Legislature(2003 - 2004)

02/19/2004 12:20 PM EDU

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                    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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