Legislature(2001 - 2002)
05/06/2001 05:33 PM House FIN
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* first hearing in first committee of referral
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= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE FINANCE COMMITTEE
May 06, 2001
5:33 PM
TAPE HFC 01 - 118, Side A
CALL TO ORDER
Co-Chair Williams called the House Finance Committee meeting
to order at 5:33 PM.
MEMBERS PRESENT
Representative Eldon Mulder, Co-Chair
Representative Bill Williams, Co-Chair
Representative Con Bunde, Vice-Chair
Representative Eric Croft
Representative John Davies
Representative Carl Moses
Representative Richard Foster
Representative John Harris
Representative Bill Hudson
Representative Ken Lancaster
Representative Jim Whitaker
MEMBERS ABSENT
None
ALSO PRESENT
Eddy Jeans, Manger, School Finance and Facilities Section,
Department of Education and Early Development; Kurt Parkan,
Deputy Commissioner, Department of Transportation and Public
Facilities; Mike Tibbles, Staff, Representative Williams.
SUMMARY
CS SB 174(FIN)
An Act relating to education funding; and
providing for an effective date.
CS SB 174(FIN) was REPORTED out of Committee with
a "do pass" recommendation and with previously
published fiscal impact note (#1) by the
Department of Revenue.
CSSB 218(TRA) AM
An Act relating to international airports revenue
bonds and requiring that the spending plan for the
International Airports Construction Fund include
information about the amounts spent during the
previous fiscal year for cost overruns on certain
projects and the identification of time delays on
certain projects; relating to customer facility
charges to fund facilities in airports to be
constructed without using international airport
revenue bonds; and providing for an effective
date.
HCS SB 218 (TRA)am was REPORTED out of Committee
with a "do pass" recommendation and with a
previously published fiscal impact note (#2) by
the Department of Revenue.
CS FOR SENATE BILL NO. 174(FIN)
An Act relating to education funding; and providing for
an effective date.
EDDY JEANS, MANGER, SCHOOL FINANCE AND FACILITIES SECTION,
DEPARTMENT OF EDUCATION AND EARLY DEVELOPMENT provided
information on the legislation. He observed that there is an
$18,385.3 million dollar fiscal note from the Department of
Education and Early Development attached to the legislation.
He reviewed the legislation. The first section increases the
base student allocation from $3,940 to $4,010 thousand
dollars. This is a $70 dollar increase and generates $14
million dollars. The second section changes the required
local effort provision of the foundation formula statute. It
establishes the required local effort in FY 01 as the base
year. If the assessed value increases in a municipality,
only 50 percent of the increase is used in the calculation
assessing an additional 4-mil local effort in the subsequent
year. A new base would be reestablished each year.
Representative Croft questioned if the base year would be
1999. Mr. Jeans explained that the assessed value uses 1999,
which is what was used to calculate the required local
effort for FY01. There is a two-year lag time.
Representative Croft questioned the cost and who would
benefit. He summarized that the beneficiaries would be
municipalities with fast growing assessed values. Mr. Jeans
agreed. He noted that the FY02 impact would be $3.825
million dollars. The spreadsheet attached to the fiscal note
has a detailed analysis.
Mr. Jeans noted that section 3 amends statute dealing with
facilities, which constitute a school for school size
adjustments. The threshold was lowered from 750 to 424
students. This would impact two school districts: Petersburg
and Wrangell. Costs are projected at $560 thousand dollars.
The total cost of the legislation is approximately $18,385.3
million dollars.
In response to a question by Vice-Chair Bunde, Mr. Jeans
reviewed the spreadsheet attached to the department's fiscal
note. The first column shows basic need with a $70 dollar
student allocation increase. The second column shows the
impact on the supplemental funding floor. The Alaska Gateway
School District would receive and additional $7,832 thousand
dollars if there were no funding floor. The third column
shows the net increase in section one [column one minus
column 2]. The floor goes down if there is a supplemental
funding as the basic need goes up.
Mr. Jeans observed that Petersburg's state aid and basic
need would go up by $71,552 thousand dollars. There is not a
supplemental funding floor so they would receive the benefit
of the full increase. The required local effort for
Petersburg has increased by $41 thousand dollars, but under
section 2 they would only pay half. Because the threshold
was lowered in section 3, Petersburg would go through the
funding formula three times, as opposed to two, for an
additional $341,007 thousand dollars. Their total increase
would be $433,333 thousand dollars.
Representative Croft questioned what schools are below the
school size of 400. Mr. Jeans noted that the original
version of SB 174 had a threshold of 400. Hoover Bay in the
Lower Yukon School District would be picked up at a 400-
student threshold. Hopper Bay would have gone through the
formula once at the 400 student threshold. They currently go
through the formula twice. A 400-student threshold would
have lowered their funding.
Representative John Davies referred to section 2. He noted
that it is a benefit in the form of a reduced reduction. Mr.
Jeans explained that there is an increase cost to the state
because it is a reduction in the required local area, which
is deducted from basic need to calculate state aid.
Representative Davies observed that school districts do not
receive any additional funding. Mr. Jeans agreed and
explained that municipalities do not have to contribute as
much as they would without the provision. State aid replaces
the reduced local effort. There are some districts at the
top of the local contribution cap. The provision would
reduce the municipalities' ability to contribute more money.
If the funding were placed in the base the cap would go up.
School districts would have the benefit of increased school
aid and municipalities would have the opportunity to
contribute more money locally.
Co-Chair Mulder stated that the net affect is better than an
increase in the tax base, in terms of contribution. He added
that in Anchorage's case and increased tax cap would be more
than offset by the increased contribution. Mr. Jeans agreed
but pointed out that Anchorage is not at the cap. In areas
where the cap is reached the funding is shifted from local
to state funding without changing their position. There is
no new money. State aid is increased, while local
contribution is decreased.
Representative Croft provided members with Amendment 1(copy
on file).
Co-Chair Mulder provided members with Amendment 2:
It is the intent of the legislature that any increase
to the Foundation Formula will provide an opportunity
to move Alaskan schools towards standards-based
education. The Legislature intends that any increase in
funding will pay for costs associated with improving
student performance by developing standards-based
programs, including implementation of standards,
aligning student assessment to standards, adopting
instructional models based on basic skills, performance
tasks, and projects, and adopting a standards-based
reporting system.
Co-Chair Mulder explained that the amendment adds intent to
account for standards-based education from the allocation.
The Department of Education and Early Development would not
be required to provide an additional report.
Co-Chair Mulder MOVED to ADOPT Amendment 2. Representative
Croft OBJECTED. He argued that the increase would help with
the impacts of inflation. He did not think the intent should
apply to foundation formula increases.
Co-Chair Mulder disagreed and stressed that education needs
to be directed towards standards-based education. He stated
that his support is not directed toward inflationary
increases. His support is directed toward trying to improve
output and performance.
Representative John Davies disagreed with Co-Chair Mulder's
remarks. He observed that the calculations were based on
inflationary increases. He maintained that many members are
looking at increasing the base amount due to inflationary
costs. He spoke in support of intent language, which would
state that the Department of Education and Early Development
and school districts use their entire budget as best they
see fit to move towards standards-based education. He
summarized that every increased dollar would have to be
attached to some specific effort that was aimed at the
curriculum instead of hiring good teachers. He stressed that
an argument could be made that hiring good teachers adds in
delivering the goal, but it is not specific to the activity.
Co-Chair Mulder disagreed and maintained that performance
can be tied to better teachers. He stated that there is a
combination of factors: better teachers, utilization of new
techniques or more exams. He observed that studies show that
putting more money into education, for the sake of putting
more money in, does not correlate to improved output or
performance. He wanted to state that "we are putting new
money and we have expectations when we put the new money in
and that is that performance is going to improve."
Representative Whitaker pointed out that the amendment is
intent language and that school districts will spend funds
in the manner they feel is appropriate.
Co-Chair Mulder stated that he discussed the issue with
school boards and that no one opposed the language.
Representative Croft argued that although no one has a
problem in seeking to increase performance though the
addition, that school districts would take the intent
language seriously. He felt that school districts would
attempt to follow the intent and that the legislature would
hold them accountable. The intent language states that: "any
increase in funding will pay for costs associated with
improving student performance…" He observed that the intent
language specifies the means of achieving his end: "by
developing standards-based programs, including
implementation of standards, aligning student assessment to
standards, adopting instructional models based on basic
skills, performance tasks, and projects, and adopting a
standards-based reporting system." He observed that the
language does not include the hiring of new teachers.
Representative John Davies MOVED to AMEND Amendment 2 to
delete "any" and add "the":
It is the intent of the legislature that [any] increase
to the Foundation Formula will provide an opportunity
to move Alaskan schools towards standards-based
education. The Legislature intends that the [any]
increase in funding will pay for costs associated with
improving student performance by developing standards-
based programs, including implementation of standards,
aligning student assessment to standards, adopting
instructional models based on basic skills, performance
tasks, and projects, and adopting a standards-based
reporting system.
There being NO OBJECTION, the amendment to Amendment 2 was
adopted. There being NO OBJECTION, Amendment 2 was adopted.
Representative Whitaker felt that it would hard to argue
against the hiring of new teachers.
Representative Croft MOVED to ADOPT Amendment 1. He
explained that the amendment would delete sections 2 and 3
and increase the base amount. The base amount would increase
by $30 million dollars and $10 million dollars would be
added for quality school funding. The amendment would add a
total of $40 million dollars. He argued that the 50 percent
provision comes "out of no where and has ramifications that
I don't yet fully understand." He noted that SB 174 [with
the amendment] would put in about the same [amount of school
funding] as HB 105. He stressed that there are dramatic
differences in winners and losers. He provided members with
a spreadsheet demonstrating the effect of Amendment 1 and
pointed out that Petersburg and Wrangell are the main
beneficiaries of SB 174.
Co-Chair Mulder spoke against the amendment and observed
that the amendment would add an additional $20 million
dollars.
A roll call vote was taken on the motion.
IN FAVOR: Croft, Davies, Moses
OPPOSED: Bunde, Foster, Harris, Hudson, Lancaster,
Whitaker, Mulder, Williams
The MOTION FAILED (3-8).
Representative Croft MOVED to delete "425" and add "400" on
page 2, lines 16 and 22. Mr. Jeans explained that the 400
threshold adversely affect Hopper Bay. The Senate change was
made to protect Hopper Bay. Any school that serves between
10 and 100 students gets counted as one school. A community
with an ADM of 101 to 750 gets counted as two schools. He
explained that Petersburg and Wrangell have three schools
but they have been counted as if there are only two schools.
Hopper Bay has a single facility in rural Alaska serving 400
students. Since the language states that each facility that
is administered as a separate school shall be counted as one
school under the section, which would be changed to 400,
Hopper Bay would be reduced from two to one school.
Representative Croft WITHDREW his Amendment.
Representative John Davies asked the intent of the 50
percent provision. Mr. Jeans noted that the amendment was
added in the Senate Finance Committee. He did not know the
intent.
Representative Foster MOVED to report CS 174 (RLS) out of
Committee with the accompanying fiscal note. There being NO
OBJECTION, it was so ordered.
CS FOR SENATE BILL 218(TRA) AM
An Act relating to international airports revenue bonds
and requiring that the spending plan for the
International Airports Construction Fund include
information about the amounts spent during the previous
fiscal year for cost overruns on certain projects and
the identification of time delays on certain projects;
relating to customer facility charges to fund
facilities in airports to be constructed without using
international airport revenue bonds; and providing for
an effective date.
KURT PARKAN, DEPUTY COMMISSIONER, DEPARTMENT OF
TRANSPORTATION AND PUBLIC FACILITIES testified in support of
the legislation. He explained that the legislation
authorizes revenue bonds for financing capital improvement
projects at the international airport systems: Fairbanks and
Anchorage. The airlines requested a new method of financing
the annual capital improvement program at the airports. The
state of Alaska agreed and the legislation would debt
finance the annual capital improvements project (CIP) for
the two airports. He clarified that the annual CIP's have
been cash funded through the International Airport Revenue
Fund. The airlines have requested debt financing to allow
the cost to be paid overtime. Debt financing authorization
would be increased. There are two years of CIP included in
the bill. The airlines that use the system pay for projects.
Representative Foster MOVED to report CSSB 218 (TRA)am out
of Committee with the accompanying fiscal note. There being
NO OBJECTION, it was so ordered.
HCS SB 218 (TRA)am was REPORTED out of Committee with a "do
pass" recommendation and with a previously published fiscal
impact note (#2) by the Department of Revenue.
ADJOURNMENT
The meeting was adjourned at 6:20 p.m.
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