Legislature(2019 - 2020)CAPITOL 106
05/01/2019 08:00 AM House EDUCATION
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| Audio | Topic |
|---|---|
| Start | |
| HB75 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
| += | HB 75 | TELECONFERENCED | |
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
questions.
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
calculations.
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
2019].
CO-CHAIR DRUMMOND questioned what would be "a reasonable path
forward" should HB 75 pass and the state fail the disparity
test.
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
aid.
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
hearings.
REPRESENTATIVE REVAK asked for comments from the sponsor of the
bill.
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
consideration.
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
ADJOURNMENT
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 |