Legislature(2019 - 2020)CAPITOL 106

05/01/2019 08:00 AM EDUCATION

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Audio Topic
08:05:17 AM Start
08:06:08 AM HB75
08:38:16 AM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ Bills Previously Heard/Scheduled TELECONFERENCED
Moved CSHB 75(EDC) Out of Committee
-- Teleconference Listen Only --
**Streamed live on AKL.tv**
                    ALASKA STATE LEGISLATURE                                                                                  
               HOUSE EDUCATION STANDING COMMITTEE                                                                             
                          May 1, 2019                                                                                           
                           8:05 a.m.                                                                                            
MEMBERS PRESENT                                                                                                               
Representative Harriet Drummond, Co-Chair                                                                                       
Representative Andi Story, Co-Chair                                                                                             
Representative Grier Hopkins                                                                                                    
Representative Tiffany Zulkosky                                                                                                 
Representative Josh Revak                                                                                                       
MEMBERS ABSENT                                                                                                                
Representative Chris Tuck                                                                                                       
Representative DeLena Johnson                                                                                                   
COMMITTEE CALENDAR                                                                                                            
HOUSE BILL NO. 75                                                                                                               
"An Act relating to funding for Internet services for school                                                                    
districts; and relating to the Alaska higher education                                                                          
investment fund."                                                                                                               
     - MOVED CSHB 75(EDC) OUT OF COMMITTEE                                                                                      
PREVIOUS COMMITTEE ACTION                                                                                                     
BILL: HB  75                                                                                                                  
SHORT TITLE: INTERNET FOR SCHOOLS; FUNDING                                                                                      
SPONSOR(s): REPRESENTATIVE(s) RASMUSSEN                                                                                         
02/25/19       (H)       READ THE FIRST TIME - REFERRALS                                                                        
02/25/19       (H)       EDC, FIN                                                                                               
04/01/19       (H)       EDC AT 8:00 AM CAPITOL 106                                                                             
04/01/19       (H)       Heard & Held                                                                                           
04/01/19       (H)       MINUTE(EDC)                                                                                            
05/01/19       (H)       EDC AT 8:00 AM CAPITOL 106                                                                             
WITNESS REGISTER                                                                                                              
MARY HAKALA, Staff                                                                                                              
Representative Andi Story                                                                                                       
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION  STATEMENT:     On   behalf  of   Representative  Story,                                                             
presented  the  committee  substitute  for HB  75,  and  answered                                                             
PATIENCE FREDERIKSEN, Director                                                                                                  
Division of Alaska State Libraries, Archives, and Museums                                                                       
Department of Education and Early Development                                                                                   
Juneau, Alaska                                                                                                                  
POSITION  STATEMENT:    Provided  invited  testimony  during  the                                                             
hearing of HB 75, and answered a question.                                                                                      
ALEXEI PAINTER, Fiscal Analyst                                                                                                  
Legislative Finance Division                                                                                                    
Legislative Agencies and Offices                                                                                                
Juneau, Alaska                                                                                                                  
POSITION  STATEMENT:    Provided  invited  testimony  during  the                                                             
hearing of HB 75, and answered questions.                                                                                     
HEIDI TESHNER, Director                                                                                                         
Administrative Services                                                                                                         
Department of Education and Early Development                                                                                   
Juneau, Alaska                                                                                                                  
POSITION  STATEMENT:    Provided  invited  testimony  during  the                                                             
hearing of HB 75, and answered questions.                                                                                       
RERESENTATIVE SARA RASMUSSEN                                                                                                    
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION  STATEMENT:   Speaking as  the  sponsor of  HB 75,  made                                                             
comments related to a forthcoming amendment to the bill.                                                                        
ACTION NARRATIVE                                                                                                              
8:05:17 AM                                                                                                                    
CO-CHAIR  ANDI   STORY  called   the  House   Education  Standing                                                             
Committee  meeting  to  order  at   8:05  a.m.    Representatives                                                               
Drummond,  Hopkins, Zulkosky,  Revak, and  Story were  present at                                                               
the call to order.                                                                                                              
              HB 75-INTERNET FOR SCHOOLS; FUNDING                                                                           
8:06:08 AM                                                                                                                    
CO-CHAIR  STORY announced  the only  order of  business would  be                                                               
HOUSE  BILL NO.  75, "An  Act  relating to  funding for  Internet                                                               
services for school districts; and  relating to the Alaska higher                                                               
education investment fund."                                                                                                     
8:07:00 AM                                                                                                                    
CO-CHAIR DRUMMOND  moved to adopt  the committee  substitute (CS)                                                               
for  HB  75,  Version  31-LS0574\M,  Caouette,  4/26/19,  as  the                                                               
working  document.   [There  being no  objection,  Version M  was                                                               
before the committee.]                                                                                                          
8:07:18 AM                                                                                                                    
MARY  HAKALA,  Staff,  Representative Andi  Story,  Alaska  State                                                               
Legislature, directed attention to language  [on page 1, lines 4-                                                               
8], of Version M, which read:                                                                                                   
     (a) Each fiscal  year, a district in which  one or more                                                                    
     schools  qualify for  a  discounted  rate for  Internet                                                                    
     services under  the federal universal  services program                                                                    
     is eligible to  receive an amount for  each school that                                                                    
     is equal to the amount  needed to bring the applicant's                                                                    
     share to 25  [10] megabits of download a  second of the                                                                
     Internet services.                                                                                                         
MS. HAKALA explained [Version M] makes  two changes to HB 75:  It                                                               
removes "a minimum  of" [on page 1, line 8,  of the original bill                                                               
version]  thus returning  the program  to  its current  structure                                                               
which  provides a  subsidy that  addresses  inequity in  Internet                                                               
access between schools in the  state.  Further, this change would                                                               
bring all  schools to a  minimum of  25 megabits of  download per                                                               
second  (Mbps) from  the current  standard  of 10.   Second,  the                                                               
Version  M changes  the  revenue source  from  the Alaska  Higher                                                               
Education Investment Fund  to general funds (GF)  as indicated by                                                               
the draft fiscal note [Identifier:  HB075CS(EDC)-EED-LO-4-30-                                                                   
19],  dated 4/30/19.    She said  the changes  bring  HB 75  into                                                               
alignment with [SB 74, the Senate companion bill].                                                                              
CO-CHAIR DRUMMOND asked for clarification.                                                                                      
MS.  HAKALA  further explained  the  removal  of "a  minimum  of"                                                               
clarifies school  districts that qualify  are those that  are not                                                               
yet at 25  Mbps.  She advised, currently, the  subsidy is focused                                                               
on school  districts that need  assistance to reach 10  Mbps; the                                                               
CS  would  provide  a  subsidy for  school  districts  that  need                                                               
assistance to reach  25 Mbps.  Although all  school districts are                                                               
eligible  for   the  [Federal  Communications   Commission  (FCC)                                                               
Schools  and Libraries  Universal Service  Program E-Rate  fund],                                                               
[HB 75] would have changed the  nature of the program so that all                                                               
school districts would be eligible for the cost of 25 Mbps.                                                                     
8:09:57 AM                                                                                                                    
PATIENCE   FREDERIKSEN,  Director,   Division  of   Alaska  State                                                               
Libraries,  Archives, and  Museums, Department  of Education  and                                                               
Early Development (EED), explained  [draft fiscal note Identifier                                                               
HB075CS(EDC)-EED-LO-4-30-19] is  for the portion  of the  cost of                                                               
the program  to "get  schools from 10  megabits to  25 megabits."                                                               
In fiscal year  2020 (FY 20), the program  would cost $7,169,400.                                                               
She  directed attention  to the  draft fiscal  note [analysis  on                                                               
page 2, paragraph 3], and remarked:                                                                                             
     The cost of the program to  get schools from zero to 10                                                                    
     megabits per  second is [$1,487,500].   That  amount of                                                                    
     the  money  will also  need  to  be allocated  annually                                                                    
     along with the [$7,169,400] in  all the out years.  ...                                                                    
     What we  will do is we  will treat those two  sources -                                                                    
     those two  funds -  as a unified  program, but  this is                                                                    
     what  the,  the bill  will  actually  cost to  get  the                                                                    
     schools from 10 to 25.                                                                                                     
MS.  FREDERIKSEN  said over  the  out  years  of the  grant,  EED                                                               
expects  a reduction  of 3  percent  annually [shown  on page  1,                                                               
Operating Expenditures:   Services,  FY 20-FY  25], based  on the                                                               
five-year  history  of  the School  Broadband  Assistance  Grants                                                               
(School BAG)  paid to  get schools  to the limit  of 10  Mbps [as                                                               
explained  on page  2,  paragraph 5].   Also,  there  has been  a                                                               
reduction  in  the number  of  schools  that participate  in  the                                                               
program.   Another change to  the fiscal  note was to  reduce the                                                               
number  of  applicants  from  245 to  172  schools  because  some                                                               
schools were receiving  two types of E-Rate support.   [The draft                                                               
fiscal note] indicates  172 schools need the program  to reach 10                                                               
Mbps.  Because,  in FY 19, it  cost an average of  $16,594 to get                                                               
schools up to  10 Mbps, the department multiplied  $16,594 by 172                                                               
and, to  get schools from 10  to 25 Mbps, multiplied  by a factor                                                               
of 2.5, for  a total estimated cost of $7,135,420  [shown on page                                                               
1, Operating Expenditures:  Grants, Benefits, FY 20-FY 21].                                                                     
CO-CHAIR DRUMMOND questioned whether  some schools were receiving                                                               
two sets of  grant funds from the [E-Rate  program funded through                                                               
the Schools and Libraries Universal Service Program].                                                                           
MS. FREDERIKSEN said  no.  She clarified the  E-Rate program will                                                               
pay for a  direct Internet line to  a school and also  for a wide                                                               
area network (WAN), which is  a circuit to connect schools within                                                               
a  geographic   area;  however,  schools  must   apply  for  each                                                               
individually, and  school districts that receive  E-Rate funds to                                                               
reach more than 10 Mbps are  not eligible to apply for School BAG                                                               
through EED.                                                                                                                    
CO-CHAIR  DRUMMOND  surmised  [the  CS for  HB  75]  would  allow                                                               
schools to apply for funds to increase from 10 to 25 Mbps.                                                                      
MS. FREDERIKSEN said yes.                                                                                                       
8:14:26 AM                                                                                                                    
ALEXEI  PAINTER, Fiscal  Analyst,  Legislative Finance  Division,                                                               
Legislative  Agencies and  Offices,  informed  the committee  the                                                               
federal government provides impact  aid to school districts based                                                               
on certain factors,  thus some districts in Alaska  receive a lot                                                               
of impact aid and some  receive none; however, federal law allows                                                               
the state to  deduct a portion of the impact  aid from the amount                                                               
the state pays  toward its share of the  K-12 foundation formula.                                                               
In fact,  the state  usually deducts between  $80 million  to $90                                                               
million per  year from the $1.2  billion the state pays  for K-12                                                               
education.   If  the state  did not  make this  deduction, school                                                               
districts would still  receive funding, but the  state's cost for                                                               
K-12 education would  increase by $80 million to  $90 million per                                                               
year.  Mr. Painter said the  deduction of impact aid is a benefit                                                               
to the state  and is dependent upon the state  using an equalized                                                               
formula to  ensure the disparity  between the lowest  and highest                                                               
funded  school  districts  does  not  exceed  25  percent:    the                                                               
disparity provision.  In order  to "pass the disparity test," the                                                               
state limits  outside contributions from local  municipalities to                                                               
23  percent.    Mr.  Painter cautioned  [funds  from  the  E-Rate                                                               
program] pose  a challenge  to the disparity  test of  25 percent                                                               
because E-Rate  money counts as  "outside the formula"  money and                                                               
contributes  to  the  disparity   between  districts.    Further,                                                               
because Internet  is much more  expensive in some  districts than                                                               
others,  districts receive  a disproportionate  amount of  E-Rate                                                               
money, for  example, the Lower Kuskokwim  School District (LKSD).                                                               
In  fact,  historically, the  top  funded  school districts  were                                                               
those with support from a  large municipality; however, in FY 18,                                                               
the top funded  district factored in the disparity  test was LKSD                                                               
because, even though it did  not receive a local contribution, it                                                               
did receive E-Rate money.  Mr.  Painter advised HB 75 would allow                                                               
districts to receive even more  E-Rate money, and that could mean                                                               
the state  may fail the  disparity test; EED projects  the amount                                                               
of E-Rate  funding could be as  high as an additional  30 percent                                                               
of  LKSD's  budget.   To  address  this  problem, EED  asked  the                                                               
federal government  for permission  to disregard E-Rate  funds in                                                               
the disparity  percentage, either  by creating a  special revenue                                                               
fund  or  by  other  means;  however,  the  federal  government's                                                               
decision is unknown.                                                                                                            
8:20:39 AM                                                                                                                    
CO-CHAIR DRUMMOND asked for a  written explanation of this issue.                                                               
She  observed  Alaska  is  a   very  large  geographic  area  and                                                               
questioned whether  the federal government seeks  to administer a                                                               
grant program throughout an extremely large and unique state.                                                                   
MR. PAINTER  assured the committee  EED has pointed  out Alaska's                                                               
geography;  he   noted  other  factors  are   excluded  from  the                                                               
disparity test, such as the cost of pupil transportation.                                                                       
REPRESENTATIVE HOPKINS  asked whether  the 25 percent  is applied                                                               
to  the cost  of educating  an individual  student or  to overall                                                               
state education funding.                                                                                                        
MR. PAINTER responded:                                                                                                          
     The federal  government allows us  to do this  based on                                                                    
     our adjusted  average daily membership so  it's the per                                                                    
     adjusted  student  that  we  apply  the  [base  student                                                                    
     allocation (BSA)] to.   ...  So, it's  the revenue that                                                                    
     they receive from per adjusted student.                                                                                    
REPRESENTATIVE HOPKINS asked how  district cost factors for small                                                               
schools affect the disparity test.                                                                                              
MR. PAINTER  said [district  cost] factors  are accounted  for by                                                               
the   adjusted  student   formula.     In  further   response  to                                                               
Representative Hopkins,  he explained the adjusted  average daily                                                               
membership  formula provides  equal  state funding  to rural  and                                                               
urban school  districts; when differences in  funding occur, they                                                               
are due to local contributions or E-Rate funding.                                                                               
8:25:39 AM                                                                                                                    
HEIDI  TESHNER, Director,  Administrative Services,  EED, related                                                               
EED asked  the federal government  whether a school  district can                                                               
remove  E-Rate  funding from  its  operating  budget and  instead                                                               
report E-Rate funding  in a special revenue fund,  so that E-Rate                                                               
funding would  not negatively impact the  federal disparity test.                                                               
She said the  department has not received approval  at this time.                                                               
In  response to  Co-Chair Story,  Ms. Teshner  said she  provided                                                               
additional information  to the federal government  [4/30/19], but                                                               
was unsure when a final decision would be received.                                                                             
CO-CHAIR  DRUMMOND   asked  when  EED  completes   the  disparity                                                               
MS.  TESHNER responded  the calculations  are due  by the  end of                                                               
February.    In  further  response   to  Co-Chair  Drummond,  she                                                               
clarified  EED  submitted its  FY  20  calculations in  [February                                                               
CO-CHAIR  DRUMMOND questioned  what would  be "a  reasonable path                                                               
forward"  should HB  75 pass  and  the state  fail the  disparity                                                               
MS. TESHNER surmised  if the bill advances  without approval from                                                               
the  federal government  to [exclude  E-Rate funding  from school                                                               
districts' operating funds]  it is probable the  state would fail                                                               
the disparity test.                                                                                                             
CO-CHAIR  DRUMMOND  said,  "And  what  happens  if  we  fail  the                                                               
disparity test, what do we not receive?"                                                                                        
MS.  TESHNER  advised  the  state would  not  have  an  equalized                                                               
formula and  thus would  not be able  to [deduct]  federal impact                                                               
CO-CHAIR STORY asked what amount of money would be affected.                                                                    
MS. TESHNER said about $82 million, ranging up to $90 million.                                                                  
REPRESENTATIVE HOPKINS inquired  as to whether EED  has a federal                                                               
waiver for any other funding source.                                                                                            
MS. TESHNER was not aware of other waivers.                                                                                     
REPRESENTATIVE HOPKINS remarked:                                                                                                
     Does  the   federal  government   have  a   history  of                                                                    
     understanding  this predicament  and questions  that we                                                                    
     ask in  terms of how  it impacts our, our  geography or                                                                    
     have they  denied waivers, or  have we never  asked for                                                                    
     something like this ...?                                                                                                   
MS. TESHNER said not to her knowledge.                                                                                          
8:29:47 AM                                                                                                                    
The committee took a brief at-ease.                                                                                             
CO-CHAIR STORY stated her staff  has been working with EED, House                                                               
Finance Committee  staff, and Senate Finance  Committee staff, on                                                               
contingency  language to  address  the  federal disparity  issue.                                                               
She  distributed  copies  of  a  draft  amendment  that  proposed                                                               
conditional language  [document not provided].   As the committee                                                               
did not have an opportunity  to review the draft, she recommended                                                               
the  committee  forward the  draft  amendment  separately to  the                                                               
House Finance Committee for action.                                                                                             
8:31:31 AM                                                                                                                    
CO-CHAIR DRUMMOND  was unsure of the  correct committee procedure                                                               
in terms of  discussing a proposed amendment without  a motion to                                                               
do  so.    She  asked  whether  Senate  Finance  Committee  staff                                                               
believes  a similar  amendment would  be proposed  to SB  74, the                                                               
companion bill to HB 75.                                                                                                        
MS. HAKALA  advised Senate Finance  Committee staff  is reviewing                                                               
proposed language and a letter  to the federal government in this                                                               
regard, but  she did not  believe staff  had received a  draft of                                                               
"conditional  language."    She pointed  out  the  aforementioned                                                               
draft  amendment  from  Legislative Legal  Services,  Legislative                                                               
Affairs  Agency, is  offered  to the  committee  as a  discussion                                                               
item, and  noted the issue of  the fiscal implications of  HB 128                                                               
would  be   addressed  at  subsequent  House   Finance  Committee                                                               
REPRESENTATIVE REVAK asked  for comments from the  sponsor of the                                                               
MS. HAKALA noted the sponsor also  has not had sufficient time to                                                               
review the draft.                                                                                                               
REPRESENTATIVE REVAK  said, "This is just  conditional, that they                                                               
meet the  requirements for  the federal  funding, is  that right?                                                               
And nothing else, just that they meet those requirements?"                                                                      
CO-CHAIR STORY  said yes; the  state does  not want to  lose "the                                                               
$98 million."                                                                                                                   
8:34:03 AM                                                                                                                    
RERESENTATIVE   SARA   RASMUSSEN,   Alaska   State   Legislature,                                                               
expressed  her  belief  [the  draft   amendment]  is  a  friendly                                                               
amendment  and  cautioned  legislation  should  not  [negatively]                                                               
impact the disparity  test.  She said HB 75  is an important bill                                                               
and expressed her hope the legislation will advance.                                                                            
CO-CHAIR STORY stated her intent to  advance the bill in a timely                                                               
manner to the House Finance Committee for further amendment.                                                                    
8:35:29 AM                                                                                                                    
REPRESENTATIVE ZULKOSKY observed  the bill's sponsor acknowledged                                                               
the [draft] amendment  as a friendly amendment  and asked whether                                                               
the  committee  is [not  adopting],  but  merely forwarding,  the                                                               
draft   amendment   to   the    House   Finance   Committee   for                                                               
8:35:53 AM                                                                                                                    
CO-CHAIR STORY said  that is correct, the committee  will move to                                                               
report  the   committee  substitute   for  HB  75,   [Version  M,                                                               
unamended], out of committee.                                                                                                   
8:36:06 AM                                                                                                                    
CO-CHAIR DRUMMOND moved  to report the CS for HB  75, Version 31-                                                               
LS0574\M,  Caouette, 4/26/19,  out of  committee with  individual                                                               
recommendations and  the accompanying fiscal notes.   There being                                                               
no  objection,  CSHB  75(EDC)  was  reported  out  of  the  House                                                               
Education Standing Committee.                                                                                                   
8:36:35 AM                                                                                                                    
The committee took an at-ease from 8:36 a.m. to 8:38 a.m.                                                                       
8:38:16 AM                                                                                                                    
There being no  further business before the  committee, the House                                                               
Education Standing Committee meeting was adjourned at 8:38 a.m.                                                                 

Document Name Date/Time Subjects
CSHB75 (EDC).pdf HEDC 5/1/2019 8:00:00 AM
HB 75
Revised Fiscal Note CS HB75 (EDC).pdf HEDC 5/1/2019 8:00:00 AM
HB 75