Legislature(2021 - 2022)ADAMS 519
04/19/2021 01:30 PM FINANCE
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HOUSE FINANCE COMMITTEE April 19, 2021 1:35 p.m. 1:35:38 PM CALL TO ORDER Co-Chair Foster called the House Finance Committee meeting to order at 1:35 p.m. MEMBERS PRESENT Representative Neal Foster, Co-Chair Representative Kelly Merrick, Co-Chair Representative Dan Ortiz, Vice-Chair Representative Ben Carpenter Representative Bryce Edgmon Representative DeLena Johnson Representative Andy Josephson Representative Bart LeBon Representative Sara Rasmussen Representative Steve Thompson Representative Adam Wool MEMBERS ABSENT None ALSO PRESENT Tim Lamkin, Staff, Senator Gary Stevens; Kris Curtis, Legislative Auditor, Alaska Division of Legislative Audit. PRESENT VIA TELECONFERENCE Corey Aist, Teacher, Anchorage Education Association, Anchorage; Jane Gray, Self, Anchorage; Don Gray, Former Member of Alaska Board of Education, Fairbanks; Tim Doran, President, Fairbanks School Board, Fairbanks; Patrick Pillai, Executive Director, Special Education Service Agency; Heidi Teshner, Director, Finance and Support Services, Department of Education and Early Development. SUMMARY HB 169 APPROP: EDUCATION; PUPIL TRANSPORTATION HB 169 was REPORTED out of committee with ten "do pass" recommendations and one "no recommendation" recommendation. SB 19 EXTEND SPECIAL EDUCATION SERVICE AGENCY SB 19 was HEARD and HELD in committee for further consideration. Co-Chair Foster reviewed the meeting agenda. HOUSE BILL NO. 169 "An Act making appropriations for public education and transportation of students; and providing for an effective date." 1:36:55 PM Co-Chair Foster OPENED public testimony. COREY AIST, TEACHER, ANCHORAGE EDUCATION ASSOCIATION, ANCHORAGE (via teleconference), testified in support of the legislation. He shared information about his teaching career in Alaska. He reported that the school year had been unlike any other and educators had continued to adapt as they supported students and families in online and face-to- face learning environments. He stressed the importance of the stability provided by the legislation. He shared that he had watched over the years as early career educators were sometimes laid off in May. During those times he had personally reassured younger colleagues that the state was likely to restore funding and that they would have a job in the fall. He reported that unfortunately many of those teachers had found jobs out of state. He stressed that recruitment was always a big issue. He remarked it was hard to lose committed, enthusiastic educators when there was an easy remedy. He noted the current remedy was HB 169. Mr. Aist spoke about the importance of stability. He stated that legislators' efforts could either support or hinder students' success. He thanked Representative Rasmussen for her suggestion of forward funding. He relayed educators were exhausted and it had been a tough year. He stated that the early forward funding would be a signal of support that the legislature played an important role in the effort. He thanked the committee and encouraged the advancement of the bill. 1:41:18 PM JANE GRAY, SELF, ANCHORAGE (via teleconference), shared that she had been a teacher in the Anchorage School District for 31 years. She echoed testimony from the previous speaker. She highlighted the disruptiveness caused by uncertainty of job security. She shared students and teachers got shuffled when principals were uncertain about what their staffing would be in the fall. For at risk students the situation was an additional trauma that could be avoided. She supported separating education funding from the operating budget and passing the bill early in order for teachers, students, and parents to know what to expect in terms of funding. She thanked Vice-Chair Ortiz for bringing the bill forward. 1:43:31 PM DON GRAY, FORMER MEMBER OF ALASKA BOARD OF EDUCATION, FAIRBANKS (via teleconference), testified in support of the legislation. He shared that he was a former member of the Alaska State Board of Education. He thanked Vice-Chair Ortiz for bringing the proposal forward. He thanked Representative Rasmussen for recommending the forward funding aspect of the legislation that would create additional stability. He thanked Representative LeBon for his support for early funding and for his service on the Fairbanks School Board in the past. He thought education funding should be kept separate from the more complicated operating budget. He stressed that the current times were challenging and without precedent. He remarked that the operating budget may be slowed down due to uncertainties about the American Rescue Plan Act (ARPA) funding. He believed waiting for clarification would be detrimental to education. He emphasized that the state's responsibility for education was one of the few things in the state constitution. He reiterated his support for the bill and keeping education funding separate from the operating budget. 1:47:42 PM TIM DORAN, PRESIDENT, FAIRBANKS SCHOOL BOARD, FAIRBANKS (via teleconference), thanked committee members for the bill and their support of the bill. He was in favor of separating the education budget from the rest of the operating budget in order to provide funding certainty. He shared that Fairbanks had completed its draft budget and it was currently under consideration by the borough assembly for the local contribution. He reported that the school board had taken a conservative, cautious approach. He understood that the governor had indicated support for fully funding a flat Base Student Allocation (BSA). He stated that until the state budget was approved, there was a certain amount of uncertainty. He shared that early notification on the funding amount made a difference in terms of district planning. Mr. Doran reported that COVID-19 had been a major hit in the past year. The district was looking at COVID recovery in the next year and the more funding certainty it had for planning purposes, the better. He explained that the district had to let tenured staff know whether they would have jobs the following fall by May 15; non-tenured teachers had to be notified by May 20. He shared that the district had to start the process in the coming weeks. He elaborated on the process. He stated that Fairbanks ended up subsidizing transportation when it was not fully funded. The district did not have the option going into the next fiscal year. He heartily supported forward funding of education. He explained that it had been very beneficial to the district a couple of years back. He encouraged the passage of the bill. Co-Chair Foster recognized that Representative LeBon and Representative Thompson had joined the meeting. Co-Chair Foster CLOSED public testimony. Co-Chair Foster noted that the committee may return to the bill to address an amendment [note: the committee returned to HB 169 at 2:20 p.m.]. Co-Chair Foster handed the gavel to Co-Chair Merrick. 1:54:30 PM AT EASE 1:55:12 PM RECONVENED CS FOR SENATE BILL NO. 19(FIN) "An Act relating to allocations for the special education service agency; extending the special education service agency; and providing for an effective date." 1:55:28 PM TIM LAMKIN, STAFF, SENATOR GARY STEVENS, introduced the legislation. He communicated Senator Stevens' appreciation of the bill hearing. He shared that the bill was an opportunity to recognize an agency that did a large amount with very little. He explained that the Special Education Service Agency (SESA) was a community of people providing a unique set of services for severely disadvantaged youth. He stated there was trust and respect for the agency's work that involved helping many schools, students, and families. He noted the subject area was fairly sensitive and required significant compassion, patience, grace, and love. The bill would extend the SESA sunset to 2029 and adjusted the agency's funding formula to keep it whole over the next eight years. He reported that the latest audit was constructive and illuminated SESA's success and efficacy. He detailed that the SESA director was available online and the legislature's auditor was available in person to speak about the findings. Mr. Lamkin reviewed the sectional analysis (copy on file): Section 1: AS 14.30.650 is amended to increase the funding component for SESA, from an existing rate of $18.65 to $23.13 times the number of students in the state in average daily membership. Section 2: AS 44.66.010(a)(6) Extends the sunset date for SESA to June 30, 2029. Section 3: Provides for a retroactive effective date in the event the bill doesn't pass before June 30, 2021. Section 4: Makes the funding component described in Section 1 effective July 1, 2021. Section 5: Provides for an immediate effective date upon its passage. 1:58:04 PM Representative Carpenter asked why there was a change from the existing rate from $18.65 to $23.13. Mr. Lamkin answered that SESA's caseload had increased substantially with flat funding and flat staffing levels. He relayed that an upcoming PowerPoint presentation would explain the issue more thoroughly. Representative LeBon asked if the rate had been locked at $18.65 for quite some time. Mr. Lamkin replied that the rate had been set at $18.65 at the time of the last audit in 2013. Prior to that it had been 15 years since the last increase. 1:59:25 PM PATRICK PILLAI, EXECUTIVE DIRECTOR, SPECIAL EDUCATION SERVICE AGENCY (via teleconference), provided a PowerPoint presentation titled "SESA: Special Education Service Agency Introduction" (copy on file). He shared that he had joined SESA in 1994 as a deaf education specialist. He reviewed the presentation with prepared remarks beginning on slide 2: This is the homepage of SESA's website. It provides online access to program services and resources, a lending library, online professional development, e- modules, and an easy process for school districts to submit online referrals for SESA service. The agency's mission reflects a focus on addressing the unique special education needs of students, parents, and teachers across Alaska's 54 school districts. Mr. Pillai moved to slide 3: The statute establishing SESA addresses technical assistance and service to students with low incidence disabilities. Low incidence disabilities are defined as occurring in less than one percent of the total population. The rarity of the disability often means specialized services are not normally available in the school district. SESA affords such sites access to a specialist with an endorsement in a particular disability area in addition to other resources. 2:01:05 PM Mr. Pillai turned to slide 4: SESA's logic model captures the design of process to deliver specialized services to parents, schools, and school districts. The intent is to address the gap via solutions that promote availability of SESA's service through on-site and distance support. This approach creates broad participant training to address staff turnover and promises collaboration and networking amongst teachers and paraprofessionals. This in turn reduces isolation and ultimately provides retention of teachers especially in rural remote areas of the state. Mr. Pillai addressed technical assistance on slide 5: The continuum of services includes observations, assessments, educational interventions, modeling of educational strategies, in-service training, assistive technology, and many more pertinent activities based on requests from the child's educational team members. Specialists also work with vendors to troubleshoot assistive technology when teachers call with complaints of device non-functionality. Mr. Pillai turned to slides 6 and 7: In addition to specialist evaluation, the SESA management system is designed to collect data on various aspects of agency activity. Metrics focus on mission-centric activities such as site travel, creation of educational materials, training and in- services, and writing of student service reports. Data is analyzed to understand variables impacting service and the SESA budget. SESA's database allows us to run reports of agency productivity. The slide captures activities of technical assistance, number of schools and districts served, number of trainings conducted on-site and via distance delivery, and an analysis of expenses. 2:03:08 PM Mr. Pillai advanced to slide 8 and spoke about the customized management system: This slide is a visual example of the customized management system SESA designed to ensure data-driven decision making. Individual reports provide data on specialist activity allowing for measurement of productivity; number of reports completed with an agency timeframe of 10 working days; schools and sites requesting service; active student caseloads by district, location, and school etcetera. Mr. Pillai reviewed slide 9: Legislative audits and the program component of annual public audits run tests of compliance with regard to process and procedure. This section of the database was created in response for specific data and with feedback from auditors. Following a recommendation of the SESA board to go green, SESA management worked to eliminate paper files. All of SESA's student record keeping is now electronic. The compliance element of the SESA database drives quarterly compliance reviews. Mr. Pillai turned to slide 10: Slide 10 captures in red the number of students attending Alaska's schools in any given year between 2011 and 2020. The solid blue line captures the steadily increasing number of students on SESA's low incidence caseload. High turnover of staff in many districts often drives the need for repeated trainings for new staff, especially first-year teachers who may be encountering any given disability for the first time. Mr. Pillai moved to slide 11: Slide 11 is a history of SESA fund balance from 2013 and projected to 2023. The cycle captures low funds at the end of a sunset cycle, in this case 2013, higher funds at the middle of the cycle, and trending to lower fund balance at the end of the cycle as a result of the increase in cost. SESA's last funding increase was in 2013. At the end of [FY] 22, factoring for cost increase, we anticipate using $578,000 from fund balance. This is a result of the impact of the CPI index increase of 6.3 percent over the last eight years. Mr. Pillai looked at the fund balance on slide 12: Slide 12 illustrates SESA's projected withdrawals from fund balance in fiscal year 2022 moving into complete deficit in fiscal year 2025. SESA utilizes a cashflow of roughly $400,000 for day-to-day expenses. SESA revenues, annual support grant, and LID activity occurring between the initial grant award and disbursement of funds at a later date. Grants operate with an initial upfront award of roughly 25 percent of the grant total and thereafter are reimbursed upon submission of receipts for qualified grant expenditure post the activity. Mr. Pillai moved to slide 13 and discussed a proposed 24 percent funding increase: Slide 13 is the projection of the 24 percent proposed increase to SESA funding through Senate Bill 19. The bill would increase the current $18.65 times the number of students in the average daily membership in the prior fiscal year to $23.13. This would effectively fund SESA without interruption of services to families and school districts through June 30, 2029, the end of the period of reauthorization. Mr. Pillai addressed the recently completed legislative audit on slide 14: The recently completed legislative audit concurs that SESA meets the needs of students with low incidence disabilities, provides professional development opportunities to teachers and paraprofessionals, provides special education resources to parents and school districts, and concludes with the recommendation for an eight-year legislative reauthorization. Mr. Pillai relayed that he was happy to answer any questions. Co-Chair Merrick thanked Mr. Pillai for SESA's hard work with special needs students. 2:07:51 PM Co-Chair Merrick asked to hear a review of the recent legislative audit. KRIS CURTIS, LEGISLATIVE AUDITOR, ALASKA DIVISION OF LEGISLATIVE AUDIT, reported that the Division of Legislative Audit conducted a review of SESA dated April 2020 (copy on file). She began the presentation with the background information section on page 5 of the audit. She read from prepared remarks: SESA was created to help Alaskan school districts provide special education services to individuals with a low incidence disability. A low incidence disability occurs in less than 1 percent of the national school- aged population and the disabilities are more severe in nature and require specialized education intervention. SESA was established as a nonprofit organization whose governing board is the Governor's Council on Disabilities and Special Education, which is organizationally housed within the Department of Health and Social Services; however, its primary service, its low incidence outreach program is budgeted and funded through the Department of Education and Early Development. This funding is independent of the intensive needs funding that a district may otherwise receive. SESA's funding provides additional financial support to help ensure students affected by low incidence disabilities receive a free and appropriate public education that is required by state and federal laws. SESA's services are available to districts whose low incidence special education needs occur infrequently, making it difficult for the district to serve the low number of students in need of a particular service. SESA recruits, trains, and retains education specialists to provide technical assistance and training to parents, students, and district staff without regard to the state. The number and location of students served by SESA you will see in a map on page 8. That shows that as of February 2020 there were 335 students served in 48 school districts. You will also see that information broken out on page 27 in a separate table, which breaks out the number of students served by a low incidence disability category. Report conclusions begin on page 11. Overall, the audit concludes that SESA served the public's interest by assisting school districts and providing students affected by low incidence disabilities an education to meet the children's unique needs and by providing opportunities to enhance school district teachers' and paraprofessionals' capabilities and by providing resources. We are recommending an eight-year extension, which is the maximum allowed for in statute. As part of the audit, we did send a survey to school district special education directors in all 51 school districts. We received a 59 percent response rate and in general the school district special education directors viewed SESA services, staff availability and their expertise favorably. Those questions and responses can be found in Appendix C to the audit. As already discussed, on page 13 we do discuss their statutory funding formula and how it is $18.65 multiplied by the states average daily membership, again, set in 2013. Before that it was set 14 years earlier. That has not changed; however, the caseload has increased by 63 percent during the last 8 years. We did find that SESA's education specialists serving certain categories were experiencing high caseloads and as of February 2020 the agency had three education specialist vacancies. 2:11:45 PM Ms. Curtis shared that the agency had one recommendation beginning on page 18. The audit recommended SESA's executive director implement written procedures to ensure the reclassification of a student's referred disability was adequately supported and communicated to school district personnel. She detailed auditors reviewed 40 case files and found five students' disabilities as identified in the referral form from the school districts had been reclassified by an education specialist and had not found any documentation in the file regarding the reason for reclassification. Additionally, in four of the five cases there had been no visible communication back to the school district about the reclassification. Auditors believed a simple administrative fix should not be too much trouble to accomplish. She relayed that the board chair and the DHSS and DEED commissioners agreed with the report conclusions and the recommendation. 2:12:43 PM Representative Wool looked at the map on page 8 showing school districts and number of students. He listed Anchorage, Fairbanks, and Juneau and asked if the program did not serve large school districts by design. Ms. Curtis replied in the affirmative. She detailed there was a threshold. When a school district reached ten in a specific category, SESA worked with the district to transition away from SESA services to make sure the district hired its own specialists given SESA's limited resources. She added that there were some students in those categories, but much fewer than in other locations. Representative Wool asked if statute designated that SESA serve school districts with less than ten students [in a particular category] requiring intervention. Ms. Curtis answered that there was no statutory guidance. The prior sunset audit had found that some type of criteria was needed to specify when school districts needed to absorb students. She explained that school districts received special education intensive needs funding. She elaborated that SESA was in place to serve districts with needs in such a low number that the district did not have the services in place to address them. 2:14:27 PM Representative Rasmussen referenced page 8 and asked if multiple disabilities was a combination of one of the other six listed disabilities. She asked if there were any unlisted disabilities. 2:15:18 PM AT EASE 2:16:14 PM RECONVENED Ms. Curtis pointed to the definition of multiple disabilities on page 7; the definition listed out the different combinations that qualified a person for the classification. HEIDI TESHNER, DIRECTOR, FINANCE AND SUPPORT SERVICES, DEPARTMENT OF EDUCATION AND EARLY DEVELOPMENT (via teleconference), was available to present the fiscal note, OMB Component Number 2735. She stated that the bill would increase SESA's funding multiplier from $18.65 to $23.13 multiplied by the average daily membership (ADM) from the prior fiscal year. She elaborated that the governor's FY 22 budget request included a $2.4 million projected grant for SESA based on the statutory calculation. She detailed it had been determined by multiplying the FY 21 projected ADM of 128,923.91 times the $18.65. Based on the increased multiplier and the final FY 21 ADM count finalized in March 2021, the amended FY 22 SESA grant was $2,937,900 (determined by multiplying the final ADM of 127,015.30 times $23.13). The bill reflected an increase of $533,500. She noted the extension would carry out through June 2029 and DEED would adjust the budget annually based on the statutory calculation. SB 19 was HEARD and HELD in committee for further consideration. 2:19:48 PM AT EASE 2:19:56 PM RECONVENED HOUSE BILL NO. 169 "An Act making appropriations for public education and transportation of students; and providing for an effective date." 2:20:03 PM Co-Chair Foster communicated there were no amendments to be considered. Co-Chair Merrick MOVED to REPORT HB 169 out of committee with individual recommendations. Representative Carpenter OBJECTED for discussion. He acknowledged the importance of the conversation on early funding of education. He stated that without a [budget] committee substitute (CS), the committee was further justifying the need to early fund education due to the lack of a budget. He thought the committee was holding the rest of the state budget hostage while it acted on one component of the budget. He believed it was highly inappropriate to send the bill out of committee without any context of how it would be received within the rest of the budget. He thought a conversation about early funding should be a part of the conversation within the context of the budget as a whole. Representative Carpenter stated it was a bad precedent to pick one component of the budget and send it forward for discussion. He highlighted that the previous year, most of the budget had been finished within 90 days. He stressed it was in the committee's power to finish the budget, which would avoid a discussion of early funding for education. He did not know what the delay was in terms of receiving a CS that would put education in context with all of the other important funding items for the coming year. He opined that piecemealing the budget was inappropriate, unprofessional, poor management, and set a bad precedent. He did not believe HB 169 should be sent from committee without seeing the rest of the budget. 2:23:09 PM Representative Josephson believed HB 169 was a good bill. He remarked that he had been in Juneau for special session in the past in most months of the year. He underscored the possibility the legislature could be in Juneau in June without a budget. He had experienced the situation several times. He stated the statutory non-retention letters required the education funding carveout [from the rest of the budget] in order to preserve continuity for educators, administrators, and staff. He referenced the [budget] CS and believed it was understood that the legislature wanted a say on how $1.1 billion [in federal funds] was appropriated. He believed it was part and parcel the reason for some delay. He noted that the governor had just released his own version of the bill. He asked why the legislature should be ahead of the governor. He stated that the money would have to be spent in one fashion or another and he believed it made perfect sense to do so via HB 169. 2:24:59 PM Representative Rasmussen thought the bill was appropriate. She recognized the timing was slightly wonky due to the 30- day delay with organization [in the House]. She stated that with Alaska ranking close to the bottom in many student outcomes, she did not believe the state could afford to risk losing any more good teachers due to fiscal uncertainty and pink slips going out unnecessarily. She highlighted the constitutional and statutory obligation and formula for funding K-12 education. She remarked that the issue was not up for a lot of debate until the statutory BSA law was changed. She had not seen any bills introduced in the current session that would change the formula. She opined that until the legislature did something else, HB 169 was incredibly appropriate and the right thing to do for teachers and students. She spoke about the need for stability and retention of talented teachers. She pointed out that teachers could go other places with more certainty. She believed it was not professional for the state to put districts in the position of sending pink slips to staff every year. She supported the bill. Co-Chair Foster recognized Representative Edgmon had joined the meeting. Representative Wool supported the bill. He shared that before he had run for the legislature, the issue of pink slips and delays had come up for his district. He remarked that because the district did not receive funding at the right time it had been forced to send out pink slips. He noted it was done frequently. He believed it was unprofessional. He stressed the importance of holding onto valued teachers. He had heard many stories of teachers leaving. He referenced public testimony earlier in the day about teachers receiving pink slips. He remarked that some teachers endured the situation several times but after awhile they decided it was enough. He believed the bill communicated that the legislature valued teachers and valued them enough to put them out front of the budget process. He agreed education should be and was in the budget and was mandated by the constitution. He remarked that for various reasons the budget was not passed in a timely manner, which was not in any one individual's control. He supported getting the education funding out ahead. He stated the funding was fairly formulaic with a BSA and predicted number of students. He noted it could be adjusted later. He believed the legislature should get the majority of the funding out immediately to avoid the sending of pink slips. He stated that teachers had enough trouble and stress in the past couple of years. He underscored that adding more stress was preventable. He supported moving forward with the legislation. 2:28:55 PM Representative Edgmon apologized that he had been in another meeting. He believed it should be mandatory for the legislature to pass the education budget early every year. He believed eight out of ten teachers in Alaska came from out-of-state. He detailed that the absence of a budget put teachers in a position where they did not know if they had a job and they had to decide whether to relocate back to their home state or elsewhere. He strongly supported the bill. 2:29:50 PM Co-Chair Foster voiced his support for the legislation. He stated that early funding of education had been done in the past. He highlighted that the bill followed the formula and did not make any increases. He understood the argument that education funding should be put in context of the larger budget. He believed the argument for including education funding with the rest of the budget would be stronger if the legislature was making increases. He reasoned that because no changes were being made, the benefit of early funding outweighed the cost. He referred to the statutory deadline for layoff notices. Additionally, there was the extraordinary circumstance of the forthcoming federal ARPA funding the legislature had to determine how to incorporate in the operating budget. He stated that the situation had slowed the process down. He did not believe schools should have to feel the brunt of the situation. Representative Carpenter remarked that the hearing on the previous bill [SB 19] indicated an increase in funding for SESA [Special Education Service Agency]. He reasoned it meant the legislature was increasing funding for education. He did not know whether other areas in education would be increased because he did not have a budget to reference. He understood that forward funding or early funding of education improved the ability of subordinate or follow-on agencies to do their budgets; however, the committee did not have a budget to reference for context. He asked when the committee would see a [budget] CS. He underscored that someone was making a decision to put federal funding on top of state funding in a budget. He assumed it was the reason for the delay. He remarked that an alternative was to have two separate bills. He thought one bill with state and federal funding combined would be hard to understand. Co-Chair Foster replied that he had hoped to have a CS before the committee the previous Monday. He shared that the Legislative Finance Division had relayed it could provide some suggestions on what the legislature could do in using some of the ARPA funds. He elaborated that the governor had ended up rolling out his bill that had come out earlier in the day. He stated there were many complexities in the process and he had told people it would not be easy. He was trying to make the best out of a difficult situation in terms of getting a CS out as soon as possible, while trying to determine how to manage the ARPA funds. 2:33:21 PM Representative Rasmussen believed the SESA funds fell outside the BSA and pupil transportation funds. She stated her understanding that HB 169 was the statutory required formula for the BSA and pupil transportation only. Vice-Chair Ortiz believed the SESA funding was not related to the funding formula bill before the committee. Co-Chair Foster agreed. He spoke to Representative Carpenter's point. He stated that the SESA funding did not increase the BSA formula. He explained that the release of a CS had been slowed down by the effort to include some of the ARPA funding. 2:35:18 PM Representative Carpenter WITHDREW his OBJECTION. There being NO further OBJECTION, it was so ordered. HB 169 was REPORTED out of committee with ten "do pass" recommendations and one "no recommendation" recommendation. 2:35:59 PM AT EASE 2:36:07 PM RECONVENED Co-Chair Foster reviewed the schedule for the following morning. ADJOURNMENT 2:36:38 PM The meeting was adjourned at 2:36 p.m.