Legislature(1997 - 1998)

05/08/1998 07:30 PM House FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
txt
           HOUSE FINANCE COMMITTEE                                             
              May 8, 1998                                                      
                 7:30 P.M.                                                     
                                                                               
TAPE HFC 98 - 163, Side 1                                                      
TAPE HFC 98 - 163, Side 2                                                      
TAPE HFC 98 - 164, Side 1                                                      
TAPE HFC 98 - 164, Side 2                                                      
                                                                               
CALL TO ORDER                                                                  
                                                                               
Co-Chair Gene Therriault called the House Finance Committee                    
meeting to order at 7:30 p.m.                                                  
                                                                               
PRESENT                                                                        
                                                                               
Co-Chair Hanley    Representative Kelly                                        
Co-Chair Therriault   Representative Kohring                                   
Representative Davies  Representative Martin                                   
Representative Davis   Representative Moses                                    
Representative Grussendorf Representative Mulder                               
                                                                               
Representative Foster was absent from the meeting.                             
                                                                               
ALSO PRESENT                                                                   
                                                                               
Karen Rehfeld, Director, Division of Administrative                            
Services, Department of Education; Morgan, Facilities                          
Section, Education Support Services, Department of                             
Education; Richard Cross, Deputy Director, Department of                       
Education; Eddy Jeans, Manager, School Finance Section,                        
Education Support Services, Department of Education.                           
                                                                               
SUMMARY                                                                        
                                                                               
SB 11 "An Act relating to state aid for school                                 
construction debt; and providing for an effective                              
date."                                                                         
                                                                               
HCS CSSB 11 (FIN) was REPORTED out of Committee                                
with a "do pass" recommendation and with a fiscal                              
impact note by the Department of Education.                                    
                                                                               
SB 36 "An Act relating to transportation of public                             
school students; relating to school construction                               
grants; relating to the public school foundation                               
program and to local aid for education; and                                    
providing for an effective date."                                              
                                                                               
SB 36 was HELD in Committee for further                                        
consideration.                                                                 
                                                                               
SB 297 "An Act relating to breast-feeding."                                    
                                                                               
CSSB 297 (2d RLS) was REPORTED out of Committee                                
with "no recommendation" and with a fiscal impact                              
note by the Department of Labor, 4/2/98.                                       
                                                                               
SB 313 "An Act relating to sponsor certification of                            
initiative petitions; relating to sponsor                                      
identification during petition circulation;                                    
relating to the voidability of an initiated law;                               
placing limitations on the compensation that may                               
be paid to sponsors of initiative petitions;                                   
prohibiting payments to persons who sign or                                    
refrain from signing initiative petitions; and                                 
repealing procedures for filing a supplementary                                
initiative petition."                                                          
                                                                               
HCS CSSB 313 (FIN) was REPORTED out of Committee                               
with "no recommendation" and with a zero fiscal                                
note by the Office of the Lieutenant Governor,                                 
dated 3/19/98.                                                                 
SENATE BILL NO. 36                                                             
                                                                               
"An Act relating to transportation of public school                            
students; relating to school construction grants;                              
relating to the public school foundation program and to                        
local aid for education; and providing for an effective                        
date."                                                                         
                                                                               
Co-Chair Therriault provided members with a proposed                           
committee substitute for SB 36, work draft #0-LS0070\J,                        
dated 5/8/98 (copy on file).                                                   
                                                                               
RICHARD CROSS, DEPUTY DIRECTOR, DEPARTMENT OF EDUCATION                        
observed that Mr. Jeans would explain the proposed committee                   
substitute.  He noted that the school funding formula uses                     
an adjusted student count to distribute funding.  A school                     
site table was developed as part of the Alaska School                          
Operating Cost Study, commissioned by the Legislative Budget                   
and Audit Committee.  It also uses district cost factors                       
instead of an area cost differential.  The district cost                       
factors were also developed as part of the Alaska School                       
Operating Cost Study.  The actual number of students is                        
adjusted based on the size of the school, special needs, and                   
the district's operating costs.  An additional 26 million                      
dollars is included.                                                           
                                                                               
EDDY JEANS, MANAGER, SCHOOL FINANCE SECTION, EDUCATION                         
SUPPORT SERVICES, DEPARTMENT OF EDUCATION reviewed the                         
legislation by section.  He pointed out that state aid                         
equals basic need minus a required local contribution and 90                   
percent of eligible federal impact aid.  Basic need equals                     
the sum subsection (D).  He reviewed the calculations in                       
section AS 14.17.410:                                                          
                                                                               
(A) The adjusted daily membership (ADM) of each school in                      
the district is calculated by 30 applying the school                           
size factor to the student count as set out in AS                              
14.17.450;                                                                     
(B) The number obtained under (A) of this paragraph is                         
01 multiplied by the district cost factor described in                         
AS 14.17.460;                                                                  
(C) The ADMs of each school in a district, as adjusted                         
according to (A) and (B) of this paragraph, are added;                         
the sum is then multiplied by the special needs factor                         
set out in AS 14.17.420(a)(1);                                                 
(D) The number obtained for intensive services under AS                        
14.17.420(a)(2) and the number obtained for                                    
correspondence study under AS 14.17.430 are added to                           
the number obtained under (C) of this paragraph.                               
                                                                               
Mr. Jeans noted that there is a 4-mill tax levy on the full                    
and true value of the taxable real and personal property in                    
the district, not to exceed 45 percent of the district's                       
basic need.  He observed that local contribution could not                     
exceed a two-mill tax levy on the full and true value of the                   
taxable real and personal property in the district, or 23                      
percent of the district's state share of public school                         
funding for the fiscal year.  He maintained that this                          
provision would maintain the federal disparity standard.  He                   
observed that newly formed boroughs could phase in the                         
required local effort over a four-year period.  The special                    
needs factor is 1.2.  The intensive services funding is                        
equal to the intensive student count multiplied by five.  In                   
order to receive funding for special education, gifted and                     
talented education, vocational or bilingual education a                        
district must have its plan on file with the Department.                       
                                                                               
Mr. Jeans noted that the legislation sets out funding for                      
correspondence program set at 80 percent of the ADM.                           
Funding for the state boarding school is included in AS                        
14.17.440.  This allows the Mt. Edgecumbe School to receive                    
funding for eligible intensive services.                                       
                                                                               
The school size factor table begins on page 5, line 22.  A                     
school must have at least 10 students.  If a school has less                   
then 10 students they would be counted with the school which                   
has the lowest ADM in that district.                                           
                                                                               
District cost factors are included under AS 14.17.460.                         
These are based on the McDowell Group Alaska School                            
Operating Cost Study, March 1998.  The Department is                           
required to monitor cost factors and prepare and submit a                      
report of proposed new district cost factors to the                            
legislature by January 15th of every other year.  He                           
estimated that the base student allocation would be $3,928                     
dollars.                                                                       
                                                                               
Mr. Jeans explained that schools eligible for quality school                   
funding would receive the districts adjusted ADM multiplied                    
by $16 dollars.                                                                
                                                                               
A funding floor would be established for school districts                      
that received less funding under the old foundation formula.                   
The floor would be permanent.  State aid is defined for the                    
purposes of setting the floor.                                                 
                                                                               
School districts are required to submit student estimates by                   
November 5th.                                                                  
                                                                               
School districts cannot accumulate an unreserved fund                          
balance of greater than 10 percent of their current year                       
expenditures.                                                                  
                                                                               
The Department of Community and Regional Affairs is required                   
to determine the full and true value of taxable real and                       
personal property in each district.  School districts must                     
budget for and spend at least 70 percent of their school                       
operating expenses on instruction.  "Instructional                             
component" includes expenditures for teachers and for pupil                    
support services.                                                              
                                                                               
Mr. Jeans noted that the student counting period would be                      
the 20-school-day period ending the fourth Friday in                           
October.  The counting period for state correspondence study                   
would be July 1 through the fourth Friday in October,                          
                                                                               
The distribution of state aid is not changed by the                            
legislation.                                                                   
                                                                               
Mr. Jeans observed that the Department would be given the                      
authority to prorate the school foundation formula if                          
insufficient funds are appropriated.  Districts are required                   
to maintain complete financial records and spend their money                   
for school purposes.  The Department is required to develop                    
regulations to implement the legislation.                                      
                                                                               
Mr. Cross observed that school districts would be required                     
to provide, at a public meeting for parents, information                       
which shows how the school is performing to standards and                      
how the district determines the standards are being met.  A                    
"School District Report Card to the Public" would be                           
included.  Beginning in January 15, 2001, the Department                       
would provide the governor and the legislature with a                          
performance report on each public school and designate the                     
schools.  Schools performing well would be accredited. By                      
August 2002, schools would be designated as distinguished,                     
successful, deficient or in crisis.  Those schools in crises                   
would be required to submit plans for improvement.  The                        
Department would be required to facilitate the improvement                     
process and provide technical support.  Existing staff or                      
qualified persons would be used.  If any school district                       
continues to be deficient or in crisis for a two year period                   
the school district would appear before the State Board of                     
Education and submit a report including steps to improve                       
quality in the school.                                                         
                                                                               
Mr. Cross noted that the legislation includes definitions of                   
a "school district" and a "charter school".                                    
                                                                               
Additional standards are given to the Department to develop                    
performance standards for reading, writing and mathematics.                    
An assessment system would be provided to all school                           
districts.                                                                     
                                                                               
Mr. Jeans reviewed section 13.  He noted that a reference to                   
employing a chief school administrator was added in section                    
13 and deleted in section 14.                                                  
                                                                               
Districts that both contract and operate their own pupil                       
transportation would be reimbursed.  The school district                       
portion would be reimbursed at 90 percent and the contractor                   
would be reimbursed at 100 percent.                                            
                                                                               
Mr. Jeans noted that the Department is required to apply the                   
same criteria in determining eligibility for reimbursement.                    
                                                                               
The legislation clarifies that districts may employ a chief                    
administrator.                                                                 
                                                                               
He noted that other sections made technical changes to                         
current statute to correspond to changes made by the                           
legislation.  "Funding" was changed from "foundation".                         
                                                                               
Section 31 amends AS 14.30.650.  It provides that the                          
Special Education Service Agency would receive a grant equal                   
to $15.75 times the number of students in the state in the                     
average daily membership of the proceeding year.  The change                   
is required because there will no longer be special                            
education categorical funding under the new foundation                         
program.                                                                       
                                                                               
Section 40 is transition language requiring the Department                     
to define the term "school" in regulation.  The Department                     
is required to submit district cost factors by January 15,                     
2001.  Centralized correspondence funding is set at 70                         
percent in the first year, 75 percent the second year and                      
then 80 percent the third year.  The minimum expenditure for                   
instruction would be set at 60 percent in the first year, 65                   
percent the second year and then 70 percent the third year.                    
The Special Education Services Agency is given a one-year                      
grace period in regards to data.                                               
                                                                               
Section 45 requires the Department to compare the use of                       
school funding and submit a report.                                            
                                                                               
Mr. Cross clarified that special education students would                      
not be identified for the purposes of state aid.  Special                      
education students would continue to be identified and                         
included in school plans.                                                      
                                                                               
Mr. Cross noted that the report mandated under section 45                      
would use a school size table developed by the McDowell                        
group.  He stressed that the report requirement would test                     
the method of funds distribution against an instructional                      
unit within two years to determine if a school based method                    
of calculation is more effective and equitable then a                          
community based means.  He explained that the Department                       
would promulgate emergency regulations to define a "school"                    
for purposes of the Act.  The school definition would be                       
consistently applied to all districts in the state of Alaska                   
to eliminate differences in school systems across the state.                   
The number of small schools allowed in larger communities                      
would be limited.                                                              
                                                                               
Co-Chair Therriault observed that the legislation would make                   
the employment of a chief administrator permissive.  State                     
statute would not mandate that a school administrator be                       
employed.  Representative Martin spoke in support of the                       
change.  He questioned if a chief school administrator would                   
be paid for within the student allocation.                                     
                                                                               
Mr. Cross explained that the amount of funding would not                       
changed based on the employment of a chief school                              
administrator.  He noted that the Aleutian Educational                         
Region Attendance Area does not employ a chief school                          
administrator.  They contract with Unalaska for                                
administrative services.  Under current law, school                            
districts must have a contract with a person who is licensed                   
as a superintendent in the State and is subject to                             
professional ethics requirement of the Professional Teaching                   
Practices Commission.  Even though the Aleutian East Borough                   
School District does not have a superintendent in their                        
employment, they do have a certificate administrator who is                    
responsible and accountable for the operation of the                           
district.  He thought that the legislation would allow a                       
district to employ someone that did not have credentials to                    
manage the district.  A chief school administrator would not                   
be subject to any licensure requirements of the state of                       
Alaska.  He stressed that the intent of the legislation                        
should be clarified.  He questioned if the intent is to                        
allow districts to hire anyone they want as a chief                            
administrator.                                                                 
                                                                               
In response to a question by Representative Martin, Mr.                        
Cross explained that the legislation applies an equal rate                     
of 20 percent to all districts for kids with                                   
exceptionalities.  Only children with continual medical                        
attention are accounted separately.  He did not think that                     
over identification of those students would be of concern.                     
                                                                               
Co-Chair Therriault noted that this was subject to abuse                       
under the old formula.  The flat multiplier was instituted                     
to prevent manipulation of these students to achieve a                         
funding advantage.  He observed that it is difficult to fake                   
the intensive need category.                                                   
                                                                               
Representative Davies referred to page 25, line 16.  He                        
noted that the Department would define "school" for                            
calculation of state aid.  Mr. Cross provided members with                     
the proposed regulation, 4AAC 09.007, defining "school" for                    
the purpose of calculating state aid (copy on file).  He                       
maintained that the definition would not be subject to abuse                   
and would evenly and consistent apply resources.  Schools of                   
less then 10 students would be counted with another school.                    
Communities with an ADM of 10 to 50 students would have one                    
school.  Communities with an ADM of 51 to 750 would have one                   
elementary school and 1 secondary school.  In communities                      
with an ADM greater than 750, each facility which is                           
administered as a separate school would be counted as 1                        
school.  Each alternative school with an ADM of less than                      
250 would be counted with the largest school in the                            
district.                                                                      
                                                                               
(Tape Change, HFC 98 - 163, Side 2)                                            
                                                                               
In response to a question by Representative Mulder, Mr.                        
Cross noted that schools must have property insurance that                     
includes fire insurance.                                                       
                                                                               
In response to a question by Co-Chair Therriault, Mr. Cross                    
noted that page 17, line 1 states that if a public school                      
continues to be deficient or in crisis for two years there                     
would be a public meeting with the Board of Education to                       
present a written report.                                                      
                                                                               
Representative Mulder referred to subsection (i) on page 17.                   
Mr. Cross stressed that the Department can show which                          
methods have proven effective for schools in crisis.                           
Districts would be encouraged to adopt strategies that have                    
been proven to work.  He observed that placing someone in                      
the school would not be successful if the school did not                       
want them present.  He explained that the Department would                     
bring proven expertise.                                                        
                                                                               
Representative Kelly referred to the student counting                          
periods.  Mr. Cross noted that the legislation uses the same                   
count period as the current formula, except that a spring                      
count is not used.  If good cause is shown, upon written                       
request, the commissioner can allow another 20-day count                       
period for special circumstances.                                              
                                                                               
In response to a question by Representative Kelly, Mr. Cross                   
expressed concern that over half of the school districts in                    
the State would not met transitional amount.  He emphasized                    
that goals should be attainable.  He observed that the                         
Department would work to improve information relating to how                   
schools spend their funds as recommended by the McDowell                       
study.  He estimated that the largest school districts would                   
meet the 70 percent level.                                                     
                                                                               
Representative Davies suggested that a reporting standard be                   
set.                                                                           
                                                                               
Mr. Jeans raised technical issues relating to the                              
legislation.  He referred to page 2, line 6.  He noted that                    
under current law, AS 14.17.021(d) allows the Department to                    
make adjustments to correct underpayments in the previous                      
fiscal year.  He recommended that a similar provision be                       
adopted.  He noted that the Department must distribute state                   
aid based on audited local revenues.                                           
                                                                               
Co-Chair Therriault pointed out that the provision was                         
already included in the proposed draft.                                        
                                                                               
Mr. Jeans referred to page 5, line 7.  He noted that the                       
base student allocation is premature.  He suggested that the                   
"the base student allocation and multiplying that product                      
by" be deleted.  This would allow an adjusted ADM for                          
correspondence students.                                                       
                                                                               
Representative Davies questioned if a charter school could                     
be a boarding school.  Mr. Jeans noted that AS 14.17.440                       
deals with the Mount Edgecumbe boarding school.  A charter                     
boarding school would not fall under this provision.                           
                                                                               
Mr. Jeans noted that page 8, line 13 states that the                           
Department shall establish a competitive grant process to                      
implement the quality school system.  He pointed out that                      
grants would not be competitive and recommended that                           
"competitive" be deleted.  Co-Chair Therriault noted that                      
the legislature would appropriate money for this purpose on                    
a yearly basis.  Mr. Jeans explained that entitlement would                    
be established that would be built into the budget.                            
Representative Davis noted that an upper limit is set.                         
There is no lower limit.  Mr. Cross explained that $16                         
dollars would be used as a multiplier.  If sufficient funds                    
are not appropriated the funding would be prorated.  The                       
amount could not exceed an adjusted ADM multiplied by $16                      
dollars.                                                                       
                                                                               
Representative Martin questioned if the floor would be                         
permanent regardless of student size.  Mr. Cross explained                     
that as school districts gain or loss students the amount of                   
funding that they would receive would depend on the new                        
formula.  District cost factors are not intended to be                         
permanent.  The Department would submit recommended changes                    
to the district cost factor every other year.  The                             
legislation also requires that the school size table be                        
compared to another method of allocation to determine if                       
there is a more equitable way of distribution.  He                             
emphasized that a school funding floor is an appropriate                       
means to use while an adjusted per student means of                            
distributing public school funding is developed.                               
                                                                               
Representative Martin expressed concern that children can be                   
counted more than once.  Co-Chair Therriault stated that if                    
a student moves the districts cost goes down.  The floor is                    
only a portion of the funding.                                                 
                                                                               
Mr. Cross noted that page 11, line 13 states that                              
"instructional component" includes expenditures for teachers                   
and for pupil support services.  He pointed out that                           
"teacher" is one classification of expenditure within the                      
function of instruction.  He suggested that the language be                    
amended to included instruction, special education                             
instruction and support services, and support services for                     
students and instruction and school administration.  He                        
explained that support services for students would included                    
boarding home programs, social workers, and guidance                           
services.  Library services, audiovisual and teacher in                        
service days would be included under instructional services.                   
District administration and operation and maintenance would                    
not be included.                                                               
                                                                               
Representative Martin questioned if there is a national                        
standard.  Mr. Cross was not aware of a national standard.                     
                                                                               
Co-Chair Therriault summarized that the definition would                       
differentiate between the operation of the school building                     
and the central office that administers the whole program.                     
                                                                               
Representative Davies questioned where janitorial services                     
would be listed.  Mr. Cross explained that they would be                       
under operation and maintenance.  Representative Davis noted                   
that some janitors bring supplies.  Mr. Jeans emphasized                       
that the Department needs a better means of setting a target                   
as recommended by the McDowell Study.  He stressed that                        
principles are an important part of instruction.                               
                                                                               
Representative Kelly recommended that a subcommittee should                    
define instructional component and establish results based                     
criteria.                                                                      
                                                                               
In response to a comment by Representative Davis, Mr. Cross                    
stressed that the McDowell report found that any formula                       
needs to be dynamic.  The report emphasized the need for                       
better data.                                                                   
                                                                               
Co-Chair Therriault questioned if two student counts should                    
be included.  Mr. Cross noted that the spring count would                      
generally be lower than the fall count.  He felt that the                      
fall count would be the most effective.  He did not                            
recommend two counts.                                                          
                                                                               
In response to a question by Representative Davies, Mr.                        
Cross noted that the two biggest districts heavily weight                      
the 70 percent average.  He did not think that averaging                       
would be effective where school district size varies as in                     
the state of Alaska.  He felt that 70 percent was a                            
misleading number.  The McDowell report stated that                            
administration was the area in which they had the least                        
confidence due to inconsistency in the data.                                   
                                                                               
Representative Grussendorf stressed that the legislation is                    
a starting point that will need to be revisited.  He                           
stressed that recommendations should come from the school                      
districts.                                                                     
                                                                               
Representative Davis asked if the Department is comfortable                    
with the definition of alternative school.                                     
                                                                               
(Tape Change, HFC 98 -164, Side 1)                                             
                                                                               
Mr. Cross stated that there were not many "tough calls" in                     
applying school districts to the definitions.  He emphasized                   
that there could be some flexibility in how alternative                        
schools are counted.  The Department is suggesting that                        
alternative schools be counted with the largest school in                      
the district.  He noted that the McDowell Group indicated                      
that the definition improves the quality and validity of the                   
study.                                                                         
                                                                               
Representative Grussendorf asked if there is any alternative                   
school over 250 students.  Mr. Cross noted that there are                      
alternative programs in Anchorage that are in excess of 250                    
students.                                                                      
                                                                               
Mr. Jeans provided members with an eight-page spreadsheet                      
demonstrating the effect of SB 36 on school districts (copy                    
on file).  He discussed the spreadsheet.  He noted that the                    
North Slope Borough would not receive the floor.                               
Municipalities must contribute the equivalent of a 4-mil tax                   
to qualify for the floor.  The North Slope Borough is at                       
approximately 2 mils.  The first page of the spreadsheet                       
showed the funding amount under SB 36, the existing state                      
aid, the difference between the current and proposed amount,                   
floor, net change and Quality education grant.  Additional                     
spreadsheets contained projected ADM, correspondence                           
students in and out of district, special education factors,                    
state support, required local support, federal impact aid,                     
mill rate and full determination, and instructional                            
expenditure amounts.                                                           
                                                                               
Co-Chair Therriault asked why Galena's local support was at                    
34.6 mills.  Mr. Jeans noted that some smaller communities                     
have low property wealth.  Hoonah receives timber receipts                     
that the city appropriates to the school in addition to                        
their cap for education.                                                       
                                                                               
Districts were compared to see how they fared with the local                   
cap on page 8.  Klawock and Nenana would have to contribute                    
additional money to meet the required local effort.  No                        
districts are over their maximum.                                              
                                                                               
Page eight contained the percentage spent on instruction                       
versus administration and potential reduction in state aid                     
if the percentage spent on the instructional unit is not                       
met.                                                                           
                                                                               
In response to a question by Representative Martin, Mr.                        
Jeans explained that timber receipts are reported as local                     
revenue.  Federal impact aid refers to federal dollars                         
deducted from the foundation program.                                          
                                                                               
In response to a question by Co-Chair Therriault, Mr. Jeans                    
explained that the required local effort is 45 percent of                      
basic need for the North Slope Borough, Valdez, Unalaska and                   
Skagway.  He noted that Unalaska has large fish processing                     
plants that increases their full value determination.                          
                                                                               
SB 36 was HELD in Committee for further consideration.                         
SENATE BILL NO. 11                                                             
                                                                               
"An Act relating to state aid for school construction                          
debt; and providing for an effective date."                                    
                                                                               
Co-Chair Therriault provided members with a proposed                           
committee substitute, work draft 0-LS015\D, 5/8/98 (copy on                    
file).                                                                         
                                                                               
MICHAEL MORGAN, FACILITIES SECTION, EDUCATION SUPPORT                          
SERVICES, DEPARTMENT OF EDUCATION stated that he worked with                   
Co-Chair Therriault's staff on the proposed committee                          
substitute.  Mr. Morgan reviewed changes incorporated by the                   
proposed committee substitute.  He noted that page 4, lines                    
2 and 3 were changed to assure that the last of the bonds                      
authorized in 1993 stay intact.  The bond election passed in                   
Fairbanks in 1996 would stay in place.  Subsection 8 on page                   
4 looks at retroactive reimbursement for projects in                           
districts, which passed bonds that were not funded.  He                        
explained that there was no money left under the formula to                    
reimburse some school districts for bonds that were passed.                    
                                                                               
Representative Mulder noted that Ketchikan, Anchorage, and                     
Sitka passed bonds with the stipulation of a 70/30 split                       
with the State.                                                                
                                                                               
Mr. Morgan noted that subsection 9 on page 4 offers 70                         
percent reimbursement for districts that have projects,                        
which bond in the future.                                                      
                                                                               
Page 5, lines 1 and 2 states that an amount due a                              
municipality for reimbursement may not be reduced by the                       
cost to the department to administer the reimbursement                         
program.                                                                       
                                                                               
Page 6, line 28 through page 7, line 1 was added at the                        
request of the Department.  This would allow the same types                    
of projects that are currently available under the grant                       
program in AS 14.11.008 to be offered.  Projects to improve                    
space and allow operating cost reductions would be covered.                    
                                                                               
Section 6, on page 7 provides a maximum authorization of                       
$357,143,000.  This is the total project cost.  The state                      
share would be 70 percent of this number.                                      
                                                                               
Co-Chair Therriault clarified that the municipality would                      
provide the bonding.  The state share would be paid through                    
debt reimbursement general funds.                                              
                                                                               
KAREN REHFELD, DIRECTOR, DIVISION OF ADMINISTRATIVE                            
SERVICES, DEPARTMENT OF EDUCATION noted that the fiscal note                   
includes the repeal of the off-set of the cigarette tax                        
distribution for the debt retirement program, of $2.4                          
million dollars in FY 99.                                                      
                                                                               
Representative Mulder MOVED to ADOPT the proposed committee                    
substitute work draft 0-LS015\D, 5/8/98.                                       
                                                                               
Representative Kohring MOVED to report HCS CSSB 11 (FIN) out                   
of Committee with the accompanying fiscal note.                                
                                                                               
HCS CSSB 11 (FIN) was REPORTED out of Committee with a "do                     
pass" recommendation and with a fiscal impact note by the                      
Department of Education.                                                       
SENATE BILL NO. 313                                                            
                                                                               
"An Act relating to sponsor certification of initiative                        
petitions; relating to sponsor identification during                           
petition circulation; relating to the voidability of an                        
initiated law; placing limitations on the compensation                         
that may be paid to sponsors of initiative petitions;                          
prohibiting payments to persons who sign or refrain                            
from signing initiative petitions; and repealing                               
procedures for filing a supplementary initiative                               
petition."                                                                     
                                                                               
Co-Chair Therriault provided members with a memorandum from                    
Richard Glover, dated May 8, 1998, regarding the                               
constitutionality of the legislation (copy on file).  He                       
observed that a Supreme Court decision ruled that payment                      
for signatures could not be prohibited.  The Court did not                     
specify if the amount could be limited.  There is a current                    
court case regarding the requirement that an identification                    
badge be worn.  The 10th circuit court ruled that this is                      
unconstitutional.  The Supreme Court will consider the case.                   
The state of Alaska has signed a brief in support of the                       
constitutionality of this provision.                                           
                                                                               
Representative Mulder MOVED to ADOPT Amendment 1 during the                    
previous meeting.  Amendment 1 would place a cap on the                        
payment for signatures.  Representative Davies OBJECTED.  He                   
spoke in support of a daily or hourly fee.  He felt that a                     
fee per signature would result in a more aggressive approach                   
by the collector.                                                              
                                                                               
Representative Grussendorf expressed concern that problems                     
could occur with an hourly rate.                                               
                                                                               
Representative Mulder spoke in support of the amendment.  He                   
stressed that a cap of a dollar per signature would slow the                   
collection of signatures.                                                      
                                                                               
Representative Davies questioned the State's interest in                       
slowing signatures.  He noted that the amendment would limit                   
the amount of money that can be paid.  The existing language                   
only limits the manner of payment.  He maintained that the                     
amendment would be closer to a constitutional challenge.                       
                                                                               
A roll call vote was taken on the motion.                                      
                                                                               
IN FAVOR: Davis, Kelly, Kohring, Martin, Mulder, Therriault                    
OPPOSED: Moses, Davies, Grussendorf                                            
                                                                               
Co-Chair Hanley and Representative Foster were absent from                     
the vote.                                                                      
                                                                               
The MOTION PASSED (6-3).                                                       
                                                                               
Representative Davies MOVED to ADOPT Amendment 2 (copy on                      
file).  Co-Chair Therriault OBJECTED for the purpose of                        
discussion.  Representative Davies explained that Amendment                    
2 would delete the requirement that the collector wear a                       
badge.  He noted that the Court ruled that the badge                           
deprives the collector of the protections of anonymous                         
speech.  He spoke in support of addressing the sponsorship                     
of the petition on the petition itself.                                        
                                                                               
Co-Chair Therriault clarified that "sponsor" refers to the                     
person carrying the petition.                                                  
                                                                               
Representative Grussendorf spoke in support of Amendment 2.                    
                                                                               
Representative Mulder disclosed that he has been requested                     
to work on an initiative petition.                                             
                                                                               
Representative Martin argued that the person gathering                         
signatures is not necessarily the sponsor.  Co-Chair                           
Therriault reiterated that the legislation indicates that                      
the sponsor is the person carrying the petition.                               
                                                                               
A roll call vote was taken on the motion.                                      
                                                                               
IN FAVOR: Moses, Davies, Grussendorf, Kelly                                    
OPPOSED: Kohring, Martin, Mulder, Davis, Therriault                            
                                                                               
Co-Chair Hanley and Representative Foster were absent from                     
the vote.                                                                      
                                                                               
The MOTION FAILED (4-5).                                                       
                                                                               
(Tape Change, HFC 98 - 164, Side 2)                                            
                                                                               
Representative Davies WITHDREW Amendment 3.  He MOVED to                       
ADOPT a conceptional amendment: "The name of the group                         
circulating the petition and the name of the group paying                      
for the petition, if different, shall both be prominently                      
displayed in bold, capital letters, on the bottom of each                      
signature page of the petition."                                               
                                                                               
Representative Mulder spoke against the amendment.                             
Representative Davies stressed that it would be the same                       
disclosure as occurs when a sign is posted.                                    
                                                                               
Representative Martin spoke against the amendment.  Co-Chair                   
Therriault questioned how the amendment would distinguish                      
between a group that is paying to work the petition through                    
the system and a group of citizens that are not being paid                     
to collect signatures.                                                         
                                                                               
Representative Davies stressed that the intent is to                           
identify the group that is behind the petition.  The group                     
can be identified through the Division of Elections or APOC.                   
                                                                               
Representative Grussendorf stated that he is opposed to paid                   
for petitions.  He spoke in support of the amendment.  He                      
expressed concern that any group could come to the state of                    
Alaska and pay for a petition.                                                 
                                                                               
Members questioned if the name of the group is already                         
listed on the top of the petition.                                             
                                                                               
A roll call vote was taken on the motion.                                      
                                                                               
IN FAVOR: Moses, Davies, Davis, Kelly, Grussendorf                             
OPPOSED: Martin, Mulder, Kohring, Therriault                                   
                                                                               
Co-Chair Hanley and Representative Foster were absent from                     
the vote.                                                                      
                                                                               
The MOTION PASSED (5-4).                                                       
                                                                               
Representative Davies referred to section 6.  He noted that                    
section 6 repeals AS 15.45.170 and 15.45.230.                                  
                                                                               
Co-Chair Therriault read:                                                      
                                                                               
AS 15.45.170: "Upon receipt of notice that the filing                          
of the petition was improper, the initiative committee                         
may amend and correct the petition by circulating and                          
filing a supplementary petition within 30 days of the                          
date that notice was given;"                                                   
And                                                                            
AS 15.45.230: "An initiative submitted to the voters                           
may not be held void because of the insufficiency of                           
the application or petitions by which the submission                           
was procured."                                                                 
                                                                               
Representative Davies MOVED to delete section 6.  He noted                     
that the amendment would maintain the status quo.                              
Representative Kelly OBJECTED.  He spoke in support of a                       
"drop dead" date.  A roll call vote was taken on the motion.                   
                                                                               
IN FAVOR: Davies, Grussendorf, Moses                                           
OPPOSED: Davis, Kelly, Kohring, Martin, Mulder, Therriault                     
                                                                               
Co-Chair Hanley and Representative Foster were absent from                     
the vote.                                                                      
                                                                               
The MOTION FAILED (3-6).                                                       
                                                                               
Representative Davies MOVED to delete AS 15.45.230.  Co-                       
Chair Therriault OBJECTED.  Representative Davies spoke in                     
support of the amendment.  He emphasized that if an                            
initiative is certified and goes on the ballot, then the                       
issue is decided.  A small insufficiency in the gathering                      
process would not be sufficient to null the election.  He                      
maintained that the statute would prevent frivolous                            
lawsuits.  A roll call vote was taken on the motion.                           
                                                                               
IN FAVOR: Davies, Grussendorf, Moses, Martin                                   
OPPOSED: Davis, Kelly, Kohring, Mulder, Therriault                             
                                                                               
Co-Chair Hanley and Representative Foster were absent from                     
the vote.                                                                      
                                                                               
The MOTION FAILED (4-5).                                                       
                                                                               
Representative Davis MOVED to report HCS CSSB 313 (FIN) out                    
of Committee with the accompanying fiscal note.  There being                   
NO OBJECTION, it was so ordered.                                               
                                                                               
HCS CSSB 313 (FIN) was REPORTED out of Committee with "no                      
recommendation" and with a zero fiscal note by the Office of                   
the Lieutenant Governor dated 3/19/98.                                         
SENATE BILL NO. 297                                                            
                                                                               
"An Act relating to breast-feeding."                                           
                                                                               
Representative Grussendorf spoke in support of the                             
legislation.  He observed that the legislation would prevent                   
legal sanctions for nursing children in public.                                
                                                                               
Co-Chair Therriault noted that there is a zero fiscal note                     
accompanying the legislation.                                                  
                                                                               
Representative Davies MOVED to report SB 297 out of                            
Committee with the accompanying fiscal note.  There being NO                   
OBJECTION, it was so ordered.                                                  
                                                                               
CSSB 297 (2d RLS) was REPORTED out of Committee with "no                       
recommendation" and with a fiscal impact note by the                           
Department of Labor, 4/2/98.                                                   
ADJOURNMENT                                                                    
                                                                               
The meeting adjourned at 11 p.m.                                               
House Finance Committee 16                                                     

Document Name Date/Time Subjects