                               
it would  need to run  an equity test  allowing the state  to use                                                               
its federal impact aid, to  ascertain that the difference between                                                               
districts  had not  exceeded what  she recalled  was 23  percent.                                                               
She  said,  "We  didn't  evaluate  that  test  on  each  of  them                                                               
independently, because you  may be using one from  here, one from                                                               
there, and combined they would have different impacts."                                                                         
                                                                                                                                
SENATOR MACKINNON  said if the  state passed the federal  bar, it                                                               
still had  issues such as  the aforementioned  Ketchikan lawsuit,                                                               
and she  opined that no  one would  win in that  scenario because                                                               
everyone would receive  less if cities or areas  with wealth were                                                               
unable to contribute and the  state continued to face an economic                                                               
downturn.  She expressed concern  that if the formula was changed                                                               
the  state  may  have  to   stand  against  lawsuits  from  other                                                               
districts.                                                                                                                      
                                                                                                                                
MR.  SILVERSTEIN  moved  on  to  slide 25.    He  said  the  next                                                               
recommendation  was  that districts  should  be  allowed to  pick                                                               
which school  the students in  a community under 10  are applied.                                                               
He explained  that in a  community with under 10  students, those                                                               
students were added to the  next smallest school in the district,                                                               
for funding  purposes, before  they were  run through  the school                                                               
size adjustment table.  He said  that an unfunded school under 10                                                               
students would  be added  to the  next smallest  school; thereby,                                                               
raising  the  enrollment  total  and  thus  lowering  the  amount                                                               
received  per  pupil,  once  a   threshold  of  approximately  40                                                               
students was  met.   He said  APA recommended  allowing districts                                                               
the  freedom to  decide where  to add  their smallest  schools in                                                               
order to  find the school  that would  be the most  efficient for                                                               
them.  He  said APA did not know whether  any district would make                                                               
a different decision,  but had heard enough  times that districts                                                               
desire flexibility.                                                                                                             
                                                                                                                                
10:30:18 AM                                                                                                                   
                                                                                                                                
MR.  SILVERSTEIN directed  attention  to slide  26, showing  that                                                               
APA's recommendation  for school  size adjustment (SSA)  was that                                                               
Alaska should create  an average formula for  schools affected by                                                               
the community  size cliffs at 100  and 425 students.   He gave an                                                               
example, as  follows:  "The  example we use  a lot in  the report                                                               
is:   101 students, as school  is funded really as  two schools -                                                               
so,  there's K-6  and 7-12  are both  run separately  through the                                                               
school  size table.   At  100 -  one less  student -  they're run                                                               
through the  single site.  And  that difference is around  18 ADM                                                               
at that  one time.   If  you then add  on the  ... multiplicative                                                               
issue that  you have -  where ... after  you do your  school size                                                               
adjustment,  you're also  doing  a district  cost factor,  you're                                                               
also applying special needs and a  CTE adjustments - that can get                                                               
closer like 40 students of change  in funding based on ... one or                                                               
two  students."   Mr.  Silverstein  said  this was  probably  not                                                               
happening  every  year  and  everywhere,  but  APA  heard  during                                                               
interviews there  were shifts  from 102 students  one year  to 98                                                               
students the  next year with  a considerable shift to  funding of                                                               
the  district,  but  the  district  would  not  be  changing  its                                                               
structure dramatically  because it lost or  gained four students.                                                               
He   acknowledged  that   the   recommendation   to  track   this                                                               
information in  order to average it  over time would add  a level                                                               
of  complexity   for  DEED.     He   remarked  that   during  the                                                               
presentation  he  will discuss  declining  enrollment  and use  a                                                               
similar approach to  smooth out the differences  when schools are                                                               
consistently at "these  cliff points."  He said APA  tried to run                                                               
other options  where "you could  smooth these curves,"  but found                                                               
it would not be sensible or worth the effort for the cost.                                                                      
                                                                                                                                
MR.  SILVERSTEIN directed  attention  to slide  27, which  showed                                                               
that SSA was first created in 1998,  and it may be time to update                                                               
the  adjustment  and emphasized  the  importance  of setting  the                                                               
intent  of the  base  student allocation.   He  said  it was  not                                                               
reasonable  to expect  the  smallest districts  in  the state  to                                                               
provide the exact same program  as the largest, but deciding upon                                                               
a general program for every student  to receive.  He said that as                                                               
school size adjustments were set  considerations could be made as                                                               
to what was being purchased.                                                                                                    
                                                                                                                                
10:33:33 AM                                                                                                                   
                                                                                                                                
MR.  SILVERSTEIN moved  to slide  28, regarding  "Hold Harmless."                                                               
He  said APA's  recommends that  Alaska create  a true  declining                                                               
enrollment  adjustment  to  replace  the  current  hold  harmless                                                               
provision  to  be applied  to  all  districts to  ensure  greater                                                               
funding stability.  He said  APA's study of Alaska's current hold                                                               
harmless  provision showed  that it  functioned like  a declining                                                               
enrollment adjustment.  A classic  hold harmless provision, as it                                                               
applies to school  finance, ensures that a district  has the same                                                               
total level  of funding going forward,  he explained.  He  said a                                                               
study  performed by  Temple University,  reviewing  all the  hold                                                               
harmless  provisions and  climbing enrollment  adjustments across                                                               
the  country, showed  that Alaska's  hold harmless  provision was                                                               
something of  a misnomer as  it was really a  climbing enrollment                                                               
provision due to the way it functioned.                                                                                         
                                                                                                                                
MR. SILVERSTEIN  indicated that  the second  piece with  the hold                                                               
harmless  provision was  that it  was a  second area  where there                                                               
might be  a cliff.  He  continued, "Because you have  an absolute                                                               
targeted  amount -  5 percent  reduction of  students in  a year,                                                               
reduction of  your school  size adjusted population  in a  year -                                                               
you could  have a district  that has  4.9 percent and  a district                                                               
that  has 5.0.   One  is going  to be  getting this  ... what  we                                                               
really say is  kind of a stabilizing of this  decrease over time,                                                               
and the  other won't.   And you  can, again,  mathematically find                                                               
situations  where  you  can  have  a  district  losing  far  more                                                               
students over  a two  or three  year period than  ... and  not be                                                               
getting this hold  harmless provisions, than a  district who hits                                                               
this 5 percent in one year but  let's say then flattens out.  And                                                               
so, it  has some real  effects on funding,  again, if it  were to                                                               
happen.   This is math  and just trying  to look at  places where                                                               
cliffs exist,  and we  go through  some of  those numbers  in the                                                               
report."                                                                                                                        
                                                                                                                                
MR. SILVERSTEIN  said many approaches  were used by  other states                                                               
in terms  of climbing enrollment,  such as looking at  prior year                                                               
funding or weighted averaging.   With those types of formulas, he                                                               
said, "any  growing district  isn't going  to be  capturing their                                                               
growth" in  any given year.   He said  APA recommended a  best of                                                               
three years  averaging approach.   He  said APA  heard frequently                                                               
from districts  that they had  uncertainty around budgeting.   He                                                               
said the districts  relied on estimates for  their October count,                                                               
and  each year  they  faced  concern regarding  that  count.   He                                                               
explained  that if  the numbers  were off,  districts could  lose                                                               
larger numbers  of staff  than they could  "absorb."   He stated,                                                               
"And so, this sort of  declining enrollment adjustment would keep                                                               
everybody a little bit steadier over time."                                                                                     
                                                                                                                                
SENATOR  MACKINNON asked  which states  used the  best three-year                                                               
averaging approaches and  how those states compared  to Alaska in                                                               
similarity.                                                                                                                     
                                                                                                                                
MR.  SILVERSTEIN  answered that  the  State  of Colorado  used  a                                                               
multi-year average  combining more  than three  years.   He said,                                                               
"Where  you often  see these  are  in states  with smaller,  more                                                               
rural  settings where  you have  a large  amount of  decline, and                                                               
that decline as  a percentage can be pretty large  year to year."                                                               
He said in some mid-size  districts, losing 100-200 students, for                                                               
example, meant losing  a large amount of funding.   He continued,                                                               
"And in  the report is  a number; it wasn't  as large as  I would                                                               
actually ...  as you would think  - the amount of  change that it                                                               
would take.   It would  be ... to implement  this would be  a big                                                               
impact on  the districts  currently on  the 5  percent threshold,                                                               
but overall  it's not actually  a huge change  in ADM in  any one                                                               
given year."                                                                                                                    
                                                                                                                                
10:38:24 AM                                                                                                                   
                                                                                                                                
MR. SILVERSTEIN, in  response to Senator MacKinnon,  said APA did                                                               
not look at all 50 states,  but looked at states that did similar                                                               
things  and the  information about  other states  using declining                                                               
enrollment is in APA's report.                                                                                                  
                                                                                                                                
REPRESENTATIVE KITO asked  whether it is the best  of three years                                                               
of actual students in the classroom before adjustments.                                                                         
                                                                                                                                
MR. SILVERSTEIN  responded that hold  harmless was  applied after                                                               
the school size  adjustment was made, and that was  when the best                                                               
of the three year average was taken "from the October count."                                                                   
                                                                                                                                
MR.  SILVERSTEIN  moved  to slide  29,  regarding  district  cost                                                               
factor  (DCF).   He said  APA believed  Alaska's current  DCF was                                                               
both strong and the most appropriate  approach for the state.  He                                                               
said there were  a few states that actually use  any type of cost                                                               
of living  adjustment, and "they  differ from what we  would call                                                               
cost  of living  adjustments or  cost of  education adjustments."                                                               
He said Alaska  would consider its cost  of education adjustments                                                               
and review whether those factors  impact the cost of education in                                                               
the state.   He said some states considered cost  of living, such                                                               
as what  it cost their  employees to  live in certain  areas, but                                                               
not  the  cost  to  provide education  services.    For  example,                                                               
Virginia  applied  cost  of  living  adjustments  only  to  those                                                               
districts  closest to  Washington, D.C.   He  named Maryland  and                                                               
Colorado as two other states that use this type of adjustment.                                                                  
                                                                                                                                
MR. SILVERSTEIN  said given it had  been 10 years since  the last                                                               
update of  the DCF, it may  be time to update  the information in                                                               
the DCF  study to  ensure it was  responsive to  current district                                                               
needs.    Based  upon  concerns   expressed  by  school  district                                                               
leadership around  the state during  the interviews, he  said the                                                               
study  team  believed that  all  current  DCF cost  areas  should                                                               
remain in  the formula.   He  said two  additional areas  of cost                                                               
that could  be considered were:   the cost of  student activities                                                               
as some  schools have  to spend more  to provide  experiences for                                                               
students;  and  the cost  of  travel  for education  specialists,                                                               
which  can  be much  higher  for  special education  teachers  in                                                               
remote areas  of Alaska.   He emphasized the importance  that all                                                               
cost  areas be  evaluated in  order to  be efficient  and provide                                                               
educational  dollars,   which  were  linked  to   higher  student                                                               
performance.                                                                                                                    
                                                                                                                                
10:42:50 AM                                                                                                                   
                                                                                                                                
MR.  SILVERSTEIN  directed  attention   to  slide  30,  regarding                                                               
special needs funding.   He stated that  Alaska's current special                                                               
needs  funding  did  not  fund  for  special  needs  on  specific                                                               
students,  but  was  a  "block  grant"  model.    He  said  APA's                                                               
recommendation  was  that  the  state move  toward  a  series  of                                                               
adjustments  for  special  needs that  were  student  population-                                                               
specific  and  need-differentiated.   Further,  he  advised,  the                                                               
state  should  consider  providing   an  adjustment  for  at-risk                                                               
students.   He said  data analysis  in the  report showed  a wide                                                               
variation  in the  following:   LEP  students, special  education                                                               
students,  low-income  or  at-risk students,  and  Alaska  Native                                                               
students.  He indicated there  were large concentrations of those                                                               
students  throughout  Alaska's  53   districts  and  most  states                                                               
applying an LEP adjustment or at-risk  adjustment do it more on a                                                               
student  basis.   In terms  of  special education,  he said  some                                                               
states  applied a  "fences-based" approach,  which was  more like                                                               
Alaska's block  grant model  by assuming  every district  had the                                                               
same  level  of  need  and the  same  distribution  of  students.                                                               
However,  LEP  or at-risk  or  low-income  groups were  far  more                                                               
student-based, and  the differences  in districts were  funded in                                                               
such cases  in order that had  "the equitable dollars to  be able                                                               
to provide  differentiated services."   He said APA  considered a                                                               
number  of  different  approaches  for  Alaska  to  consider  and                                                               
offered that  Alaska could use  weights when  considering special                                                               
needs funding  and be in  line with  other states today,  and the                                                               
numbers  in the  long term  would  not differ  greatly from  what                                                               
Alaska was  currently providing in its  special needs adjustment.                                                               
He  said this  would  disconnect Alaska's  special needs  funding                                                               
from other adjustments.                                                                                                         
                                                                                                                                
10:45:47 AM                                                                                                                   
                                                                                                                                
SENATOR   MACKINNON  asked   whether  APA's   analysis  reflected                                                               
consideration  of the  litigation  that  Alaska school  districts                                                               
were facing  in attempting to  meet special needs.   Further, she                                                               
asked if  APA had  compared that  to other  states that  may have                                                               
other levels they provide in terms of special needs.                                                                            
                                                                                                                                
MR. SILVERSTEIN answered that APA  had not looked at any specific                                                               
litigation as it  was focused on how  much differentiations there                                                               
were  in the  student need  setting at  the district  level.   He                                                               
said, "Districts  look very  different when  you think  about the                                                               
type of students  who are walking through the door,  based on the                                                               
demographic data that we were using."                                                                                           
                                                                                                                                
SENATOR  MACKINNON   opined  that   compared  to  the   State  of                                                               
Washington,  Alaska's  services  to  special  needs  students  is                                                               
different.  She  said Alaska wants an  integrated classroom where                                                               
people with disabilities are able to  function.  She said she had                                                               
heard  that other  states  provide less,  which  pertains to  the                                                               
instructional  dollar   providing  services  for   special  needs                                                               
students.                                                                                                                       
                                                                                                                                
MR. SILVERSTEIN replied that as shown  at the bottom of slide 30,                                                               
the  first  place  Alaska  districts  cover  with  special  needs                                                               
funding was  their non-intensive  special education  students and                                                               
additional funding goes toward  intensive special needs students.                                                               
He  said, "When  there  are dollars  ...  other dollars,  they're                                                               
going to look  at vocational and gifted and talented  and ... bi-                                                               
lingual/bi-cultural, but  right now  with the way  it is,  if you                                                               
have  a very  high concentration  of students  - especially  your                                                               
non-intensive  special [education]  - most  of those  dollars are                                                               
going to  go to  that population because  it's this  block grant,                                                               
and it's not differentiated by need."                                                                                           
                                                                                                                                
MR.  SILVERSTEIN   moved  to  slide  31,   regarding  Career  and                                                               
Technical  Education  CTE  funding,   and  he  related  that  APA                                                               
recommended  that  Alaska  leave  its CTE  adjustment  in  place;                                                               
however,  when funding  was available  the state  should consider                                                               
whether  it was  possible to  increase the  level of  funding and                                                               
fund actual  CTE student  counts.   He said  the CTE  funding was                                                               
done  on a  block grant  model applied  to K-12  populations, and                                                               
then used for  7-12 student populations.  He said  APA heard from                                                               
districts that the current weight  had done well in helping those                                                               
districts provide CTE education support.   In a state where there                                                               
are a  number of jobs  that require  technical skills but  do not                                                               
require  a  higher  level  of education,  the  expansion  of  CTE                                                               
education was  very important, he  said.  He said  the underlying                                                               
question was  whether to  make it more  student specific,  so "if                                                               
you have more of those  populations, you would get more funding."                                                               
One consideration, he  said, was that some district  would say it                                                               
was more  difficult to provide a  more robust program in  some of                                                               
the smaller settings.                                                                                                           
                                                                                                                                
10:49:55 AM                                                                                                                   
                                                                                                                                
MR. SILVERSTEIN  directed attention  to slides  32 and  33, which                                                               
addressed  intensive  services  funding,  and  said  that  Alaska                                                               
should  not  make any  major  changes  to the  current  intensive                                                               
services adjustment.  He pointed  out that Alaska currently funds                                                               
its intensive services  students at a 13 weight,  which is higher                                                               
than other states.                                                                                                              
                                                                                                                                
The committee took an at ease from 10:50 to 11:05 a.m.                                                                          
                                                                                                                                
MR. SILVERSTEIN returned to the  discussion of intensive services                                                               
funding.   With regard  to the high  weight, he  explained Alaska                                                               
did not provide extraordinary aid  funding that many other states                                                               
provide,  wherein the  state  picked  up the  full  cost or  some                                                               
percentage of the cost of students  over a certain threshold.  He                                                               
advised, "Your approach does not do  that but it does have higher                                                               
weight, so we think the current structure is a good structure."                                                                 
Mr. Silverstein  said another recommendation  was that  if Alaska                                                               
reexamined the  DCF, it  should examine  the additional  costs of                                                               
providing  related  services   for  intensive  special  education                                                               
students in remote and/or isolated  areas.  He clarified that APA                                                               
was not recommending  that the state should apply the  DCF to the                                                               
intensive services funding.  He continued:                                                                                      
                                                                                                                                
     What we're  hearing, and  what ...  we think  should be                                                                    
     examined  if  there is  a  look  at the  district  cost                                                                    
     factor again, is that there  are some services provided                                                                    
     by therapists who have to  travel from more urban areas                                                                    
     to very remote settings, and  to provide the same level                                                                    
     of service to  a student with the same  disability in a                                                                    
     very remote  or isolated area might  cost substantially                                                                    
     more than it would in the more urban setting.                                                                              
                                                                                                                                
SENATOR MACKINNON  noted that  Mr. Silverstein  had said  APA was                                                               
hearing  feedback  from  districts   and  surmised  that  was  an                                                               
indication  those districts  were "bringing  people in  to help."                                                               
She related that in the past  she had been involved with the K-12                                                               
education  budget,  and  [the legislature]  embedded  within  the                                                               
Department of Education & Early  Development the funding for that                                                               
travel.  She  asked whether Mr. Silverstein was  telling her that                                                               
districts were being  charged, that the travel  funds had somehow                                                               
been  removed.   She asked,  "Can  you tell  me specifically  how                                                               
districts have been affected by that?"                                                                                          
                                                                                                                                
11:07:53 AM                                                                                                                   
                                                                                                                                
MS. BROWN  responded that APA  did not hear districts  talk about                                                               
"the state picking  up those costs," but was told  about the high                                                               
cost of  bringing [specialists] to  the district, both  in paying                                                               
for the  actual travel and the  time spent in travel,  the latter                                                               
of which stretched longer because of weather delays.                                                                            
                                                                                                                                
SENATOR MACKINNON said districts  could have specialized teaching                                                               
staff they  send out to  other schools  in their region,  but the                                                               
state  had   been  providing  education  specialists   to  go  to                                                               
districts in  need of assistance.   She said the state  had taken                                                               
on that responsibility  based on a previous lawsuit  and it would                                                               
be interesting to consider the matter more.                                                                                     
                                                                                                                                
MR.  SILVERSTEIN highlighted  the  last recommendation  regarding                                                               
Individualized Service  Funds (ISF),  that Alaska  should collect                                                               
data  on the  movement  of intensive  special education  students                                                               
into and out  of districts throughout the year  to understand the                                                               
potential cost  impact for  districts due to  this mobility.   He                                                               
said APA was unable to do this as  part of its study.  He related                                                               
that the type  of intervention services needed  for special needs                                                               
students  varies  with  each  student;  therefore,  even  if  one                                                               
student  begins school  and another  leaves the  school mid-year,                                                               
there still  could be  unfunded costs  that year  as a  result of                                                               
that  varied need.    He  said the  data  should include  student                                                               
movement and types of services being provided.                                                                                  
                                                                                                                                
MR.   SILVERSTEIN   directed   attention    to   the   issue   of                                                               
correspondence programs,  on slides  34 and 35.   He  said Alaska                                                               
was  unique  in  its  approach   to  provide  a  publicly  funded                                                               
homeschool option as few other states  did so.  He specified that                                                               
APA  considered only  publicly funded  homeschool  programs.   He                                                               
said APA  recommended that if  a new system  was put in  place to                                                               
fund for  actual counts  of special  needs students,  then Alaska                                                               
could consider adjusting for the  special needs of correspondence                                                               
students by identifying what types  of special needs were present                                                               
and  what services  were needed.    He said,  "We've heard  about                                                               
students who  have these  types of needs,  where the  funding ...                                                               
isn't provided  because correspondence funding is  outside of the                                                               
formula where the block grant is for special needs."                                                                            
                                                                                                                                
MR. SILVERSTEIN said another of  APA's recommendations related to                                                               
correspondence  programs was  that if  blended learning  programs                                                               
grew, then  as they grew  Alaska should  examine the cost  of the                                                               
programs and the methods for  counting blended learning students.                                                               
He  explained  that  when blended  learning  programs  are  fully                                                               
implemented, it  meant students undertook part  of their learning                                                               
offsite and part onsite.  He  said there were factors in Alaska's                                                               
system that would allow someone taking  a course to be counted as                                                               
a  part-time student.   He  relayed that  APA heard  concern from                                                               
districts  that the  current system  did not  quite address  "the                                                               
structure where you're  having students come in,  but they're not                                                               
necessarily in  classes, right; they're  coming to the  school to                                                               
have support  in a blended  learning environment, but  that's not                                                               
necessarily  in  a  class."    The  cost  structure  of  Alaska's                                                               
correspondence funding  did not necessarily align  to the blended                                                               
learning  movement.   He  indicated  that  because the  trend  is                                                               
growing across the  country, APA wanted Alaska to take  a look at                                                               
it; however,  he emphasized  that APA was  not making  a specific                                                               
recommendation for it.                                                                                                          
                                                                                                                                
11:12:55 AM                                                                                                                   
                                                                                                                                
MR.  SILVERSTEIN  directed  attention   to  slide  36,  regarding                                                               
transportation.    He  said  APA did  not  recommend  changes  to                                                               
Alaska's  current  transportation  funding system,  and  suggests                                                               
that  districts  continue to  be  allowed  to use  transportation                                                               
funding   for    intra-district   transportation.       He   said                                                               
transportation funding varied widely  across the country as there                                                               
were a number  of approaches.  In  Alaska, transportation funding                                                               
was funded on a per pupil  amount based on actual district costs.                                                               
He  said  that most  districts  expressed  satisfaction with  the                                                               
current  system,  but there  was  repeated  mention that  without                                                               
competition, pursuing contracts could  be problematic.  Regarding                                                               
intra-district  transportation, he  said there  was mention  that                                                               
there   was   new   accounting  based   on   various   types   of                                                               
transportation.  He said the  evaluation was different for moving                                                               
students to and  from school as compared to  moving students from                                                               
program to  program within  a district.   He explained  that many                                                               
districts have a career technical  education center, and they use                                                               
transportation to  bring students  to and from  that center.   He                                                               
said  districts   wanted  to  ensure  that   within  the  funding                                                               
structure  that would  still be  allowed.   He added,  "They feel                                                               
that ... if  you got rid of  that, that cost is going  to have to                                                               
come from somewhere if you want  to keep as effective an approach                                                               
for those programs."                                                                                                            
                                                                                                                                
11:14:28 AM                                                                                                                   
                                                                                                                                
MR. SILVERSTEIN turned  to slide 37, regarding capital.   He said                                                               
APA was  making no specific  recommendations around capital.   He                                                               
relayed that funding varied widely  across the country, with some                                                               
states picking up large shares of  the cost and others picking up                                                               
little to no  cost of capital.  He said  districts with declining                                                               
enrollment with  the same structures  to maintain  were concerned                                                               
with  the  growing costs  of  maintenance  of buildings  and  the                                                               
decreasing condition  of the buildings.   He said  districts were                                                               
concerned  about  the  elimination   of  the  debt  reimbursement                                                               
program is  an issue as it  was one way districts  could leverage                                                               
support  from the  community.    He concluded  that  any loss  of                                                               
capital funding was an issue for districts over time.                                                                           
                                                                                                                                
MR. SILVERSTEIN directed attention  to slides 38-40, regarding an                                                               
equity  study.   He invited  the committee  to read  the numerous                                                               
metrics, analyses, and  statistics, in the equity  section of the                                                               
full  report.    He  said there  were  structured  approaches  to                                                               
looking at  what is equitable  in terms of  horizontal, vertical,                                                               
and fiscal  neutrality.   He said the  APA team  recommended that                                                               
Alaska revisit  its special  needs adjustment  to ensure  that it                                                               
accounted  for differences  in  concentrations  of special  needs                                                               
students, especially  at-risk students,  across districts.   When                                                               
looking at  vertical equity across  districts, he said,  once the                                                               
adjustment for  special needs  has been  met even  when adjusting                                                               
for  current factors  in Alaska's  school finance  formula, there                                                               
remains  "an equity  issue."   He said  that meant  that all  the                                                               
additional dollars "coming on top"  outside of the mandated local                                                               
match created equity issues that  were not necessarily related to                                                               
student need.   One  way to  do that, he  said, was  "through the                                                               
characteristics."                                                                                                               
                                                                                                                                
MR. SILVERSTEIN said APA's next  recommendation related to equity                                                               
was  that   Alaska  should  conduct   further  analysis   of  the                                                               
differences  in  the  amount of  local  revenues  contributed  to                                                               
districts and explore approaches  for either equalizing access to                                                               
additional  revenues  beyond  state foundation  funding  for  low                                                               
wealth  districts,  or  further  limiting  the  amount  of  local                                                               
funding that may be contributed  to districts.  He indicated this                                                               
would create greater horizontal equity between districts.                                                                       
                                                                                                                                
MR.  SILVERSTEIN  said  APA's  final  recommendation  related  to                                                               
equity  was that  Alaska should  consider  creating a  consistent                                                               
measure of  local capacity for  supporting districts that  may be                                                               
used across all district types.   He said APA attempted to create                                                               
a wealth  proxy, which was explained  further in the report.   He                                                               
said  finding a  way  to  discuss the  local  fiscal capacity  of                                                               
districts included  discussion of what was  equitable, especially                                                               
in terms  of what fiscal  neutrality for tax payers  looked like.                                                               
He said, "With  the split between your [REAA]  districts and your                                                               
city  &  bureau districts,  it  becomes  difficult to  make  that                                                               
comparison currently."                                                                                                          
                                                                                                                                
11:18:37 AM                                                                                                                   
                                                                                                                                
MR.  SILVERSTEIN directed  attention  to  the recommendation  for                                                               
fiscal sustainability, on slides 41-45.   He stated that over the                                                               
long  term, it  may  be in  the state's  best  interest to  begin                                                               
moving toward reducing its reliance  on oil revenues because both                                                               
demand  and production  would likely  begin a  permanent downward                                                               
trend.  He said in order  to reduce its 80-90 percent reliance on                                                               
oil  revenues, the  state would  need to  put revenue  streams in                                                               
place.  He  said APA recommended the state  could temporarily use                                                               
funds  from  its  constitutional  budget reserve  (CBR)  fund  or                                                               
permanent  fund  earnings  reserve  account, both  of  which  APA                                                               
observed had  billions of dollars  as of the beginning  of fiscal                                                               
year 2016 (FY 16).                                                                                                              
                                                                                                                                
CHAIR  HAWKER noted  that APA  had not  attempted to  recommend a                                                               
fiscal policy  solution for  Alaska, but  was just  "pointing out                                                               
the obvious."                                                                                                                   
                                                                                                                                
MR. SILVERSTEIN confirmed that was true.                                                                                        
                                                                                                                                
MR. SILVERSTEIN  said the next  recommendation related  to fiscal                                                               
sustainability was that  since Alaska pays for  a relatively high                                                               
state share of  K-12 funding, the state  should explore equitable                                                               
approaches  to adjusting  the local  share of  that funding.   He                                                               
said  APA recognized  that there  was ongoing  litigation through                                                               
the Ketchikan  lawsuit, which was  not part of APA's  purview and                                                               
would  change the  discussion dramatically.    He said  currently                                                               
Alaska  funded 64.8  percent  of K-12  funding  and the  national                                                               
average was  approximately 45 percent.   He said the  state could                                                               
consider  removing that  cap  to allow  districts  to provide  "a                                                               
higher percentage of their total education pot."                                                                                
                                                                                                                                
11:21:20 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE KITO  said that  recommendation seemed  counter to                                                               
an earlier  recommendation to provide more  compressed funding to                                                               
equalize on  the horizontal side.   He explained, "So,  if you're                                                               
allowing  for  more  local  contribution,  then  there  are  some                                                               
districts that can't provide  that additional local contribution,                                                               
which means it would push them outside that horizontal equity."                                                                 
                                                                                                                                
MR. SILVERSTEIN clarified  that in this case,  APA was addressing                                                               
the  45  percent  cap  required  on local  contribution.    If  a                                                               
district produced more  than 45 percent of its  total basic need,                                                               
it would  be capped,  "they don't have  to go to  the 2.65."   He                                                               
continued,  "This  is   on  the  required  amount,   not  on  the                                                               
additional amount  that can  come above.   So,  the total  pot of                                                               
dollars between state  and local would stay the  same when you're                                                               
just thinking  about the basic  aids calculation, it's  just that                                                               
more would be  coming from the local.  It  would reduce the state                                                               
share, and it  would increase the local share.   So, it isn't the                                                               
additional dollars above."                                                                                                      
                                                                                                                                
MR. SILVERSTEIN  stated another recommendation related  to fiscal                                                               
sustainability  was  that the  state  could  consider creating  a                                                               
floor  for the  Impact Aid  Percent  applied to  city and  bureau                                                               
(C&B) districts making an effort  above the required level, which                                                               
would lower the amount of  state aid provided to these districts.                                                               
He paraphrased the remaining information  on slide 44, which read                                                               
as follows:                                                                                                                     
                                                                                                                                
     Currently  C&B  districts  that provide  local  funding                                                                    
     above the  minimum required  local effort  are rewarded                                                                    
     with  a decrease  in  the Impact  Aid  Percent used  to                                                                    
     calculate the  amount of impact aid  that offsets state                                                                    
     funding.                                                                                                                   
                                                                                                                                
     By creating a floor for this reduction the state would                                                                     
        reduce the cost of state basic aid and possibly                                                                         
     improve funding equity across districts.                                                                                   
                                                                                                                                
MR.  SILVERSTEIN turned  to the  last  recommendation related  to                                                               
fiscal sustainability, and read as follows:                                                                                     
                                                                                                                                
       As noted in the equity study recommendations, the                                                                        
        state should also consider formally defining and                                                                        
     measuring the local fiscal capacity of all districts.                                                                      
                                                                                                                                
MR.  SILVERSTEIN  said  that  in order  to  understand  what  was                                                               
happening at the local level, a comparison was necessary.                                                                       
                                                                                                                                
11:24:46 AM                                                                                                                   
                                                                                                                                
MR. SILVERSTEIN  directed attention  to slides  46 and  47, which                                                               
showed recommendations not  specific to any one  component of the                                                               
funding system,  but were  issues that  arose when  APA conducted                                                               
its  full study.    First was  APA's  recommendation that  Alaska                                                               
should  undertake an  examination of  the state's  current school                                                               
district  governance   structure  to  ensure  it   was  the  most                                                               
efficient and  effective approach to  serving students.   He said                                                               
APA's study  focused on  the current  school finance  formula and                                                               
its  application within  the current  school district  governance                                                               
structure in the state.   The findings reflected a replication of                                                               
district-level services,  and APA  recommended this  as something                                                               
to be  evaluated.  Although,  he indicated, one  possible barrier                                                               
was differing tax  structures.  The last  recommendation was that                                                               
Alaska  should  examine  student enrollment  trends  through  the                                                               
year,  which  he indicated  was  relevant  to the  concern  about                                                               
declining  enrollment.   He said  there was  some question  as to                                                               
whether October  was the best  month in which to  count students.                                                               
He  explained  this  was  because there  was  a  varied  behavior                                                               
pattern  in  communities  in  October as  a  result  of  [tribal]                                                               
gatherings,  end of  seasonal  work, and  receipt  of the  Alaska                                                               
permanent fund dividend (PFD).   Because APA did not have student                                                               
counts for  multiple points  during the school  year, it  was not                                                               
possible  to substantiate  the anecdotal  information.   He  said                                                               
Alaska  should consider  whether the  October count  is the  most                                                               
helpful.                                                                                                                        
                                                                                                                                
REPRESENTATIVE  PRUITT   asked  when   the  state   should  count                                                               
students.                                                                                                                       
                                                                                                                                
MR. SILVERSTEIN  answered that without  the data it  is difficult                                                               
to answer.  Each state counts  students differently and he gave a                                                               
couple  of examples.    He said  the goal  was  to determine  the                                                               
number  of  students  the  state  would  have  to  serve  in  the                                                               
education system over time, and  he reiterated that Alaska should                                                               
figure out  whether or  not October  was the  best month  for the                                                               
most representational student count.                                                                                            
                                                                                                                                
REPRESENTATIVE  PRUITT  questioned   whether  Alaska  would  find                                                               
unique challenges any other time of  year than October.  He asked                                                               
whether there  was a better way  to come up with  a number beyond                                                               
just a 20-day snapshot.  He  clarified that he was not interested                                                               
in placing  a burden on  small districts, but  questioned whether                                                               
there may  be "other  mechanisms in other  states."   He ventured                                                               
that Alaska would have to devise a different system.                                                                            
                                                                                                                                
MR. SILVERSTEIN  reiterated that APA  was unable to look  at that                                                               
part of  the issue  - whether  October was  a one-time  "blip" or                                                               
whether there was never an  opportune time for the student count.                                                               
One factor,  he said, was  what kind  of reporting system  was in                                                               
place.    He  concurred  with  Representative  Pruitt  about  not                                                               
wanting to put  any additional burden on districts  to track when                                                               
"the  marginal  cost  is  higher   than  the  marginal  gain  for                                                               
anybody."                                                                                                                       
                                                                                                                                
CHAIR HAWKER noted that Alaska was  not able to give APA the U.S.                                                               
Census information to use;  therefore, APA's recommendations were                                                               
for the state to begin by collecting that Census data.                                                                          
                                                                                                                                
MR. SILVERSTEIN responded that's correct.                                                                                       
                                                                                                                                
11:31:04 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE  KITO noted  that  the October  count allowed  the                                                               
legislature to have the most  recent numbers before entering into                                                               
its budget  cycle.  If counts  were brought in from  the previous                                                               
year,  a  district  could  have   a  different  affect,  but  not                                                               
accurately  reflect what  was happening  in the  school for  that                                                               
[emphasis  on  "that"]  year.   The  legislature,  he  said,  was                                                               
already competing its budget process  by the time the school year                                                               
ended;  therefore, it  was "a  difficult  thing to  adjust."   He                                                               
stated,  "I didn't  come  up  with a  reasonable  solution.   The                                                               
further  back we  go, the  further away  from the  actual student                                                               
population  that we  end  up with  as we're  looking  at ...  our                                                               
budget."                                                                                                                        
                                                                                                                                
                                                                                                                                
CHAIR HAWKER stated that the  documents presented were now public                                                               
and available  on the committee's web  site.  He noted  there was                                                               
limited time  with the  folks from  APA, and  he thanked  all the                                                               
school districts that  participated in the study  and the efforts                                                               
of APA  to get as  much information  and diversity of  opinion as                                                               
possible.                                                                                                                       
                                                                                                                                
^REPORT STATUS UPDATE - School Design and Construction                                                                          
     REPORT STATUS UPDATE - School Design and Construction                                                                  
                                                                                                                                
11:34:14 AM                                                                                                                   
                                                                                                                                
CHAIR  HAWKER announced  that the  committee would  hear a  brief                                                               
update  regarding  two ongoing  studies,  under  House Bill  278,                                                               
placed  under the  purview of  the Legislative  Budget and  Audit                                                               
Committee that  include a school  design and  construction report                                                               
and a salary and benefit schedule for school districts report.                                                                  
                                                                                                                                
11:35:04 AM                                                                                                                   
                                                                                                                                
ELIZABETH   SWEENEY   NUDELMAN,   Director,  School   Finance   &                                                               
Facilities, Department  of Education & Early  Development (DEED),                                                               
said she would discuss the language  in House Bill 278, provide a                                                               
glimpse of  the scope and process  of the report, talk  about the                                                               
contractor  undertaking  the  report,   and  provide  a  progress                                                               
update.                                                                                                                         
                                                                                                                                
MS.  NUDELMAN stated  that House  Bill  278, passed  into law  in                                                               
2014, and included Section 53,  which had the requirement for the                                                               
school design  and construction report.   She read  the directive                                                               
as follows:                                                                                                                     
                                                                                                                                
     The Department  of Education & Early  Development shall                                                                    
     prepare  and  submit a  report  to  the legislature  no                                                                    
     later  than   June  15,  2015,  on   the  benefits  and                                                                    
     disadvantages  of  using   coded  typical  designs  for                                                                    
     school  construction in  both  the  railbelt and  rural                                                                    
     areas of the state.                                                                                                        
                                                                                                                                
MS. NUDELMAN  said the  department began  a request  for proposal                                                               
(RFP) process  to begin the  study.   She said the  Department of                                                               
Education &  Early Development (DEED) sought  a multi-disciplined                                                               
team  of engineers,  energy  experts,  contractors, and  building                                                               
maintenance people as  it was not looking solely  for an academic                                                               
review  of  publications.    The  department  also  directed  the                                                               
contractor to seek stakeholder input  and include those people in                                                               
the study familiar  with the buildings.   Further, DEED suggested                                                               
the contractor  consider six climate  regions.  She said  the RFP                                                               
was on the  state's web site as a public  document.  Ms. Nudelman                                                               
relayed that subsequent  to the RFP and  procurement process, the                                                               
contract  was  awarded  to   Envision  Architecture  and  DeJong-                                                               
Richter.     She   stated  that   the  contractor's   methodology                                                               
encompassed  both  a  review of  national  publications,  serving                                                               
school districts, and  breaking the area into six  regions.  They                                                               
visited the  schools in  the regions and  spoke to  school staff,                                                               
stakeholders, parents,  and students  in Barrow,  Bethel, Juneau,                                                               
Anchorage, Fairbanks, Kodiak,  and Matanuska-Susitna (Mat-Su), in                                                               
March 2015.   She noted  that Envision Architecture was  based in                                                               
Anchorage, and  DeJong-Richter was an education  planning entity.                                                               
There were  also participants from multiple  firms across Alaska,                                                               
some attended meetings and other  developed surveys and conducted                                                               
research.   She advised that  the research team was  comprised of                                                               
five  engineers, two  contractors, one  project manager,  and one                                                               
building maintenance expert.                                                                                                    
                                                                                                                                
MS. NUDELMAN  said the department  received the first  draft from                                                               
the contractor prior to June 15.   She said time had run out, but                                                               
the  contractor wanted  to "take  it  back again"  to the  expert                                                               
research  team;  therefore,  the   department  decided  the  best                                                               
decision was to extend the  timeline to approximately December 1,                                                               
2015.                                                                                                                           
                                                                                                                                
REPRESENTATIVE KITO asked whether  the contractor also considered                                                               
the smaller communities within the six regions.                                                                                 
                                                                                                                                
MS.  NUDELMAN  said  she  did   not  have  the  exact  areas  the                                                               
contractors visited;  however, she  opined the  contractor sought                                                               
existing  research to  "flesh  that out  to  include the  smaller                                                               
areas that they did not go out to in person."                                                                                   
                                                                                                                                
11:42:57 AM                                                                                                                   
                                                                                                                                
SENATOR  MACKINNON   said  the   Senate  Finance   Committee  had                                                               
expressed  that if  the state  placed architects,  engineers, and                                                               
contractors in  the position of a  review team, then each  one of                                                               
them could  benefit from individual  construction.  She  said the                                                               
concern was who on the team  would be advocating for the state to                                                               
save  money,  which  was the  purpose  of  evaluating  individual                                                               
design in  communities.   She offered an  example of  the state's                                                               
huge investment in Kivalina.   She indicated that what would cost                                                               
$14 million in  another area has been allocated  for $42 million.                                                               
She said she would look at  the upcoming report through a lens to                                                               
determine who was benefiting.                                                                                                   
                                                                                                                                
MS. NUDELMAN responded:                                                                                                         
                                                                                                                                
     The  department  relied on  the  charge  which was  the                                                                    
     disadvantages and benefits of  prototypical study.  And                                                                    
     in our  RFP we  cued up the  contractors who  would ...                                                                    
     apply for that  work, with questions, and  we had quite                                                                    
     a  few questions.    Because  as we  looked  at it,  we                                                                    
     didn't see  the contractor  bringing a solution  to the                                                                    
     legislature, we  saw them  bringing information  to the                                                                    
     legislature,   and   specifically  the   benefits   and                                                                    
     disadvantages.                                                                                                             
                                                                                                                                
     So, I  would concur that  there will be lenses  to view                                                                    
     the information.   The department goal was  to get good                                                                    
     information  over   a  wide  range  of   topics  to  be                                                                    
     discussed.                                                                                                                 
                                                                                                                                
SENATOR  MACKINNON said  she would  be looking  for "mobilization                                                               
and demobilization  costs in the  structure that  it's supporting                                                               
individual design, as well  as long-term maintenance consequences                                                               
for individual systems that are  individually set up that require                                                               
the state to  invest differently in each design."   She explained                                                               
those would be the two lenses  she would use to determine whether                                                               
a prototypical school design had been fairly evaluated.                                                                         
                                                                                                                                
CHAIR HAWKER thanked Ms. Nudelman for her update.                                                                               
                                                                                                                                
^REPORT  STATUS  UPDATE  -  Evaluation  of  Salary  and  Benefits                                                               
Schedule for School Districts                                                                                                   
    REPORT STATUS UPDATE - Evaluation of Salary and Benefits                                                                
                 Schedule for School Districts                                                                              
                                                                                                                                
11:46:38 AM                                                                                                                   
                                                                                                                                
CHAIR  HAWKER  announced  the  committee  would  hear  an  update                                                               
regarding a salary and benefit schedule for school districts.                                                                   
                                                                                                                                
11:47:15 AM                                                                                                                   
                                                                                                                                
DIANE HIRSHBERG,  Director, University of Alaska  Anchorage (UAA)                                                               
Center for  Alaska Education Policy Research  (CAEPR), noted that                                                               
Dr. Matt Burman  (ph), an economist from the  Institute of Social                                                               
and   Economic  Research   was  available   for  questions,   and                                                               
introduced Liz Brooks, a research  analyst from the Department of                                                               
Administration who  would give an  explanation about  the genesis                                                               
of the study.                                                                                                                   
                                                                                                                                
11:48:06 AM                                                                                                                   
                                                                                                                                
LIZ  BROOKS,  Research Analyst,  Division  of  Personnel &  Labor                                                               
Relations, Department  of Administration  (DOA), stated  that the                                                               
Department  of  Administration  (DOA)  was tasked  to  present  a                                                               
written proposal  for a salary  and benefits schedule  for school                                                               
districts,  including an  evaluation of  and recommendations  for                                                               
teacher tenure.   She  said the  department sought  a partnership                                                               
with  the Center  for Alaska  Education  Policy Research  (CAEPR)                                                               
through a memorandum of understanding (MOU).                                                                                    
                                                                                                                                
MS.  HIRSHBERG related  that  the study  was  running behind  its                                                               
timeline  due to  unanticipated data  challenges.   She said  the                                                               
team  was using  a lot  of  data gathered  by a  number of  state                                                               
agencies,  and there  were  missing  values and  inconsistencies.                                                               
She said it  took time to make corrections,  and initial analysis                                                               
had to  be made before  doing so and  opined that the  issues had                                                               
been resolved.   She said a  draft report had been  prepared, and                                                               
productive  discussions had  taken  place between  DOA and  DEED,                                                               
particularly  with  Department   of  Administration  Commissioner                                                               
Sheldon Fisher  not just on  how the analyses had  been garnered,                                                               
but also better  to present the report.  Currently,  the team was                                                               
tweaking the data  to make more sense to a  broader audience, she                                                               
explained.                                                                                                                      
                                                                                                                                
MS. HIRSHBERG said the goal was  to put the report out for public                                                               
comment  by the  next week  in order  to receive  feedback.   She                                                               
offered to  give more details  on specific aspects of  the study,                                                               
in terms of what the team had done.                                                                                             
                                                                                                                                
11:52:03 AM                                                                                                                   
                                                                                                                                
CHAIR HAWKER  asked when the  final study would be  concluded and                                                               
ready for presentation.                                                                                                         
                                                                                                                                
MS. HIRSHBERG related  the hope was to have a  draft available in                                                               
the next  week; however, the  team wanted the commissioner  to be                                                               
comfortable  with that.   Following  would be  a two-week  public                                                               
comment   period,  after   which  both   the  final   report  and                                                               
accompanying  public  comment would  be  shared.   She  indicated                                                               
there  may be  feedback added,  but said  the study  has received                                                               
positive feedback  from DEED; therefore,  she did  not anticipate                                                               
any major  changes.  She said  the emphasis was on  providing the                                                               
most accurate picture to the legislature.                                                                                       
                                                                                                                                
CHAIR  HAWKER said  he was  comfortable  with the  update on  the                                                               
status, but  asked the committee  members if they  wanted further                                                               
details at present.                                                                                                             
                                                                                                                                
SENATOR MACKINNON asked if the  committee could expect to see the                                                               
study by September 1, 2015.                                                                                                     
                                                                                                                                
MS. HIRSHBERG answered yes.                                                                                                     
                                                                                                                                
^OTHER COMMITTEE BUSINESS                                                                                                       
                    OTHER COMMITTEE BUSINESS                                                                                
                                                                                                                                
11:53:51 AM                                                                                                                   
                                                                                                                                
CHAIR HAWKER asked if there was other committee business.                                                                       
                                                                                                                                
SENATOR MACKINNON  stated that  Medicaid was  an issue  that many                                                               
people  were  passionate  advocates  for,  and  many  people  had                                                               
contacted her  office in opposition  to the  governor's executive                                                               
order.   She requested a meeting  for the opportunity to  vote on                                                               
that issue.                                                                                                                     
                                                                                                                                
CHAIR HAWKER stated  that as chair of the  Legislative Budget and                                                               
Audit  Committee, he  had distributed  to the  entire legislature                                                               
two legal  opinions, both  of which conclude  that no  matter how                                                               
the committee  would recommend  the governor  proceed, it  had no                                                               
voice in  his decision  to implement expanded  Medicaid.   If the                                                               
legislature did  not respond  to the governor's  RPLs, he  had 45                                                               
days  from the  day he  issued them  to wait,  and then  he could                                                               
proceed regardless  of any  action.   Any hearing  and subsequent                                                               
vote  by  the committee  regarding  the  RPLs would  trigger  the                                                               
governor's  ability  to  pursue  his actions  under  those  RPLs.                                                               
Chair Hawker said  Governor Walker had stated,  both publicly and                                                               
privately,  that  he was  not  going  to take  the  legislature's                                                               
counsel  into  consideration;  he  had  made  a  firm  and  final                                                               
decision  and  "there's frankly  nothing  of  substance for  this                                                               
committee to accomplish."  He  mentioned policy bills in both the                                                               
House  Finance Committee  and Senate  Finance  Committee, and  he                                                               
opined that it would be  more appropriate for those committees to                                                               
take  up a  policy discussion  so  there could  be a  substantive                                                               
outcome.  He  stated that by statute, the  Legislative Budget and                                                               
Audit Committee  was not a  policy committee and was  not allowed                                                               
to  speak   on  policy   decisions  on   behalf  of   the  entire                                                               
legislature, and  he did not want  to give any impression  to the                                                               
public   that   the   committee    had   greater   authority   or                                                               
responsibility than it,  in fact, had.  He  reemphasized that the                                                               
committee had no ability to  change the outcome of the governor's                                                               
resolve.                                                                                                                        
                                                                                                                                
11:56:49 AM                                                                                                                   
                                                                                                                                
SENATOR GIESSEL  stated that  as a separate  but equal  branch of                                                               
government,  the  opportunity to  review  the  documents was  the                                                               
committee's purview, and she would  appreciate the opportunity to                                                               
do  so even  though the  statute authorizes  the governor  to act                                                               
unilaterally.                                                                                                                   
                                                                                                                                
SENATOR  MACKINNON opined  that  "the process  by  which this  is                                                               
coming down"  was part  of the  committee's responsibility.   She                                                               
offered her  understanding that the  money involved to  the state                                                               
would be about  $148 million dollars.  She said  she had read the                                                               
legal opinion  to which  Chair Hawker had  referred, and  said it                                                               
had ambiguity of the governor's  ability to "change the structure                                                               
statutorily  on expansion  of an  eligible group  of recipients."                                                               
She stated her belief that  having someone present to explain the                                                               
executive  order  and  the  ability   of  the  committee  to  ask                                                               
questions, as  well as  deny or  reduce the  appropriation amount                                                               
the governor would  be placing as a fiscal  responsibility of the                                                               
state,  was in  the  purview  of the  committee.    She said  she                                                               
respectfully requested  that the  governor's executive  order was                                                               
scheduled on the committee's calendar for consideration.                                                                        
                                                                                                                                
CHAIR HAWKER  said he  would take  the request  under advisement;                                                               
however, he  said the  entire legislature  had already  voted and                                                               
was on  record as saying  "we do not  want him  to do this."   He                                                               
said:                                                                                                                           
                                                                                                                                
     We have  the entire  legislature on  record.   That was                                                                    
     done very clearly in the  budgets that we passed in the                                                                    
     ...   legislative   process  during   the   legislative                                                                    
     session.    That is  the  appropriate  vehicle for  the                                                                    
     legislature to  express itself, not  one or  two people                                                                    
     on this  committee to attempt to  create the appearance                                                                    
     that  we   are  speaking   on  behalf  of   the  entire                                                                    
     legislature.                                                                                                               
                                                                                                                                
Notwithstanding that, Chair Hawker  reiterated that he would take                                                               
the request of the committee members under advisement.                                                                          
                                                                                                                                
11:59:28 AM                                                                                                                   
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
There  being  no  further  business  before  the  committee,  the                                                               
Legislative Budget  and Audit Committee meeting  was adjourned at                                                               
11:59 a.m.                                                                                                                      

Document Name Date/Time Subjects
Agenda_LBA_22July15_updated.pdf JBUD 7/22/2015 9:30:00 AM
APA_Review of Alaska's School Funding Program_Final Report.pdf JBUD 7/22/2015 9:30:00 AM
APA Presentation to LB&A 7.22.15.pdf JBUD 7/22/2015 9:30:00 AM
Medicaid RPL Legal Opinon.pdf JBUD 7/22/2015 9:30:00 AM