Legislature(1995 - 1996)

05/02/1996 08:40 AM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
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                     HOUSE FINANCE COMMITTEE                                   
                           May 2, 1996                                         
                            8:40 A.M.                                          
                                                                               
  TAPE HFC 96-155, Side 1, #000 - end.                                         
  TAPE HFC 96-155, Side 2, #000 - 117.                                         
                                                                               
  CALL TO ORDER                                                                
                                                                               
  Co-Chair  Mark  Hanley called  the  House Finance  Committee                 
  meeting to order at 8:40 a.m.                                                
                                                                               
  PRESENT                                                                      
                                                                               
  Co-Chair Hanley               Representative Martin                          
  Co-Chair Foster               Representative Mulder                          
  Representative Brown          Representative Navarre                         
  Representative Grussendorf    Representative Parnell                         
  Representative Kelly          Representative Therriault                      
  Representative Kohring                                                       
                                                                               
  ALSO PRESENT                                                                 
                                                                               
  Eddy  Jeans,  Division  of  School  Finance,  Department  of                 
  Education; Tom Boutin,  Division of Forestry, Department  of                 
  Natural Resources; Willie Anderson, NEA-Alaska; John  Walsh,                 
  Staff,  Representative Foster;  Wanda  Cooksey, Single  Site                 
  School Districts.                                                            
                                                                               
                                                                               
  SUMMARY                                                                      
  SB 98     An  Act  making  changes  related  to the  aid  to                 
            families  with  dependent  children  program,  the                 
            Medicaid  program,  the general  relief assistance                 
            program, and the  adult public assistance program;                 
            directing  the  Department  of  Health and  Social                 
            Services  to apply  to the federal  government for                 
            waivers to implement  the changes where necessary;                 
            relating   to   eligibility  for   permanent  fund                 
            dividends of certain individuals who receive state                 
            assistance, to notice  requirements applicable  to                 
            the  dividend  program;   and  providing  for   an                 
            effective date.                                                    
                                                                               
            SB 98 was rescheduled to another time.                             
  SB 180    An  Act   authorizing  the  commissioner   of  the                 
            Department of Natural  Resources to negotiate  and                 
                                                                               
                                1                                              
                                                                               
                                                                               
            enter into  timber sale contracts that provide for                 
            local   manufacture   of  high   value-added  wood                 
            products;  and  establishing   an  Alaska   Forest                 
            Products Research and Marketing Program within the                 
            Department of Commerce and Economic Development.                   
                                                                               
            HCS CSSB 180  (FIN) was reported out  of Committee                 
            with a "do pass" recommendation; and with a fiscal                 
            impact   note  by   the   Department  of   Natural                 
            Resources, 4/26/96; and with a zero fiscal note by                 
            the University of Alaska, 4/22/96; and with a zero                 
            fiscal  note by  the Department  of Community  and                 
            Regional Affairs, 4/23/96.                                         
                                                                               
  SB 244    An  Act  relating  to  state  foundation  aid  and                 
            supplementary   state   aid  for   education;  and                 
            providing for an effective date."                                  
                                                                               
            HCS CSSB 244  (FIN) was reported out  of Committee                 
            with a "do pass" recommendation  and with a fiscal                 
            impact note by the Department  of Education, dated                 
            4/11/96.                                                           
  SB 289    An  Act  relating  to  runaway  minors  and  their                 
            families or legal custodians.                                      
                                                                               
            SB 289 was rescheduled to another time.                            
  SCR 23    Relating to long range financial planning.                         
                                                                               
            SCR 23 was rescheduled to another time.                            
  SENATE BILL NO. 244                                                          
                                                                               
       "An  Act  relating  to  state foundation  aid  and                      
       supplementary   state   aid  for   education;  and                      
       providing for an effective date."                                       
                                                                               
  EDDY  JEANS,  DIVISION  OF  SCHOOL  FINANCE,  DEPARTMENT  OF                 
  EDUCATION testified in support of SB 244.  He noted that the                 
  legislation   would  make  an  adjustment  to  the  regional                 
  educational   attendance   area  (REAA)   school  districts'                 
  instructional unit value  to allow  the state  of Alaska  to                 
  meet the new  federal disparity  standard which has  dropped                 
  from 25 to  20 percent.   The legislation has a  retroactive                 
  clause which  would make the  bill effective in FY  96.  The                 
  legislation also contains  a hold harmless provision  for FY                 
  96.  The fiscal  note is for $311.7 in FY 96 and $20.2 in FY                 
  97.                                                                          
                                                                               
  In  response  to a  question  by Representative  Martin, Mr.                 
  Jeans explained  that variances between school  districts is                 
                                                                               
                                2                                              
                                                                               
                                                                               
  based  on  the amount  of  impact aid  each  school district                 
  receives along with their number of instructional units.  He                 
  added  that  all  but  two school  districts  apply  for and                 
  receive federal impact aid funds.  These funds are  measured                 
  for all districts when determining state aid.  In Anchorage,                 
  Fairbanks and  Kodiak the state  of Alaska is  the applicant                 
  for students  that reside  on a  military base.   Funds  are                 
  allocated within 45 days of receipt.                                         
                                                                               
  Representative Martin referred to deferred maintenance.  Mr.                 
  Jeans  noted that  the  foundation program  provides funding                 
  that all school  districts should be using  for preventative                 
  maintenance.  Once funds go to the school districts they are                 
  discretionary funds allocated by the school board.                           
                                                                               
  Co-Chair Hanley noted that the  Department of Education does                 
  not determine which schools have to be funded in a district.                 
   He  asked  if  the  federal   formula  takes  into  account                 
  maintenance in school  districts on  buildings owned by  the                 
  military.  Mr. Jeans explained that  impact aid funds are in                 
  lieu of  local  taxes.   He maintained  that the  foundation                 
  formula should  provide sufficient  revenue to cover  annual                 
  maintenance.   He observed that the rate of reimbursement is                 
  established by one  half of  the statewide expenditures  per                 
  pupil.                                                                       
                                                                               
  Co-Chair Hanley provided  members with Amendment 1  (copy on                 
  file).  He  noted that  the legislation was  amended in  the                 
  Senate  to pay  100 percent  of Anchorage's  actual cost  in                 
  pupil transportation.  Some of  Anchorage's buses are driven                 
  by employees and some are on contract.  Currently, Anchorage                 
  is reimbursed at 67 percent of their actual operations.  The                 
  Senate amendment would result in a $2 - $2.5 million dollars                 
  addition  pupil transportion reimbursment for Anchorage.  If                 
  the  additional amount is not funded  by the Legislature the                 
  cost would be  reallocated within all the  school districts.                 
  An  amendment was offered in  the House Health Education and                 
  Social Services  Committee to reimburse school  districts at                 
  the  contract  level.    This   amendment  would  have  cost                 
  approximately $200.0 thousand  dollars.   He noted that  the                 
  intent of the  legislation is  to take care  of a  disparity                 
  problem and  a potential  loss of  $40.0 million  dollars in                 
  federal funds.   He stressed  that a  reevaluation of  pupil                 
  transportion costs would be appropriate during deliberations                 
  to rewrite the entire foundation  formula. He explained that                 
  Amendment 1 would require that the Department to review both                 
  employee and contract transportation costs.                                  
                                                                               
  Representative Mulder noted that Amendment 1 would allow the                 
  Senate title to accompany the  legislation.  Co-Chair Hanley                 
  emphasized  that  there would  not  be  a dollar  impact  or                 
  reallocation effect on the budget.                                           
                                                                               
                                3                                              
                                                                               
                                                                               
  Mr. Jeans summarized  that the  amendment would require  the                 
  Department to review the agreement with the Anchorage School                 
  District.                                                                    
                                                                               
  Representative Mulder  MOVED to  adopt Amendment  1.   There                 
  being NO OBJECTION, it was so ordered.                                       
                                                                               
  Representative   Mulder  MOVED  to   return  to   the  title                 
  transmitted by the  Senate with  CSSB 244 (FIN)  am.   There                 
  being NO OBJECTION, it was so ordered.                                       
                                                                               
  In  response  to a  question  by Representative  Martin, Mr.                 
  Jeans explained that  the impact  aid money appropriated  to                 
  school districts is measured against the instructional unit.                 
  He explained that  the amount  of money that  municipalities                 
  contribute over and above 4 mils is the source of disparity.                 
                                                                               
                                                                               
  Representative Martin asked  if it  is mandatory that  local                 
  school districts  use impact  aid money  that they  receive.                 
  Mr. Jeans stressed  that the  funds are being  spent in  the                 
  schools.  He  noted that  10 percent  of of  the impact  aid                 
  funding is not deducted in the  foundation formula.  This 10                 
  percent is counted  toward the local  contribution.  It  may                 
  also be used in school district's excess contribution.                       
                                                                               
  WANDA COOKSEY, SINGLE SITE SCHOOL  DISTRICT CONSORTIUM spoke                 
  in  support  of  HB  244.    She  noted  that  the  original                 
  legislation called for a permanent  fix for the single  site                 
  school  district  formula.   She  stressed that  single site                 
  school districts would like a permanent fix.  She asked that                 
  Sections 3 and 4 of SB 244 be reinstated.                                    
                                                                               
  In response  to a question  by Co-Chair  Hanley Ms.  Cooksey                 
  confirmed that funding  for single site school  districts is                 
  contained  in  the  school foundation  formula.    Mr. Jeans                 
  explained  that   the  allocation  to  single   site  school                 
  districts has been based on the formula that the single site                 
  consortium is promoting.  The amount  is based on the actual                 
  student counts in  K - 12.   The amendment  that the  single                 
  site consortium  is promoting  would put  this formula  into                 
  statute.  He noted that a  study in 1988 or 1989  determined                 
  that single  site school  districts were  not provided  with                 
  sufficient  funding.    A  table  was developed  to  provide                 
  additional funding.  This  table has been used for  a number                 
  of years to  determine single site  funding, but it has  not                 
  been adopted and placed into statute.                                        
                                                                               
  Representative Martin questioned if single site pupils would                 
  receive the  same allocation  as a  student in  Fairbanks or                 
  Anchorage.    Mr. Jeans  explained  that they  would receive                 
                                                                               
                                4                                              
                                                                               
                                                                               
  additional  instructional  units.     Representative  Martin                 
  questioned if the administrative cost  is greater for single                 
  site  school districts.   Mr. Jeans  noted that  funding was                 
  reduced from  single site school districts.   When the issue                 
  was revisited a couple of years later it was determined that                 
  the  adjustment  was  excessive.    He maintained  that  the                 
  legislation would correct the over-adjustment.                               
                                                                               
  Representative Martin emphasized the savings in economies of                 
  scale.  He  noted that there  are 17 districts in  Southeast                 
  Alaska.  He maintained that  the legislation would guarantee                 
  more money  to  single site  school  districts.   Mr.  Jeans                 
  pointed   out  that  the  legislature  already  makes  these                 
  appropriations through  additional  district  support.    He                 
  emphasized  that  the  amendment to  add  the  adjustment to                 
  statute  would  eliminate the  need  for single  site school                 
  districts to lobby for the money on an annual basis.                         
                                                                               
  Co-Chair  Foster MOVED to adopt  Amendment 2 (copy on file).                 
  Ms. Cooksey explained that  the value of the unit  would not                 
  change.  The  amount of units would be increased.  She spoke                 
  in support of Amendment 2.   She emphasized that the formula                 
  does not generate an adequate amount of funding.                             
                                                                               
  Mr. Jeans explained that  there would be an  additional cost                 
  of  approximately $3.0  million  dollars.   Co-Chair  Hanley                 
  spoke  against  the  amendment.     He  stressed  that  some                 
  communities have decided not to join school districts.                       
                                                                               
  Representative  Navarre noted that  Craig and  Klawock share                 
  services between  school districts.  He spoke  in support of                 
  additional  funding for  single  site school  districts, but                 
  pointed out that there are  other inequities in the formula.                 
  He noted that Kenai receives the same area cost differential                 
  as  Anchorage, despite  the  fact that  some schools  in the                 
  Kenai School  District  must have  supplies  flown in.    He                 
  stressed that area cost differentials  need to be addressed.                 
                                                                               
                                                                               
  A roll call vote was taken on the  MOTION to adopt Amendment                 
  2.                                                                           
                                                                               
  IN FAVOR: Grussendorf, Kelly, Kohring, Foster                                
  OPPOSED:  Martin,  Mulder,  Navarre,   Parnell,  Therriault,                 
  Hanley                                                                       
                                                                               
  Representative Brown was absent from the vote.                               
                                                                               
  The MOTION FAILED (4-6).                                                     
                                                                               
  WILLIE ANDERSON, NEA-ALASKA spoke in support  of SB 244.  He                 
  expressed concern with Section  5.  He noted that  Section 5                 
                                                                               
                                5                                              
                                                                               
                                                                               
  would place a sunset  on the foundation funding system.   He                 
  noted that there has been discussion regarding the disparity                 
  in  single  site districts  for  more  than six  years.   He                 
  cautioned that  there could be uncertainty and  chaos if the                 
  rewrite does not  occur before  the sunset.   He noted  that                 
  there  have been  attempts  to rewrite  the  formula in  the                 
  Senate for the past three years.  He urged that Section 5 be                 
  deleted.   He  expressed  support  for the  rewrite  of  the                 
  formula.                                                                     
                                                                               
  Representative  Martin questioned  if  the sunset  should be                 
  changed to 1998.   Mr.  Anderson stated that  1998 would  be                 
  better than 1997.  He emphasized that a sunset is not needed                 
  if there is a commitment to rewrite the formula.                             
                                                                               
  Representative  Martin  noted   that  the  sunset   provides                 
  pressure to rewrite the formula.   He MOVED to delete "1997"                 
  and insert "1998".                                                           
                                                                               
  Representative Navarre  spoke in  support of  a sunset.   He                 
  emphasized that the sunset will provide a  catalyst to focus                 
  on  amending   the  formula.    He  pointed   out  that  the                 
  Legislature can change the sunset next year.                                 
                                                                               
  A roll call vote  was taken on the MOTION to  adopt a sunset                 
  date of 1998.                                                                
                                                                               
  IN FAVOR: Kohring, Martin, Foster                                            
  OPPOSED:  Mulder, Navarre, Parnell, Therriault, Grussendorf,                 
  Kelly,         Hanley                                                        
                                                                               
  Representative Brown was absent from the vote.                               
                                                                               
  The MOTION FAILED (3-7).                                                     
                                                                               
  Representative Martin MOVED to report HCSSB 244 (FIN) out of                 
  Committee  with  individual  recommendations  and  with  the                 
  accompanying fiscal note.  There  being NO OBJECTION, it was                 
  so ordered.                                                                  
                                                                               
  HCS CSSB 244 (FIN) was reported out of Committee with  a "do                 
  pass" recommendation  and with a  fiscal impact note  by the                 
  Department of Education, dated 4/11/96.                                      
  SENATE BILL NO. 180                                                          
                                                                               
       "An Act authorizing the  commissioner of the Department                 
       of Natural Resources to negotiate and enter into timber                 
       sale contracts that  provide for  local manufacture  of                 
       high  value-added wood  products;  and establishing  an                 
       Alaska Forest  Products Research and  Marketing Program                 
       within  the   Department  of   Commerce  and   Economic                 
                                                                               
                                6                                              
                                                                               
                                                                               
       Development."                                                           
                                                                               
  TOM BOUTIN,  DIRECTOR, DIVISION  OF FORESTRY,  DEPARTMENT OF                 
  NATURAL RESOURCES spoke in support of SB 180.  He noted that                 
  the Committee has reviewed the House version, HB 344.                        
                                                                               
  (Tape Change, HFC 96-155, Side 2)                                            
                                                                               
  Mr.  Boutin explained that  the Administration  supports the                 
  deletion of amendments made in the Senate Finance Committee.                 
  He  provided  members  with  Amendment  1  (copy  on  file).                 
  Amendment  1  would deleted  the  amendments adopted  by the                 
  Senate  Finance  Committee.   He  explained  that  the prior                 
  versions limited  regional contracts  to 3  per  year.   The                 
  Senate Finance Committee changed the limit to two.  He noted                 
  that the Administration supports  3 contracts per year.   He                 
  added that  Amendment 1  would reinstate  language requiring                 
  that the "area of  the sale must be designated  for forestry                 
  purposes by a  valid, existing  area plan."   He noted  that                 
  Kenai and parts of Southeast Alaska  do not have area plans.                 
  The amendment  would also  add, "the  existence of  adequate                 
  protection measures to ensure the sustainability of fish and                 
  wildlife  habitat and populations  and continuation of other                 
  uses of the area subject to the negotiated sale."                            
                                                                               
  Representative  Kelly  MOVED to  adopt  Amendment 1.   There                 
  being NO OBJECTION, it was so ordered.                                       
                                                                               
  Representative  Kelly  MOVED  to  report  CSSB  180  out  of                 
  Committee  with  individual  recommendations  and  with  the                 
  accompanying fiscal notes.                                                   
                                                                               
  HCS CSSB 180 (FIN) was reported  out of Committee with a "do                 
  pass" recommendation; and with  a fiscal impact note  by the                 
  Department of Natural  Resources, 4/26/96;  and with a  zero                 
  fiscal note by the University of Alaska, 4/22/96; and with a                 
  zero fiscal note by the Department of Community and Regional                 
  Affairs, 4/23/96.                                                            
  ADJOURNMENT                                                                  
                                                                               
  The meeting adjourned at 9:30 a.m.                                           
                                                                               
                                                                               
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