Legislature(2003 - 2004)
02/19/2004 12:20 PM House EDU
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ALASKA STATE LEGISLATURE
HOUSE SPECIAL COMMITTEE ON EDUCATION
February 19, 2004
12:20 p.m.
MEMBERS PRESENT
Representative Carl Gatto, Chair
Representative Paul Seaton, Vice Chair
Representative Dan Ogg
Representative Peggy Wilson
Representative Kelly Wolf
Representative Les Gara
Representative Mary Kapsner
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
HOUSE BILL NO. 471
"An Act relating to the funding of public education; and
providing for an effective date."
- MOVED CSHB 471(EDU) OUT OF COMMITTEE
PREVIOUS COMMITTEE ACTION
BILL: HB 471
SHORT TITLE: INCREASE AMT OF BASE STUDENT ALLOCATION
SPONSOR(S): EDUCATION
02/16/04 (H) READ THE FIRST TIME - REFERRALS
02/16/04 (H) EDU, HES, FIN
02/17/04 (H) EDU AT 11:00 AM CAPITOL 124
02/17/04 (H) Heard & Held
02/17/04 (H) MINUTE(EDU)
02/19/04 (H) EDU AT 11:00 AM CAPITOL 124
WITNESS REGISTER
DEBORAH POORE
Homer, Alaska
POSITION STATEMENT: Testified in support of HB 471.
DAVID JONES, Director
Finance Department
Kodiak Island Borough School District
Kodiak, Alaska
POSITION STATEMENT: Testified in support HB 471.
MIKE FORD
Juneau, Alaska
POSITION STATEMENT: Testified on HB 471.
KRISTEN ROMANOFF
Juneau, Alaska
POSITION STATEMENT: Testified in support of HB 471.
PETER BURCHELL
Wasilla, Alaska
POSITION STATEMENT: Testified on HB 471.
RON RUCKER, President
Classified Staff Association
Matanuska-Susitna Borough School District
Wasilla, Alaska
POSITION STATEMENT: Testified on HB 471.
KRIS MOORE
Valley Voices for Children
Wasilla, Alaska
POSITION STATEMENT: Testified on HB 471.
JENNIE HAMMOND
Nikiski, Alaska
POSITION STATEMENT: Testified on HB 471.
ACTION NARRATIVE
TAPE 04-11, SIDE A
Number 0001
CHAIR CARL GATTO called the House Special Committee on Education
meeting to order at 12:20 p.m. All members were present at the
call to order.
HB 471-INCREASE AMT OF BASE STUDENT ALLOCATION
[Contains discussion of HB 477]
CHAIR GATTO announced that the only order of business would be
HOUSE BILL NO. 471, "An Act relating to the funding of public
education; and providing for an effective date." [In packets,
not adopted but treated as the working document, was a proposed
committee substitute (CS), Version 23-LS1645\H, Mischel,
2/18/04.]
Number 0121
REPRESENTATIVE GARA brought attention to Amendment 1, language
taken from HB 477 that read [original punctuation provided but
some formatting changed]:
Delete all language; insert the following:
* Section 1. AS 14.17.470 is amended to read:
Sec. 14.17.470. Base student allocation. The base student
allocation is $4,600. However, the department shall annually
increase the base student allocation to the extent of increases
during the second preceding calendar year in the Consumer Price
Index for all urban consumers for the Anchorage Metropolitan
Area compiled by the Bureau of Labor Statistics, United States
Department of Labor. The index for January 2002 is the
reference base index [$4,169].
* Sec. 2. AS 14.17.470 is amended by adding a new subsection
to read: (b) After an increase, if any, to the base student
allocation under (a) of this section, the department shall
annually increase the base student allocation by two percent.
The increase under this subsection shall be used for either
(1) class-size reduction; or
(2) compliance with 20 U.S.C. 6301 - 7941 (No Child Left
Behind Act of 2001).
* Sec. 3. AS 14.17.470(b) is repealed July 1, 2009.
* Sec. 4. This Act takes effect July 1, 2004.
REPRESENTATIVE GARA explained that Amendment 1 would convert
this bill to HB 477, which he and Representative Kapsner
sponsored. The change would result in an additional $43 per
student to the base student allocation over what HB 471
provides. The amendment would increase the fiscal note by $8
million.
REPRESENTATIVE GARA told members the rationale is based on
comments made by the school districts that HB 471 does a good
job by preventing additional layoffs this year and is laudable,
but does nothing to make up for all the layoffs last year. He
commented that funding has been going in the wrong direction for
many years. The $8-million increase in funding would begin to
repair the damage school districts have suffered. The amendment
would continue to correct the damage by providing that funding
would continue to go up based on the Consumer Price Index [for
the Anchorage Metropolitan Area] and a 2 percent annual increase
until class sizes are reduced to an acceptable level.
Number 0220
CHAIR GATTO commented that the $4,600 figure includes funding
for the PERS/TRS [shortfall], which is not an issue addressed in
the current bill. He told the members that inclusion of
PERS/TRS funding complicates the issue significantly, which is
the reason members agreed to break out the TRS/PERS funding from
the [base student allocation]. He suggested the TRS/PERS issue
may be taken care of on a statewide basis in the House Finance
Committee; if not, maybe it's something the current committee
will deal with separately. He reiterated that inclusion of the
funding for the PERS/TRS [shortfall] is a wholly separate issue.
Number 0319
REPRESENTATIVE GARA moved to adopt Amendment 1 [text provided
previously]. He said in response to Chair Gatto's comments that
he believes it is much more appropriate to fund the PERS/TRS
shortfall in the base student allocation because the same issue
will come up each year. He said [he doesn't question the
committee members support for education, but] believes there is
extra will on the part of other legislators in funding education
this year, because it is an election year. Another advantage of
including this in the base student allocation is that it would
increase the amount of money local school districts can
contribute, he stated.
Number 0395
REPRESENTATIVE KAPSNER asked Chair Gatto to provide the
committee with information regarding other vehicles available to
address PERS/TRS.
CHAIR GATTO responded that a bill is being worked on that deals
with the PERS/TRS [shortfall]. He said he believes the House
Finance Committee is considering handling the issue on a
statewide basis, and emphasized that the conversation is not yet
over. He assured members that the issue will be addressed
either in the House Finance Committee or in this committee.
REPRESENTATIVE KAPSNER told members she'll be voting in favor of
Amendment 1 because it isn't known what will happen in the
future. She voiced strong support for the $4,600 figure.
Number 0496
REPRESENTATIVE WILSON stated that she is planning on introducing
a bill in the House Health, Education and Social Services
Standing Committee [which she chairs] that will address the
PERS/TRS [shortfall] if it is not handled in the House Finance
Committee.
Number 0535
REPRESENTATIVE OGG said he opposes Amendment 1. He explained
that the subcommittee that brought HB 471 to the full committee
has also worked on a vehicle to address the PERS/TRS
[shortfall]. The two bills work together as companion bills.
The subcommittee has examined the impact of running the PERS/TRS
cost into the formula. He said some schools benefited and some
suffered. He commented that the subcommittee was not willing to
see some school suffer to a great extent, so it was decided that
it could not be inserted in the formula. He told the members
the responsible thing to do is run the PERS/TRS at cost so that
each district [is reimbursed for the cost of the shortfall]. He
said that was his reason for supporting two vehicles to address
these issues. Amendment 1 would go against what the
subcommittee recommended to the full committee, he added.
Number 0680
REPRESENTATIVE SEATON explained that the subcommittee found that
by including the TRS/PERS in the foundation formula, some
districts lost significant funding. For example, the North
Slope Borough School District would lose [approximately]
$400,000 in equivalent payment, while the Kenai Peninsula School
District would have gained $220,000 above its PERS/TRS costs.
This change would create dramatic cost shifting. He stated that
he would vote against the amendment for those reasons.
REPRESENTATIVE KAPSNER told the members she appreciates the work
the subcommittee did. She pointed out that another important
component of Amendment 1 is that it addresses automatically
inflation-proofing the [base student allocation]. She said she
believes that in reviewing the actual dollars to schools, the
figure is a fraction of what it should be, especially in light
of the No Child Left Behind Act and exit exams.
REPRESENTATIVE WILSON shared her belief that it is important to
keep the funding [for the base student allocation and the
PERS/TRS shortfall] in separate bills because she doesn't want
to jeopardize funding for the base student allocation. She said
she does not know what the House Finance Committee will do if
the 2 percent annual increase is included in HB 471.
Number 0875
REPRESENTATIVE GARA clarified that [Amendment 1] would provide
$8 million more than a separate PERS/TRS bill and HB 471 put
together. He agreed that if HB 471 rolled in PERS/TRS, then a
small number of districts wouldn't receive enough money to cover
their PERS/TRS shortfall. However, bringing the total base
student allocation up to $4,600 adds an extra $8 million into
the foundation formula, which gives every district in the state
enough money to cover the TRS/PERS shortfall and extra money to
cover teacher shortages. If any school district were to be
short of funds to address the PERS/TRS shortfall, then an
amendment could be made on the floor to account for that, he
suggested.
Number 1012
CHAIR GATTO commented that the school districts that are at the
base level of 1.0, such as Anchorage and Matanuska-Susitna
school districts, would receive an adequate amount to cover the
PERS/TRS [shortfall]. He pointed out that if the TRS/PERS
funding were in the formula, school districts in remote areas
would receive additional money beyond their need to cover
PERS/TRS. He stated it is a fairness issue. Since the cost is
exactly the same for each retiree across the state, it seems
more appropriate to fund this as a statewide issue, rather than
trying to have each district accountable for a portion when the
formula allots funding to each district differently.
Number 1112
A roll call vote was taken. Representatives Gara and Kapsner
voted in favor of Amendment 1. Representatives Ogg, Wilson,
Wolf, Seaton, and Gatto voted against it. Therefore,
Amendment 1 failed to be adopted by a vote of 2-5.
Number 1153
REPRESENTATIVE OGG moved to adopt Amendment 2, a technical
amendment that would do the following:
On page 1, line 7, after the words "of each year,"
Insert "beginning July 1, 2005,"
On page 1, line 8
Delete "2005"
Insert "2004"
REPRESENTATIVE OGG explained that there may have been some
miscommunication in the drafting process of the proposed CS.
CHAIR GATTO asked if there was any objection to adopting
Amendment 2. There being no objection, it was so ordered.
Number 1208
DEBORAH POORE testified in support of HB 471. She stated,
however, that she is concerned about the possibility of the
funds being diluted as it goes through the [legislative]
process. She warned that this funding level is not enough to
provide schools with full funding. For ten years the schools in
the Kenai Peninsula Borough School District have been robbing
from their programs to try to keep the schools in operation.
She said she believes it is important to regain the ground that
has been lost. There needs to be stable, on going funding for
public education in Alaska, she emphasized. Ms. Poore told the
members that she [testified] a year ago that she would support
the implementation of a state income tax to support public
education.
Number 1278
DAVID JONES, Director, Finance Department, Kodiak Island Borough
School District, testified on HB 471. He told the members that
the increase in base student allocation enables the school
district to maintain the programs in place for FY 04 for the
coming year. It will not undo the losses from the previous
year, but it is a welcome thought that the district will be able
to maintain what it now has.
MR. JONES said the inflation-proofing provision in this bill
will be a great help because each year the district faces
increases in health insurance, workers' compensation insurance,
and liability insurance increases. These increased costs are
cutting into the school district's budget so this [inflation
proofing measure] is welcome. Mr. Jones said that each year the
district has looked at the programs to decide what will be cut
just to survive another year.
MR. JONES agreed that the TRS/PERS issue should be addressed in
another bill. He reminded members that it is not a single-year
issue, but one that will need to be addressed repeatedly. He
closed by saying he is the father of three children in the
school system and wants them and their friends to have the best
education possible. He said he would be willing to pay an
income tax or some other kind of tax to ensure that happens.
Number 1432
MIKE FORD testified that he is the parent of a second-grader in
the Juneau School District. He applauded the committee's action
by increasing funding for public education. He said he does not
believe the committee has gone far enough. In Juneau, the
increase will not bring the district to parity for the budget
today. There is still a budget gap. He said the PERS/TRS
[shortfall] will be a recurring problem, and it is significant.
Mr. Ford urged the members to work on a solution that does not
require them revisiting the issue year after year. Saying the
classrooms in Juneau are very crowded, he urged the members to
reduced the student-teacher ratio. He told the members that he
would be willing to support a revenue measure to support these
increases.
Number 1520
KRISTEN ROMANOFF testified in support of HB 471, noting that she
has been volunteering weekly for the last three years. In her
son's kindergarten class there were 28 children with one teacher
and no aide. The pupil-teacher ratio is so high that it is
impacting the education of all the children in the school
system. This bill does not go far enough in educating students.
While it is a step in the right direction, there needs to be
increased funding. She said she believes the amendment that was
proposed to bring education funding up to $4,600 per student
with the inclusion of PERS/TRS would have been a good beginning.
Number 1647
PETER BURCHELL, retired teacher, testified on HB 471. He said
the proposed increase won't meet the needs of the Matanuska-
Susitna Borough School District. He also expressed concern that
TRS/PERS is operating on a one-week basis. When no inflation-
proofing is done and there is failure to plan ahead, then
districts end up with what the valley is experiencing now. Mr.
Burchell commented that Chair Gatto, as a former school board
member, knows what the district has been cutting for nine years,
and now it is a desperate situation. He asked members to please
inflation-proof education funding and include PERS/TRS funding
so it won't have to be revisited next year.
Number 1725
RON RUCKER, President, Classified Staff Association (CSA),
Matanuska-Susitna Borough School District, testified on HB 471.
He thanked members for all their work on this bill. He said
since Tuesday's hearing he has had the opportunity to review the
numbers discussed and wants to correct his statement. Mr.
Rucker said contingent on the Matanuska-Susitna Borough's being
able to fund education to the maximum amount, the district will
be made whole for this year. It does not do anything to resolve
past years problems, however. Mr. Rucker said that in one way
it makes sense to handle the PERS/TRS issue separately, but it
will be "a hammer over the head" of the districts if the
legislature does not fund it in down years. He encouraged the
committee to consider the $4,600 figure again, so that it will
give the districts some leeway.
Number 1792
CHAIR GATTO responded that Mr. Rucker knows that with an
increase in the base student allocation, the local effort is
allowed to increase. It is currently at the cap, he stated.
Chair Gatto said he believes the increase would be approximately
$600,000. That should not even come close to solving the
problems of the past seven to nine years, but it is a move in
that direction.
MR. RUCKER concurred.
Number 1833
KRIS MOORE, Valley Voices for Children, testified in support of
HB 471. She thanked the committee for their work. This
increased funding will allow the schools to break even this
year. She commented that there is a long way to go and she
hopes the committee will continue to work on increased education
for the future. Ms. Moore said she appreciates the amendment
that changes the effective date to July 1, 2004, rather than
July 1, 2005. She closed by saying most of the people she talks
with support income tax as a way of paying for education.
Number 1937
JENNIE HAMMOND testified on HB 471. She commented that the
version of the bill in front of her would increase funding to
$4,422 and it does not say anything about PERS/TRS. She asked
if that is correct.
REPRESENTATIVE GARA explained that [with Amendment 1] the $4,600
figure includes the PERS/TRS problem, or if the PERS/TRS problem
were dealt with separately, then the figure would be $4,422.
Representative Gara said he believes it is more important to
roll the PERS/TRS into the foundation formula. That is the
reason for the larger number.
Number 1995
MS. HAMMOND said while she supports addressing the PERS/TRS
issue, an important benefit is that funding at the $4,600 figure
means the community can fund more at the cap. Another benefit
is that the issue wouldn't have to come back to the legislature
next year. She asked what the PERS/TRS bill number is.
CHAIR GATTO responded that there is no bill number available
yet. A couple of options are being looked at. If the funding
is done strictly as a education bill, then it will be a $[35.7]
million grant. If it is done as a statewide grant, it will be
significantly higher. He stated that the issue will be
rectified one way or another.
REPRESENTATIVE SEATON commented that the committee is still
waiting for a determination from the Department of Education and
Early Development on how the PERS/TRS funding can be structured
so that PERS/TRS contributions given to the districts can be
matched.
CHAIR GATTO reiterated Representative Wilson's earlier statement
that this issue will be addressed in the House Health, Education
and Social Services Standing Committee.
REPRESENTATIVE WILSON commented that Ms. Hammond is fortunate
that the Kenai municipality funds the school system to the cap.
Many communities around the state, including Anchorage, do not
fund up to the cap, she said.
Number 2138
REPRESENTATIVE OGG moved to report CSHB 471, Version 23-
LS1645\H, Mischel, 2/18/04, as amended, out of committee with
individual recommendations and the accompanying fiscal notes.
REPRESENTATIVE OGG asked if the members would like the
accompanying memorandum [addressing methods of funding] to be
included with the bill.
CHAIR GATTO responded that he believes the memorandum could be
included without adding it to the [motion].
Number 2174
REPRESENTATIVE GARA objected for purposes of discussion. He
asked members to consider increasing the base student allocation
by $43 to address last year's losses. He added that he believes
the bill that is going forward is very responsible and he
appreciates working with the members on this. Representative
Gara said he isn't going to put forth an amendment, but asked
members to consider this change and leave aside the inflation-
proofing issue that some are uncomfortable with.
REPRESENTATIVE GARA withdrew his objection.
Number 2233
CHAIR GATTO announced that without objection, CSHB 471(EDU) was
reported out of the House Special Committee on Education.
Number 2259
REPRESENTATIVE OGG asked if the memorandum on funding should
accompany HB 471. He explained that the letter says the
committee assigned the issue to a subcommittee that held
extensive hearings, and there was persuasive testimony that the
education system could not sustain any further cuts. School
districts from around the state said the increase necessary to
hold districts "whole" was somewhere between $380 and $400.
There was agreement to use the $388 figure because that was the
figure provided by the Anchorage School District. There were
two bills considered. One bill was to fund the PERS/TRS
[shortfall] of $35,789,260. The intent was that this increase
would be allowed to count for purposes of the local contribution
funding caps, he said. He added that HB 471 funds $42.5
million, increases the student formula by $210, and codifies the
increase by July 1, [2004]. The cost of both bills is
$78,289,260.
REPRESENTATIVE OGG told members it was requested that if the
House Special Committee on Education were to suggest monies that
were not in the budget, then the committee should suggest
sources for those monies. He explained that two sources were
recommended. One is utilization of the Constitutional Budget
Reserve excess from the FY 2004 appropriation, and the second is
the excess earnings from the Earnings Reserve Account of the
permanent fund. Representative Ogg noted that the committee
wants it known that the University of Alaska also has an
unanticipated need for PERS/TRS obligations. The memorandum
also urges the House Finance Committee to fund that need.
Number 2414
REPRESENTATIVE WILSON commented that the university's PERS/TRS
is set up different from [that in other parts of the state].
She explained that [with the shortfall], university employees
must contribute, so the university does not have to pay back as
much. She pointed out that with general government, the state
must pay for all of the PERS/TRS [shortfall].
CHAIR GATTO told members the university asked for its TRS/PERS
portion to be included in the House Special Committee on
Education's bill. He commented that if the PERS/TRS issue is
handled statewide, then this inclusion would not be necessary.
If it does not, then this is something the committee should
consider.
REPRESENTATIVE GARA told the members that the letter does not
reflect his views and he will not sign on to it. He said he
believes it is obvious that there is over $100 million in the
Constitutional Budget Reserve that the legislature and the
governor intended to spend last year, which was not spent
because of high oil prices. He commented that he agrees with
that part of the letter. Representative Gara said he believes
there are many options [for funding] and he hopes it will be
debated on the House floor.
CHAIR GATTO asked if Representative Gara is debating the fiscal
gap or the letter.
REPRESENTATIVE GARA responded that this letter is proposing to
solve the fiscal gap with permanent fund earnings. He said he
is not necessarily comfortable with that. Representative Gara
summarized that he believes the legislature will fail the public
if every single fiscal proposal is not out on the House floor
for open debate. He stated that he is not comfortable agreeing
to only those that the [legislative] majority want.
Number 2567
REPRESENTATIVE KAPSNER said she believes it is interesting that
this memorandum recommends using the excess earnings from the
Earnings Reserve Account for the permanent fund, when people
have testified today that a tax would be appropriate. She
suggested more vague language or more inclusive [language] with
all revenue-generating options, including a road tax.
Number 2607
REPRESENTATIVE SEATON pointed out that the memorandum suggests
two sources of revenue that are available to the legislature
right now. He said this is not a question of addressing another
bill to establish a tax or to change a tax structure. These two
revenue sources are two funds that are currently available to
the legislature right now to fund an $80-million increase in
education funding. He told the members he believes this
memorandum is appropriate. The letter does not suggest
addressing revenue sources at another time. What is being
examined is what can be used now to address the increase in
funding. That is the reason for the language used in the
memorandum.
Number 2668
CHAIR GATTO commented that a separate question might be where
the money will come from in the future. [CSHB 471(EDU) was
reported from committee.]
ADJOURNMENT
There being no further business before the committee, the House
Special Committee on Education meeting was adjourned at 1:05
p.m.
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