Legislature(2017 - 2018)CAPITOL 106
02/16/2018 08:00 AM House EDUCATION
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| Audio | Topic |
|---|---|
| Start | |
| HB339 | |
| HB233 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | HB 339 | TELECONFERENCED | |
| *+ | HB 233 | TELECONFERENCED | |
| + | TELECONFERENCED |
ALASKA STATE LEGISLATURE
HOUSE EDUCATION STANDING COMMITTEE
February 16, 2018
8:01 a.m.
MEMBERS PRESENT
Representative Harriet Drummond, Chair
Representative Justin Parish, Vice Chair
Representative Jennifer Johnston
Representative Chuck Kopp
Representative David Talerico
MEMBERS ABSENT
Representative Ivy Spohnholz
Representative Lora Reinbold (alternate)
Representative Geran Tarr (alternate)
COMMITTEE CALENDAR
HOUSE BILL NO. 339
"An Act relating to the base student allocation; and providing
for an effective date."
- HEARD & HELD
HOUSE BILL NO. 233
"An Act relating to the insurance tax education credit, the
income tax education credit, the oil or gas producer education
credit, the property tax education credit, the mining business
education credit, the fisheries business education credit, and
the fisheries resource landing tax education credit; providing
for an effective date by repealing the effective dates of secs.
3, 5, 7, 10, 14, 16, 18, 21, 23, 25, 28, 30, 32, 35, 37, 39, 42,
44, 46, 49, 51, 53, and 55, ch. 92, SLA 2010, sec. 14, ch. 7,
FSSLA 2011, secs. 15, 17, 19, 21, 23, and 25, ch. 74, SLA 2012,
sec. 49, ch. 14, SLA 2014, secs. 37, 40, 43, and 46, ch. 15, SLA
2014, and secs. 26 and 31, ch. 61, SLA 2014; providing for an
effective date by amending the effective date of secs. 1, 2, and
21, ch. 61, SLA 2014; and providing for an effective date."
- HEARD & HELD
PREVIOUS COMMITTEE ACTION
BILL: HB 339
SHORT TITLE: INCREASE BASE STUDENT ALLOCATION
SPONSOR(s): REPRESENTATIVE(s) GARA
02/09/18 (H) READ THE FIRST TIME - REFERRALS
02/09/18 (H) EDC, FIN
02/16/18 (H) EDC AT 8:00 AM CAPITOL 106
BILL: HB 233
SHORT TITLE: EDUCATION TAX CREDITS; SUNSET; REPEALS
SPONSOR(s): REPRESENTATIVE(s) TUCK
04/15/17 (H) READ THE FIRST TIME - REFERRALS
04/15/17 (H) EDC, FIN
02/16/18 (H) EDC AT 8:00 AM CAPITOL 106
WITNESS REGISTER
REPRESENTATIVE LES GARA
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Presented a PowerPoint titled "Education
Matters".
REPRESENTATIVE CHRIS TUCK
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Testified as prime sponsor of HB 233.
SUSAN FOLEY, President
University of Alaska Foundation
Anchorage, Alaska
POSITION STATEMENT: Testified in support of HB 233.
ROBERT ONDERS, M.D., J.D., M.P.A.; President
Alaska Pacific University (APU)
Anchorage, Alaska
POSITION STATEMENT: Testified in support of HB 233.
BRADLEY HARRIS, PhD;
Associate Professor of Marine Biology
Alaska Pacific University (APU)
Anchorage, Alaska
POSITION STATEMENT: Testified in support of HB 233.
MIKE SATRE, Manager
Government and Community Relations
Hecla Greens Creek Mine;
Board Member, Council of Alaska Producers
Juneau, Alaska
POSITION STATEMENT: Testified in support of HB 233.
BRANDON SPANOS, Deputy Director
Tax Division
Department of Revenue (DOR)
Anchorage, Alaska
POSITION STATEMENT: Answered questions during the discussion of
HB 233.
DAN STICKEL, Chief Economist
Tax Division
Department of Revenue (DOR)
Anchorage, Alaska
POSITION STATEMENT: Answered questions during the discussion of
HB 233.
ACTION NARRATIVE
8:01:33 AM
CHAIR HARRIET DRUMMOND called the House Education Standing
Committee meeting to order at 8:01 a.m. Representatives
Drummond, Talerico, Kopp, Parish, and Johnston were present at
the call to order.
HB 339-INCREASE BASE STUDENT ALLOCATION
8:02:27 AM
CHAIR DRUMMOND announced that the first order of business would
be HOUSE BILL NO. 339, "An Act relating to the base student
allocation; and providing for an effective date."
8:02:55 AM
REPRESENTATIVE LES GARA, Alaska State Legislature, said he
appreciated being able to share what schools were currently
experiencing with inflation-adjusted funding at $90 million less
than in 2015.
REPRESENTATIVE GARA turned to slide 1, titled "Education Matters,
IT'S TIME TO INCREASE THE BSA." The slide contained a Nelson
Mandela quote, "Education is the most powerful weapon we can use
to change the world."
8:03:25 AM
REPRESENTATIVE GARA turned to slide 2, titled "Lost Opportunity:
Lost Forever," which read as follows [original punctuation
provided]:
Students can not come back to repeat the 4th grade ...
once we fix the budget crisis.
REPRESENTATIVE GARA emphasized that the effects of budget cuts on
children would result in permanent damage.
REPRESENTATIVE GARA turned to slide 3, titled, "HB 339: A Modest
Increase," which read as follows [original punctuation provided]:
This bill would increase the BSA by $100. It is co-
sponsored by Education Chair Drummond and Reps.
Spohnholz, Kawasaki, Tuck, Josephson, and Parish.
REPRESENTATIVE GARA explained that the base student allocation
(BSA) of $100 was the amount that the legislature has
traditionally increased funding, when it has increased funding.
He recalled that education had "flat funding" throughout the
1990s and education funding was experiencing the same effects
now. He asked what impacts that would have on education.
8:04:20 AM
REPRESENTATIVE GARA turned to slide 4, titled "Juneau
Superintendent Dr. Mark Miller Put It Well," which read as
follows [original punctuation provided]:
"Over the past five years, the BSA has been nearly
flat. Over that same time, my operating expenses from
the general fund have increased nearly 10% . . . We
have used our general fund balance to survive the last
couple of years ? we are now being forced to consider
severe cuts to try to fill a $3 million hole ... A $100
BSA student increase would not solve this problem, but
it would go a long way to help."
REPRESENTATIVE GARA said any school districts with reserves, such
as Juneau, have used their reserves to "dampen" the effects of
flat or lost funding. The Juneau School District (JSD) has lost
a significant number of teachers, class sizes have increased, and
the district has reached a point that it no longer has the
reserves to offset deeper cuts.
8:04:41 AM
REPRESENTATIVE GARA turned to slide 5, titled "K-12 Formula
funding, FY-15-19 (Nominal dollars), which consisted of a bar
chart. He explained the graph represented actual dollars not
adjusted by inflation, mostly reflected by the loss of $43
million budgeted in 2015.
REPRESENTATIVE GARA turned to slide 6, titled "The Loss is
Greater When You Consider Inflation: $90 Million." He stated
that the Legislative Finance Division estimated that the state
education funding was $90 million lower than in 2015 when
considering inflation. He said, "Those are dollars."
8:05:15 AM
REPRESENTATIVE GARA turned to slide 10, titled " Cuts Have Hit
Students Across the State," which read as follows [original
punctuation provided]:
In Anchorage, since 2013:
? 394 FTE positions have been cut (a 9.3% reduction)
? 216 of these were teachers
? The remaining were mostly teacher assistants
? Classroom sizes have increased and will continue to
...
REPRESENTATIVE GARA stated that since 2013, Anchorage has lost
nearly 400 fulltime equivalent (FTE) positions; approximately
half teachers along with many teacher's assistant positions. He
related that an English as a second language teacher did not
think it was possible to adequately teach by herself with
existing staff levels.
REPRESENTATIVE GARA turned to slide 11, titled "At The Same Time
in Anchorage...," which read as follows [original punctuation
provided]:
? Special education enrollment is up 3.2%
? Intensive needs enrollment is up 8.6%
? Preschool enrollment is up 34%
? And many fixed costs, such as health care, have
skyrocketed.
REPRESENTATIVE GARA said that at the same time enrollment has
increased for some of the most expensive students who also
deserve equal education. He reported that the base student
allocation (BSA) was close to $6,000 per student but special
education student costs were at $29,000. He pointed out that
under federal law those students deserve an equal opportunity to
reach their potential.
8:06:25 AM
REPRESENTATIVE GARA turned to slide 12, titled "Mat-Su Faces
Similar Cuts," which read as follows [original punctuation
provided]:
? Cut $8.4 million in FY 18, resulting in the loss of
87 FTE positions
? Expects to face an $8 million deficit in FY 19
? The district has cut 247 FTE teachers, classrooms
aides and classroom assistants since 2013, a 9.3% cut
? Also cut roughly 8 special education instructors
8:06:56 AM
REPRESENTATIVE GARA, reviewing slide 12, estimated that most of
the 87 FTE cuts would be teachers.
REPRESENTATIVE GARA turned to slide 13, titled " Eagle River High
School Student," which read as follows [original punctuation
provided]:
Annual pink slips cause her mother, a teacher, to think
about leaving Alaska. This is a teacher who has won a
Milliken Educator Award.
REPRESENTATIVE GARA emphasized this slide highlighted the biggest
problem that transcends education and the economy, which was that
the best teachers are thinking about leaving. When schools lose
their best teachers, the schools can no longer teach to the
standards that would meet our expectations. He said, "I think
it's fair to say that parents and educators do not see a
commitment to public education coming from the state right now."
8:07:43 AM
REPRESENTATIVE GARA turned to slide 14, titled "Anchorage Student
at Stellar," which read as follows [original punctuation
provided]:
Her brother at Romig Middle School feels with 30
students in his biology class, he'd be disruptive if he
asked all his questions.
REPRESENTATIVE GARA elaborated that this student walked out of
class on many days feeling that he had not been able to ask all
the questions he needed to ask.
8:08:09 AM
REPRESENTATIVE GARA turned to slide 15, titled "Anchorage Alaska
School Board Member," which read as follows [original punctuation
provided]:
To avoid additional teacher cuts, the district has
taken away course planning periods for teachers.
Estimated cuts from future flat funding (budgets have
not yet been adopted):
? 91 more FTE teacher losses in FY 19
? 107 more FTE teacher losses in FY20
Admin and support already cut by 28.5%, includes
teacher training.
REPRESENTATIVE GARA asked members to realize that "flat funding
is a cut." He stated that Anchorage, as well as most school
districts, have tried to focus on administrative cuts. The next
cuts would impact teachers, classrooms, and curriculum as flat
funding continues.
8:09:09 AM
REPRESENTATIVE GARA turned to slide 16, titled "Wrangell High
School Student," which read as follows [original punctuation
provided]:
School no longer provides 3 years of foreign language,
which is required by many colleges. Consequently, needs
to take non-interactive, on-line courses and watch
videos. No teacher engagement.
REPRESENTATIVE GARA characterized non-interactive, on-line
courses, and watching videos as being "reading, not learning."
8:09:40 AM
REPRESENTATIVE GARA turned to slide 17, titled "15-year-old JDHS
student," which read as follows [original punctuation provided]:
Class sizes are increasing. Hears people and peers talk
about leaving Alaska. Is discouraged.
REPRESENTATIVE GARA referred to this as a "brain drain" from the
State of Alaska, and wondered if this was the legacy that this
legislature wanted.
8:10:00 AM
REPRESENTATIVE GARA turned to slide 18, titled "Juneau School
District Rep," which read as follows [original punctuation
provided]:
Flat funding means recent losses of:
? nurses
? Tlingit language teachers
? classroom and special ed teachers
It is threatening burn-out of the best teachers. Class
choice is down. Classes sizes are up.
REPRESENTATIVE GARA reminded members of the science teacher who
reported that her science class size increased from 28 to 32
students in middle school, which was the breaking point for her
to provide individual education. He emphasized the need to teach
to the student and not "bulk teach."
8:10:42 AM
REPRESENTATIVE GARA turned to slide 19, titled "Juneau School
Board Member," which read as follows
? District has cut 92 teacher and other positions
? Facing continued cuts without inflation-adjusted
funding
? Cut Middle School counselors for 100 students from 2
- 1
? Want to train to higher standards but
"administration" cuts includes cuts to teacher
instructional coaches.
REPRESENTATIVE GARA, reviewing slide 19, commented that the cuts
will largely be deeper in the classroom as the superintendent
previously testified at an earlier hearing. The state has been
asking teachers to teach to higher standards; however, cuts to
administration equated to training teachers to teach to higher
standards that has a direct impact on the classroom.
8:11:15 AM
REPRESENTATIVE GARA turned to slide 21, titled "Anchorage School
District CFO," which read as follows [original punctuation
provided]:
? Class sizes are up
? Eliminated funds for teacher professional training
? Cut 122 positions last year
? Cutting support for gifted students
? Have focused past cuts outside the classroom as much
as possible
? Future cuts will hit the classroom harder
REPRESENTATIVE GARA stated no student was more equal than other
students, for example, schools are losing support for gifted
students.
REPRESENTATIVE GARA turned to slide 22, titled "AEA Re and
Teachers," which read as follows [original punctuation provided]:
? At schools without high income parents, cuts hit
harder
? Combining ESL and IEP students in same classes
REPRESENTATIVE GARA recalled a teacher at Clark Middle School,
one of the lower income schools in Anchorage, told him that the
school combined English as a second language and IEP [Individual
Education Program]. These student groups do not have the same
needs, he said. He characterized some schools resorting to "bulk
teaching."
8:12:13 AM
REPRESENTATIVE GARA turned to slide 23, titled "Kenai Peninsulas
School District," which read as follows [original punctuation
provided]:
? No music taught in many schools now
? Have tried not to cut teachers, have cut elsewhere
? Future cuts WILL hit teachers
REPRESENTATIVE GARA cautioned members that cutting teachers was
coming and that the Kenai School District has exhausted its
reserves. Since 2009, the state has enjoyed one strong year of
school funding and the rest have been close to flat funding, he
said.
8:12:46 AM
REPRESENTATIVE GARA turned to slide 24, titled "Cordova," which
read as follows [original punctuation provided]:
? Spreading teachers too thin
? No nurses
? Chemistry not offered every year. This affects
college applications.
? One student could not fit chemistry in schedule last,
can't take chemistry this year, will have to wait
another year.
? Can't realistically teach ESL students with only 1
teacher
REPRESENTATIVE GARA stated a student in Cordova must wait two
years to take chemistry and she expressed concern that this would
adversely affect her college application. He emphasized that
these cuts impact students and their ability to reach their full
potential and be part of an educated work force that will move
this state forward.
8:13:24 AM
REPRESENTATIVE GARA turned to slide 25, titled "Seward High
School and Soldotna Prep," which read as follows [original
punctuation provided]:
? 1 music teacher for combined middle and high
school in Seward
? Soldotna Prep - no choir or band, or art classes.
REPRESENTATIVE GARA said that things like music matter and that
children do not go to school just to learn the three Rs.
REPRESENTATIVE GARA turned to slide 26, titled "Let's not make
this mistake." He offered his belief that an undereducated child
or one not educated to reach his/her potential "is a child who's
lost."
8:14:15 AM
REPRESENTATIVE GARA offered to correct an earlier estimate he
gave for the BSA increase of $100, which he had indicated was
approaching $30 million; however, the fiscal note calculation
using current student counts estimates the BSA at $25 million.
8:14:37 AM
REPRESENTATIVE GARA turned to slide 27, titled "Thank you," which
read as follows [original punctuation provided]:
Thank you for your commitment to Alaska's youth.
REPRESENTATIVE GARA said the state does not currently have a plan
to eliminate the $2.5 billion budget deficit. Of course,
legislators have their own ideas, but a fiscal plan does not
exist. Students cannot wait for the state to solve fiscal
problems, he said. His presentation was an effort to "paint a
picture" for the committee that illustrated the issues many
school districts throughout the state face with the base student
allocation (BSA).
8:15:58 AM
REPRESENTATIVE GARA referred to a letter from [Shannon Johnson-
Nanalook, Iliamna community member and mother], and read several
sentences, "I have seen our Lake and Peninsula District save and
cut with the flat funding we have received now in the past 4
years. We have eliminated programs and then last year we had no
choice but to cut school days off our school calendar." He
offered his belief that this was not any way to move education
forward. He concluded by stating that this was a statewide
problem.
8:17:09 AM
REPRESENTATIVE KOPP asked for further clarification that in
fiscal year [FY] 15 the legislature distributed $43 million
"outside" the [foundation] formula.
REPRESENTATIVE GARA responded that he thought that was a fair way
to state it. He clarified that the additional funding was
distributed through the [foundation] formula under the formula's
calculation as to which districts received the money, just like
the BSA; however, it was not made as an increase to the BSA
itself. That additional funding went to school districts as
though it was [foundation] formula funding.
8:17:41 AM
REPRESENTATIVE KOPP related his understanding that it was a one-
time appropriation; that it was not in the budget in a previous
FY and it was not after FY 15. He pointed out that the
legislature increased the BSA by $50 BSA in FY 16 and again in FY
17. By using the one-time appropriation of $43 million in FY 15
as a baseline, it appeared that the legislature was dropping the
ball. Although he did not disagree that the state needed money
for education, he clarified the state has increased the BSA.
REPRESENTATIVE GARA acknowledged that it was fair to say it that
way. He acknowledged substantial debate happened when the
legislature passed the bill in 2015. Many legislators felt that
the declining money in out years was not appropriate and it would
result in budget cuts to schools. He clarified that the $43
million was distributed through the formula, but it was not
included in the annual BSA. He added that there was "outside"
funding that was to be distributed through the formula in the
following year. Although he and Representative Drummond objected
to the deletion of that funding; the funding was deleted. There
was supposed to be funding in the next two years "outside the
formula" to be distributed through the BSA, but that funding was
"wiped out of the budget in 2016 and 2017." It was not supposed
to disappear the way it did. He said, "There would be a lot of
back and forth between school districts about whether losing $43
million is not losing $43 million," he said.
8:20:09 AM
REPRESENTATIVE KOPP said he was interested in what was being used
as a baseline since he viewed FY 15 as a one-time cash infusion.
He offered his belief that the point could be made in other ways.
Without including the $43 million - the one-time case infusion -
it appeared that the funding would show year-by-year
improvements.
REPRESENTATIVE GARA said he did not want to argue about funding,
acknowledging there are many ways to consider funding. For
example, he could have added in money spent for school
construction, which is funding that was not directed to the
classroom. Instead he wanted to focus on how funding has
impacted schools, including reductions of approximately 400
teachers and staff in Anchorage, with an estimated additional 100
cuts to teachers this next year. The money was not as important
as what is happening to school, which has resulted in lost
courses, teachers, nurses, and lost opportunities.
8:21:40 AM
REPRESENTATIVE KOPP offered that Representative Gara raised
important issues. He stated that the number one cost driver in
education was healthcare. Instead of aggressively reforming the
way to take care of teachers and staff and figuring out how to
more optimally pay the costs, the state just finds more money in
the BSA. He said this underscored why the state must look at
better ways to review the highest cost drivers to avoid
increasing appropriations to wrestle with very serious funding
problems. He said he thinks that our teachers do suffer. He
indicated that health care was the most critical issue the state
needed to address since that drives the cost in every school
district.
REPRESENTATIVE GARA agreed with Representative Kopp on health
care costs. He did not think any bills comprehensively change
health care costs. The state needs to get serious about health
care costs, he said.
8:23:00 AM
CHAIR DRUMMOND interjected that the highest budget cost for any
school district was for people, next to health insurance. She
offered her belief that as health insurance costs increase
teachers are cut. This was no way to run school districts, she
said.
8:23:23 AM
REPRESENTATIVE JOHNSTON asked whether the Anchorage School
District (ASD) 34 percent increase in preschool was for preschool
students with IEPs.
REPRESENTATIVE GARA offered to research and respond; however, he
thought it reflected overall preschool costs.
8:23:52 AM
REPRESENTATIVE JOHNSTON related her understanding that the ASD
was innovative with preschool by allowing non-profit preschools
to use ASD facilities. She said the ASD's superintendent has
publicly said this was the best method because it provided
quality preschool to more students for less funding.
REPRESENTATIVE JOHNSTON remarked that she got a different
perspective when students and school boards visited her office
this year. She reported that there are some exciting things
going on in the state, including exciting innovations and cross-
fertilization among school districts. Although she would like to
think this happens when the state has a lot of money it does not.
She heard from students sharing fascinating stories. She said,
"I didn't hear all the doom and gloom you did." She reiterated
that some exciting things were going on. She asked whether
Representative Gara had been part of the education challenge. In
terms of health care, she argued that many legislators were
actively working on health care. It takes time to address. In
terms of a fiscal plan, she noted that both houses had a majority
vote for percent of market value (POMV). She hoped that the
legislature would be able to achieve a POMV because it would be a
start of a fiscal plan.
8:26:32 AM
REPRESENTATIVE GARA indicated he has also heard from students who
were thriving, and from parents whose children are thriving, and
teachers who are doing their best. He argued that it did not
make up for the fact that chemistry was only offered every two
years in some schools nor did it make up for students not being
able to ask questions in class because the classes are so large.
He offered his belief that schools were doing the best they can
with what they have. He applauded educators who were doing so.
He said there was a difference between parents who are fully
engaged with their children and those who are not. He
characterized it as a dividing line that has always existed. He
did not think that the legislature was doing what it could to
give students in Alaska the ability to achieve their full
potential.
REPRESENTATIVE GARA said he would not deny that lots of good
things were happening. While some things were being addressed in
terms of health care, he felt the legislature lacked a
comprehensive effort to make meaningful reductions on health-care
costs. He applauded the efforts being made, in terms of the
price transparency bill. He said he thought it would take a
statewide and community effort to solve that will take time.
8:28:23 AM
REPRESENTATIVE JOHNSTON offered her belief that the Municipality
of Anchorage has passed the best transparency bill.
8:28:32 AM
REPRESENTATIVE PARISH asked why the legislature should let the
value of our students' education be gnawed away at by inflation.
CHAIR DRUMMOND expressed concern to hear that special education
students were in the same classes as ESL [English as a Second
Language] students. She characterized it as abominable. She
asked for further clarification on the cost for special education
students.
REPRESENTATIVE GARA recalled that in the mid-2000s, funding was
increased to approximately $29,000.
8:29:19 AM
CHAIR DRUMMOND pointed out that intensive needs' enrollment was
up 8.6 percent. She said this group included medically fragile
children that require nursing assistance and other services that
cost $70,000 per year. She offered her belief that preschool
enrollment was up because income is also down. She predicted
that more kids are eligible for programs such as Head Start and
other similar programs due to socioeconomic conditions. She
expressed an interest in hearing from the ASD on preschool
enrollment. She said that we need to have additional preschool
classes.
REPRESENTATIVE GARA said that what resonated most with him was
that a child who does not receive the education he/she needed in
6th grade would not come back five years later for it.
CHAIR DRUMMOND announced that HB 339 would be held over.
HB 233-EDUCATION TAX CREDITS; SUNSET; REPEALS
8:30:41 AM
CHAIR DRUMMOND announced that the next order of business would be
HOUSE BILL NO. 233, "An Act relating to the insurance tax
education credit, the income tax education credit, the oil or gas
producer education credit, the property tax education credit, the
mining business education credit, the fisheries business
education credit, and the fisheries resource landing tax
education credit; providing for an effective date by repealing
the effective dates of secs. 3, 5, 7, 10, 14, 16, 18, 21, 23, 25,
28, 30, 32, 35, 37, 39, 42, 44, 46, 49, 51, 53, and 55, ch. 92,
SLA 2010, sec. 14, ch. 7, FSSLA 2011, secs. 15, 17, 19, 21, 23,
and 25, ch. 74, SLA 2012, sec. 49, ch. 14, SLA 2014, secs. 37,
40, 43, and 46, ch. 15, SLA 2014, and secs. 26 and 31, ch. 61,
SLA 2014; providing for an effective date by amending the
effective date of secs. 1, 2, and 21, ch. 61, SLA 2014; and
providing for an effective date."
8:31:06 AM
REPRESENTATIVE CHRIS TUCK, Alaska State Legislature, thanked
members for hearing the bill today. He stated that HB 233 would
extend the education tax credit program from December 31, 2018 to
January 1, 2025 and ensure that the credits that exist in statute
today will continue to support our education programs and
institutions.
REPRESENTATIVE TUCK stated that the education tax credit program
would allow private businesses to make charitable contributions
to support public and private education in Alaska. Private
businesses can fund institutions and programs throughout Alaska
with direct monetary contributions or provide equipment and
supplies. He said the objective was to help the next generation.
He related that the fishing, mining, construction and oil and gas
industries can contribute to education programs and institutions
but can also foster student' interest in career opportunities.
He characterized the education tax credit as a direct connection
between businesses, our education system and students.
8:32:48 AM
REPRESENTATIVE KOPP remarked that he was excited about this bill.
He said that he had heard from several industries, including
Hecla Mining Company, Greens Creek and oil and gas industries.
He agreed that this makes education directly responsive to the
needs of the local communities and it promotes a strong Alaska
labor: local labor and local hire. He characterized it as a
great policy to move forward. He offered his complete support
for HB 233.
8:34:07 AM
SUSAN FOLEY, President, University of Alaska Foundation, stated
she has submitted a letter of support for HB 233. The University
of Alaska (UAA) has been one of the highest recipients of
contributions of education tax credits. The impact has been
significant. She related that many companies in Alaska would
like to support education in Alaska. These companies
strategically engage in multi-year planning to have impact over a
sustained period of a time. They also want their employees to
see the results of their contributions. She characterized the
six-year extension of this bill as very important because it
enables companies to partner with educational institutions and to
institute and foster programs. She found the multi-year aspect
of HB 233 as allowing companies to be influential.
MS. FOLEY stated that the University of Alaska Foundation has
received feedback from corporations that the way the education
tax credit program was structured creates a major incentive for
their donations. The structure allowed corporations to see the
direct impact of their donations and receive recognition for
their support. This enables them to partner in significant
programs that will benefit their future business enterprise.
Finally, for an academic institution, the long-term nature of
this extension was important because it takes time to start
programs, get them running efficiently, recruit students, and
bring things to fruition. She acknowledged and appreciated the
work legislators make.
8:38:36 AM
ROBERT ONDERS, M.D., J.D., M.P.A.; President, Alaska Pacific
University (APU), offered his support for HB 233. He
characterized this bill as providing a critical connection
between industry, education, and students. This bill facilitates
community-based research that engages students with industry and
the external community, which was an essential component of
education at Alaska Pacific University (APU).
8:39:28 AM
BRADLEY HARRIS, PhD; Associate Professor of Marine Biology,
Alaska Pacific University (APU), offered his support for HB 233.
He reiterated the importance of this bill in terms of APU's
educational profile. He related his experience as a professor.
DR. HARRIS said he has seen industry resources go directly to
support student outcomes. He said that the tax credit program
was working as designed. It has provided opportunities for
students in Alaska to obtain a high-quality education in areas
that directly align with needs within Alaska. He stated that
this program provided opportunities for world class education and
research opportunities and created a "win-win" solution for
educational institutions, industry, and students.
8:40:38 AM
DR. HARRIS offered to outline four things that highlighted the
strategic components of the tax credit program. First, the tax
credit program has allowed professors, such as himself, to
recruit and support excellent students throughout Alaska and
outside Alaska. He said this was particularly important in
natural resource fields, which are highly competitive fields. He
pointed out that the tax credit program provides tuition and
project support, which are critical elements when recruiting
students. Second, the program has allowed the university to
invest in strategically important research areas, in particular,
applied research projects require high levels of engagement from
practicing professionals; for example, researchers from federal
and state agencies and other universities are drawn to Alaska
because of the type of research being performed. Our students
benefit from this, he said. These robust and strategic
partnerships can be developed with state, federal, industrial,
and private partners and ultimately produce new levels of
funding.
DR. HARRIS said the third thing was that since the university has
ongoing projects it can submit proposals, which have experienced
a high-rate of success, which results in value-added growth in
these programs. Finally, APU has been expanding research and
education with partnerships in the nation and worldwide. He
related that APU had researchers from Cornell University, the
Smithsonian, National Oceanic and Atmospheric Administration, the
US Geological Survey, US Fish & Wildlife Service and ADF&G
actively working with students to address natural resources
issues important to Alaska. He referred to a letter in members'
packets that contained a list outlining some very specific
outcomes including listing home towns of students and where they
are working. He said that list was a small subset of students
that were being impacted by the tax credit program in HB 233. He
hoped that would illustrate his point that the tax credit program
works. He asked members to please support HB 233.
8:43:22 AM
MIKE SATRE, Manager, Government and Community Relations, Hecla
Greens Creek Mine; Board Member; Council of Alaska Producers,
stated that his wife has also spent 20 years working in the
Juneau School District. The work this committee does directly
affects his family and he appreciated members' service.
MR. SATRE offered general comments on tax policy. The
legislature holds many discussions on tax policy. We know that
we can tax things to curtail activities that are not beneficial
to our communities or the legislature can provide incentives by
rolling back taxes. He characterized the education tax credit as
a means to encourage industry to invest in Alaska's educational
system, both at the secondary level and with our universities by
forming partnerships. This benefits companies but also the
regions companies operate in to build community and capacity. He
offered his belief that one of the private sector's challenges
was recruitment and retention of an Alaskan work force. As
Alaska works to grow its economy, that challenge will become even
greater. This has been something that Hecla Greens Creek mine
has recognized, that attracting Alaskan workers provides a stable
work force since they stay longer and contribute to their
community.
MR. SATRE said he also recognized that posting a job opening
would not necessarily provide the highly skilled, highly-educated
work force Greens Creek mine needs. The industry does not have
the capacity to provide all the training necessary; however, the
universities do. In 2011, Hecla Greens Creek looked to partner
with the University of Alaska [Southeast] (UAS) to develop a
program called "Pathways to Mining Careers." This program starts
with a college course that high school juniors and seniors take
that provides a broad survey of hundreds of career opportunities
in the mining industry. This program provides students with an
educational foundation for choices they may make when choosing
their professions. Once they take that course, Hecla Greens
Creek tries to direct interested students into a two-year diesel
mechanic degree program at the Career and Technical Education
program at UAS. He emphasized that the diesel mechanic
represented one of the mine's greatest needs. He characterized
the diesel mechanic program as a high-tech profession that
requires specialized training. Hecla Greens Creek provides
scholarships for students, an internship, and ultimately hopes
students will choose them as an employer. Between 2011-2016 over
200 students have taken the entry level course, with 13-14
students completing the two-year degree program. Further, many
of these students have chosen to work for Greens Creek mine, live
in Juneau, and provide for their families.
8:46:55 AM
MR. SATRE offered that his company has also endowed scholarships
at the University of Alaska Fairbanks and geology scholarships at
the University of Alaska Anchorage, and Hecla Greens Creek works
with secondary schools in the region to develop interest. He
urged members to support this bill and pass it on to the next
committee of referral. He acknowledged that the program would
sunset at the end of the year, making it very difficult to bring
this valuable tax credit into existence. He appreciated
Representative Tuck introducing this bill.
8:47:35 AM
CHAIR DRUMMOND asked whether the partnership with UAS begins with
junior and seniors in high school and was not limited to post-
secondary training.
MR. SATRE responded that current students were more aware of
educational tracks and professions much earlier, so the company
felt it was important to start its program to benefit high school
students to give them an opportunity to follow a pathway that
will benefit them.
CHAIR DRUMMOND commented there was a theory that states that
students in second or third grade know what they want to do as
adults. She closed invited testimony.
8:49:37 AM
REPRESENTATIVE PARISH asked for further clarification on the
types of business that uses the tax education credit.
8:50:16 AM
BRANDON SPANOS, Deputy Director, Tax Division, Department of
Revenue (DOR), responded that in 2016, 37 companies used the
education tax credit, varying from oil and gas and mining to
banking and retail sector. He said that any corporate income tax
payer with qualifying donations could use the education tax
credit.
REPRESENTATIVE PARISH was hoping to learn about the average size
of the companies using the education tax credit program.
MR. SPANOS said that most companies were large multi-state or
multi-national companies.
REPRESENTATIVE PARISH asked if he had any idea about the smallest
company.
MR. SPANOS deferred to Mr. Stickle.
8:52:02 AM
DAN STICKEL, Chief Economist, Tax Division, Department of Revenue
(DOR), stated that the primary business are large businesses. He
pointed out that these companies must be large enough to have a
significant corporate income tax liability to apply these types
of credits. The primary beneficiaries would be large resource-
oriented companies.
8:52:27 AM
REPRESENTATIVE KOPP offered his belief that these would be the
same companies producing the same employees that make this
community work; ones that fund everything.
CHAIR DRUMMOND reiterated these companies must be large enough to
have a significant corporate income tax liability in order to
make contributions like this.
MR. STICKEL agreed.
8:52:58 AM
REPRESENTATIVE PARISH expressed an interest in exploring ways for
the smaller companies to participate, as well. He was unsure of
the threshold but said that currently the sweet spot for
donations seemed to be $300,000. He would like to see that
lowered. He stated that the amount of the credit was 50 percent
of contributions of not more than $100,000; 100 percent up to
$300,000 of contributions; and 50 percent of the amount of
contributions that exceed $300,000 [as per AS 43.20.014 (12)(b)].
He recalled the cap was $5 million. He related his understanding
this could discourage companies that could not reach the $300,000
"sweet spot" from participating. He said he thought that some
smaller businesses in the state would be interested in
participating in a program that promotes education in the state
for excellent causes.
8:54:41 AM
CHAIR DRUMMOND acknowledged that the names of the companies was
confidential information. She said that if those companies
wanted to identify themselves, nothing would prevent them from
doing so; for example, Hecla Greens Creek or the other companies
that visited her office and revealed themselves as participants
who helped create jobs and training in Alaska.
MR. SATRE agreed that was correct.
8:55:16 AM
CHAIR DRUMMOND encouraged companies to identify themselves if
they so choose.
8:55:33 AM
CHAIR DRUMMOND announced that HB 233 would be held over.
8:55:45 AM
ADJOURNMENT
There being no further business before the committee, the House
Education Standing Committee meeting was adjourned at 8:56 a.m.