Legislature(2003 - 2004)
05/06/2003 03:02 PM House FIN
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE FINANCE COMMITTEE
May 06, 2003
3:02 P.M.
TAPE HFC 03 - 79, Side A
TAPE HFC 03 - 79, Side B
CALL TO ORDER
Vice-Chair Meyer called the House Finance Committee meeting
to order at 3:02 P.M.
MEMBERS PRESENT
Representative John Harris, Co-Chair
Representative Kevin Meyer, Vice-Chair
Representative Mike Chenault
Representative Eric Croft
Representative Richard Foster
Representative Mike Hawker
Representative Carl Moses
Representative Bill Stoltze
Representative Jim Whitaker
MEMBERS ABSENT
Representative Bill Williams, Co-Chair
Representative Reggie Joule
ALSO PRESENT
Representative Carl Gatto; Barbara Bitney, Staff,
Representative Bill Stoltze; Eddy Jeans, Manager, School
Finance and Facilities Section, Department of Education and
Early Development; Mary Francis, Executive Director, School
Administrators Association; Bruce Johnson, Executive
Director, Association of Alaska School Boards, Juneau
PRESENT VIA TELECONFERENCE
Sandy Gillespie, Alaska State Arts Council, Anchorage; Steve
Kalmes, Director of Transportation, Anchorage School
District, Anchorage
SUMMARY
HB 215 An Act repealing statutes that relate to art works
in public buildings and facilities and that
require a set percentage of construction costs to
be spent on art.
CS HB 215 (STA) was reported out of Committee with
a "do pass" recommendation and with zero fiscal
note #1 by Department of Transportation & Public
Facilities.
HB 259 An Act relating to public school transportation,
and to the minimum wages for school bus drivers;
and providing for an effective date.
HB 259 was HEARD and HELD in Committee for further
consideration.
HOUSE BILL NO. 215
An Act repealing statutes that relate to art works in
public buildings and facilities and that require a set
percentage of construction costs to be spent on art.
BARBAR BITNEY, STAFF, REPRESENTATIVE BILL STOLTZE, stated
that Alaska's "Percent for Art" program originated in 1975
with the requirement that a percent of State capital
expenditures for public buildings and facilities be set
aside to acquire works of art for display in those
facilities (Alaska Statute 35.27).
She noted that it was the sponsor's intent in introducing HB
215 to address the fiscal aspect of the program; the
original version repealed the percent for art program. The
committee substitute would provide 1% for art from the first
$10 million of the total construction costs and would then
reduces it to smaller percentage thereafter. Additionally,
the 1% would only apply to State funding sources such as the
general fund or the general obligation bonds.
Ms. Bitney continued, at this time, a mechanism for
maintenance does not exist. The bill would set aside 5% of
the percent for art, placing it into the Art in Public
Places Fund to insure works of art can be maintained in good
condition. The Alaska State Council on the Arts (ASCA)
would receive requests for maintenance, facilitate
coordination of the repairs, and maintain a database of all
artwork that is owned by the State.
Furthermore, annual reporting to ASCA would be required by
those agencies subject to the 1% for art. Required
reporting would provide:
· The amount of State funding for the project, the percent
set aside for art;
· The total cost of art, the title, artist, etc.
ASCA would have the information for monitoring works of art
and the annual amount allocated to the Percent for Art
Program through new construction. Annually, ASCA would
prepare a report to the Legislative Budget and Audit
Committee (LBA). The legislation strengthens the preference
for State artists.
Ms. Bitney noted that the House State Affairs Committee
removed the long-standing reduced percentage for rural
schools that allowed for a lesser percentage to compensate
for the significantly higher construction costs for rural
schools.
SANDY GILLESPIE, (TESTIFIED VIA TELECONFERENCE), ALASKA
STATE ARTS COUNCIL, ANCHORAGE, offered to answer questions
of the Committee. She noted that the Alaska State Arts
Council was supportive of the bill.
Representative Foster MOVED to report CS HB 215 (STA) out of
Committee with individual recommendations and with the
accompanying fiscal note. There being NO OBJECTION, it was
so ordered.
CS HB 215 (STA) was reported out of Committee with a "do
pass" recommendation and with a zero fiscal note #1 by the
Department of Transportation & Public Facilities.
HOUSE BILL NO. 259
An Act relating to public school transportation, and to
the minimum wages for school bus drivers; and providing
for an effective date.
REPRESENTATIVE CARL GATTO commented that the bill would
improve the existing method of funding pupil transportation
allowing each district to spend any savings in the
classrooms while limiting the "runaway costs" which have
been associated with pupil transportation.
He noted that appropriations under the bill would be
determined by dividing the FY03 pupil transportation
allocation by the FY03 enrollment. That would create a per
pupil transportation amount for each district. The per
pupil cost of transportation would then be set in statute
and used as a multiplier to the Average Daily Maintenance
(ADM), less correspondence, in future years to determine
transportation entitlement. The formula would guarantee an
amount of money specifically connected to the ADM count
already required for Foundation Formula Funding.
Representative Gatto stated that this method of reimbursing
school districts does two things:
· It allows for more realistic, appropriate and
predictable annual appropriations for each district;
and
· It would eliminate the "cost plus" reimbursements,
which have resulted in the 136% increase in the
program's expense since 1990. By connecting
transportation costs to enrollment and fixing the
State's appropriation to the FY03 level, it would
create an incentive for school districts to become
more efficient, allowing them to place any savings
associated with transportation contracts back into the
classroom.
Representative Stoltze asked if the legislation had the
support of the Administration. Representative Gatto
responded that he had been working with the Administration
for half of the session to address these concerns.
Representative Stoltze asked if the Administration was
"pushing" the bill. Representative Gatto reiterated that he
had been working with his staff person Cody Rice and Eddy
Jeans from the Department of Education & Early Development
on the legislation.
Representative Croft asked what would happen to districts
spending less than $1200 dollars. Representative Gatto
explained that the $1200 dollar number was a cut off. If
there was a difference, it would be "flattened out" and no
one would receive more than $1200 dollars.
Representative Croft maintained that districts would freeze
at their per pupil enrollment. He asked how to account for
the argument that some districts were being good and
efficient, even though they had a cost-plus system to keep
the costs as low as possible, by freezing inequities into
it. Representative Gatto agreed that there would be some
that would be more efficient than others. Most districts
are currently struggling to get the most they can from
student transportation, yet the State was very responsible
in indicating that they would have to account for the
contracts received. There has been no benefit to any
district doing that. Under the proposed formula, if savings
can be found, then the districts can keep them. Each
district would be responsible for working out the needs of
their community. Once they understand that any savings they
make will not disappear, they can better address their
community needs for student transportation.
Representative Croft asked why Representative Gatto had not
used the FY04 projection rather than the FY03 costs.
Representative Gatto referred that question to Mr. Jeans
from the Department. Representative Croft inquired which
districts were over the $1200 dollar mark.
Vice-Chair Meyer asked how the ADM formula would handle the
special need and handicap students. Representative Gatto
responded that in FY03, those students were counted and
received additional money from the State. If the State knew
that the Special Ed ration would remain the same, there
would be no problem. However, the State does not know if
that number will change. In FY03, it was fixed at a
specific ratio and they will continue to be handled
similarly until the adjustments are made.
Vice-Chair Meyer commented that Anchorage and/or Fairbanks
might be penalized if they had an increase of special needs
children. Representative Gatto responded that each student
would generate additional funds. The amount of money
generated includes a ratio of Special Ed and the non-Special
Ed students. If the ratio stays the same, the district
would receive the increase.
Vice-Chair Meyer pointed out that a handicapped student
would take more funds than a non-handicapped student.
Representative Gatto agreed, pointing out that in FY03 they
did. The number was frozen at that level.
Vice-Chair Meyer inquired if the Anchorage or Fairbanks
school districts had indicated their support for the
legislation. Representative Gatto noted that in
conversations with the Anchorage School District, the
director stated that the district would prefer to keep the
existing arrangement, however he understood that the
Governor would be changing the existing arrangement. The
Governor indicated that he wanted to reduce student
transportation by a specific amount. The other option would
be to keep the existing system with knowledge that there
will be cuts down the road and that would be a gamble and
next year, the program could be cut or restored. The House
subcommittee placed the funds back in but the Senate did
not.
Representative Hawker referenced the fiscal note that
indicates a one-time general fund expenditure in FY04 for
$10 million dollars. He asked if there would be financial
consequences of the legislation beyond FY04. Representative
Gatto referred that question to Mr. Jeans.
EDDY JEANS, MANAGER, SCHOOL FINANCE AND FACILITIES SECTION,
DEPARTMENT OF EDUCATION AND EARLY DEVELOPMENT, testified
that the legislation does propose a change from the current
program. At this time, the State defines in regulation what
are reimbursable expenses for the transportation program.
Since 1990, the pupil transportation costs have increased by
136%. It was $25 million in 1990 and the estimated FY04
budget is over $58 million dollars. The Department believes
that part of that is coming from the flaws within the system
itself and the definition of reimbursable expenses.
In the contracts, inflationary costs are built in for the
adjustments. Mr. Jeans noted that the Department has worked
closely with the school districts in trying to contain some
of the costs of the transportation program. He noted that
was what the Department had done with the four school
districts that overspent, which set the stage for some
competitiveness in that field. In the future, it is hoped
that any new providers in the State will help to keep costs
down.
Mr. Jeans noted that school districts could charge fees to
help keep the costs down, however, at this time, there is no
incentive to do that. He understood that the school
districts are trying to do a good job. The inherent flaw
with the system is that contractors know that the State will
reimburse them and any increases are passed on to the State
of Alaska.
Mr. Jeans spoke to the reimbursable costs. The State
currently reimburses for students that live beyond 1.5
miles. He suggested that school districts should look at
that and make changes to the policy. Those discussions
would be better left at the local level. School district
should also look at are the frequency of stops. There are
places that the school districts can look to for cost
reductions.
Mr. Jeans noted that the Administration has been working
closely with Representative Gatto in developing the
legislation. He noted that they had heard the testimony by
the Anchorage School District regarding the special needs
students. The Department has requested information
regarding that concern and that these concerns could be
addressed.
Mr. Jeans stated that the reason that the legislation is
tied to the ADM is because that information is verifiable as
provided by the school district. Every student in the State
has a unique identifier, which is verifiable data that can
be used for the grant program versus rider-ship. He noted
that rider-ship is self-recorded. The ADM system is
currently in place and provides the needed data.
The Department will be able to divide the special needs
component and the costs associated with that. By doing
that, it could address some of Anchorage's concerns,
however, that still would not provide for the 100% funding
requested.
Mr. Jeans described what happens under the current system if
a program is prorated. When prorated and the district
reduces services, then the local share is reduced by a less
percentage. The additional savings that they would be able
to incur are then distributed throughout the State. Through
the proposed grant program, if efficiencies are identified,
then that money stays in that district.
Representative Croft asked the number of intensive need
students statewide. Mr. Jeans replied that are about 1700
intensive need students. In 1999, there were approximately
1400.
Representative Croft inquired if those were the same
students defined in federal law. Mr. Jeans replied that
these are the severely multi-handicapped students that are
typically transported with a Special Ed bus that has a wheel
chair lift and an aid on the bus. They are the extremely
high cost students. That does not include the slightly
special need students. Those students are included in the
20% block funding.
Representative Croft asked how much more expensive are those
students to transport. Mr. Jeans did not know the amount.
It would depend on the configuration of the Special Ed
route. The only way to address the Anchorage concern would
be to take all the Special Ed routes and use the intensive
count as the factor for determining the student allocation.
Representative Croft asked if the costs were segregated.
Mr. Jeans advised that he was in the process of collecting
that information from Anchorage.
Vice-Chair Meyer asked if the Department would be willing to
adjust the fiscal note once they receive that information
from Anchorage. Mr. Jeans replied that the fiscal note
would remain at the $53 million dollars and instead the
Department would modify the grant program. The Special Ed
costs would be split from the regular costs. There would
then be two numbers for each district, special needs and
regular routes.
Mr. Jeans noted that there were five districts that exceeded
the $1200 dollar amount. They are as follows:
* Alaska Gateway - $1464
* Bristol Bay - $1322
* Copper River - $1300
* Delta Greely - $1351
* Southeast Island - $1234
Representative Hawker asked about the fiscal note indication
of a one time $10 million increment for FY04. He asked if
it would have a zero fiscal effect in FY05. Mr. Jeans
explained that the $10.7 million dollar increase is a one-
time increase to implement the program over the Governor's
current year budget. There will be adjustments in the
Department's budget in the out-years based on changes in the
student population.
Representative Hawker asked if it would be build into the
FY05 budget. Mr. Jeans replied that was correct.
Representative Hawker questioned if the Department would add
in any changes to the ADM factors. Mr. Jeans agreed.
Representative Hawker thought that indicating a zero fiscal
note for FY05-FY09 was inappropriate, as the bill would be
providing a permanent and consistent $10 million dollar
increase in funding for that program.
Mr. Jeans explained that under the current reimbursable
program, the districts have indicated that the projected
entitlement will be $59 million dollars in FY04. In the
Governor's budget, there is $43 million dollars allocated.
The fiscal note reflects the $10 million dollar increase in
order to implement the program in year one. The Department
assumed that they would come forward with a request to fund
a new program at the appropriate level in the FY05 budget
process.
Representative Hawker asked if a new program was anticipated
in FY05 and if the bill would sunset after FY04. Mr. Jeans
stated that he did not mean to imply a new program but
rather, this program. If the legislation is passed, then
the increase change over FY04 would be either an increase or
decrease based on a change in student population.
Representative Hawker thought that it would be more
appropriate to show a $10 million dollar increase across the
board with a note indicating it would be subject to changes
made in the ADM. Mr. Jeans clarified that under the current
program, the school districts entitlement would be $59
million dollars and that is not being reflected in the
Governor's budget. He recommended a funding level of $43
million dollars.
In response to a query by Representative Hawker, Mr. Jeans
said that the entitlement estimated by the school districts
is $59 million dollars. The level of funding is dependant
upon what the Governor puts forward and what the Legislature
appropriates.
Representative Hawker thought that the fiscal effect would
be more appropriately indicated as indeterminate. Mr. Jeans
stated that the fiscal note could be amended to reflect
that.
Co-Chair Harris noted that $10.7 million was set out and
referred to in the fiscal note for FY 04. He stated that in
the House Finance budget, $11 million dollars had been
allocated above the Governor's recommendation. Mr. Jeans
corrected that the amount that the House funded was the
$53.9 million dollars. The per pupil number will be
determined at the end of school year 2003, based on actual
expenses. The Department did use the $53 million dollar
number in the analysis to prepare for the fiscal note.
Co-Chair Harris asked if the numbers for FY 05-09 would use
the same amount, multiplied by per pupil. He inquired if
there was a way to adjust the per pupil number if the costs
increased. Mr. Jeans stated that the Legislature would have
to adjust that number through statute.
Co-Chair Harris observed that there are no provisions that
would deal with select areas statewide. Those areas have
more difficult transportation needs and challenging roadway
terrain. Mr. Jeans replied that there would not be in this
proposal. The Department already takes into consideration
those types of situations. The bill does not address that.
Representative Whitaker referenced the note and asked if the
Administration intended to fund this program only one time.
Mr. Jeans advised that the intention with the fiscal note
was to show that with the program, the estimated dollar
amount in FY 04 would be at $53.9 million dollar level.
During the out-years, the Department would ask for funding
based upon the change in the student population.
TAPE HFC 03 - 79, Side B
MARY FRANCIS, EXECUTIVE DIRECTOR, SCHOOL ADMINISTRATORS
ASSOCIATION, testified that the school districts would
prefer full funding for pupil transportation. Every dollar
that is short funded in student transportation is a dollar
that will have to be absorbed by the districts. That would
mean a cut to another part of their program. If the
alternative is the grant program versus a 20% reduction on
FY03 dollars, the districts would prefer the grant program.
Representative Hawker asked if the "alternative" would
become a permanent entitlement. Ms. Francis understood that
was true. Representative Hawker wondered if there was a
commitment to some long-term stream of incremental costs
that now are subject to appropriation.
STEVE KALMES, (TESTIFIED VIA TELECONFERENCE), DIRECTOR OF
TRANSPORTATION, ANCHORAGE SCHOOL DISTRICT, ANCHORAGE,
addressed the reason that there are increased costs in pupil
transportation. There has been increased requirements and
increased enrollment. The district runs safer buses than
they did ten years ago. These buses are larger and require
more fuel. Because a commercial drivers license has been
added to the requirement, there must be background checks on
the employees, drug and alcohol tests, increased staff and
bus driver trainings, and special education attendants to
meet the needs for students with disabilities. Wages have
also increased, as has the cost of fuel, parts, and
supplies. Costs increase.
Mr. Kalmes continued, the district saves money through
better route strategies, control start times and developing
a three tier routing schedule. The only savings that could
be found are reductions in service. Today, the district
runs 44 fewer buses than it did in 1984.
Mr. Kalmes listed some concerns with HB 259. Because of
increased costs, the districts will have to cut as many as
10-15 routes before breaking even. Additionally, there is
the Special Education issue. He noted that 37% of the
routes transport 5% of the population. He acknowledged that
they are concerned with the impact to the 95% of students.
Costs continue to increase and also there are contracts in
affect until 2006, which were negotiated in good faith. He
predicted that budget shortfalls would translate to
reductions in service. Mr. Kalmes urged consideration of
the FY04 base rather than FY03.
The issue is complex. School buses are the safest form of
student transportation. When funds for transportation are
reduced and the districts have to fund programs out of
existing dollars, routes will be cut. He spoke to
increasing the distance students would have to walk. In the
case of the Anchorage areas, students would be required to
cross major thoroughfares and walk along major arterials.
Mr. Kalmes offered to answer questions of the Committee.
Vice-Chair Meyer inquired if 5% of the special needs
students made up 75% of the costs. Mr. Kalmes responded
that 37% of the buses are used on handicap routes and those
buses transport 5% of the children. There is a requirement
to provide service for handicapped children.
Representative Croft asked if it amounted to 63% of the
expense for 5% of the students. Mr. Kalmes replied that 37%
of the busses are used for the handicapped population, which
amounts to 45% of the cost.
Vice-Chair Meyer requested a faxed copy of the costs.
Representative Hawker asked if the Anchorage School District
supported the bill. Mr. Kalmes responded that the Board had
not taken an official position on the bill. He noted that
the district would not like to see money taken from this
component and would prefer to receive continued full funding
for student transportation.
Representative Hawker asked if the bill implies a continued
entitlement grant program. Mr. Kalmes understood that there
would be additional dollars for additional students,
however, the fiscal note indication of zero in the out-years
causes concern.
BRUCE JOHNSON, EXECUTIVE DIRECTOR, ASSOCIATION OF ALASKA
SCHOOL BOARDS, JUNEAU, acknowledged the work done by
Representative Gatto. He recognized that this would be a
major policy shift in how student transportation is going to
be funded. There are at least four major issues, two of
which have to do with the opportunities in creating major
efficiencies. He pointed out that if your district falls
within one of those five that are now capped, they will take
a huge cut before they are able to talk about any saving for
further purposes.
The Association's is trying to determine if there can be a
beneficial fix. Parents of multiple handicapped children
tend to gravitate to the larger communities because of the
types of service that their children require. He encouraged
that door be "kept open" in determining a manageable
solution with the available dollars.
Vice-Chair Meyer stated that HB 259 would be HELD in
Committee for further consideration.
ADJOURNMENT
The meeting was adjourned at 4:06 P.M.
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