Legislature(1993 - 1994)

01/28/1993 03:00 PM House HES

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
txt
                                                                               
           HOUSE HEALTH, EDUCATION AND SOCIAL SERVICES                         
                       STANDING COMMITTEE                                      
                        January 28, 1993                                       
                            3:00 p.m.                                          
                                                                               
                                                                               
  MEMBERS PRESENT                                                              
                                                                               
  Rep. Cynthia Toohey, Co-Chair                                                
  Rep. Con Bunde, Co-Chair                                                     
  Rep. Gary Davis, Vice Chair                                                  
  Rep. Tom Brice, arrived later                                                
  Rep. Bettye Davis, arrived later                                             
  Rep. Pete Kott                                                               
  Rep. Irene Nicholia                                                          
  Rep. Harley Olberg                                                           
  Rep. Al Vezey                                                                
                                                                               
  MEMBERS ABSENT                                                               
                                                                               
  None                                                                         
                                                                               
  OTHER LEGISLATORS PRESENT                                                    
                                                                               
  Rep. Ed Willis                                                               
                                                                               
  COMMITTEE CALENDAR                                                           
                                                                               
  Alaska Board of Education - Alaska 2000                                      
                                                                               
  Mechanics of the School Foundation Formula by the Alaska                     
  Association of School Business Officials                                     
                                                                               
  WITNESS REGISTER                                                             
                                                                               
  Joe Montgomery, Chairman                                                     
  State Board of Education                                                     
  1048 Beech Lane                                                              
  Anchorage, Alaska 99501                                                      
  Phone:  (907) 272-9339                                                       
  Position Statement:  Introduced board members and                            
                       explained how the board was appointed;                  
                       was available to answer questions                       
                                                                               
  Don Fancher                                                                  
  P.O. Box 2027                                                                
  Bethel, Alaska 99559                                                         
  Phone:  (907) 543-3121                                                       
  Position Statement:  State Board of Education member                         
                                                                               
  Robert Walp, Second Vice Chair                                               
  State Board of Education                                                     
  804 P St. #4                                                                 
  Anchorage, Alaska 99510-3252                                                 
  Phone:  (907) 265-5606                                                       
  Position Statement:  Available to answer questions                           
                                                                               
  John Hotzfield                                                               
  5890 Liberty Court                                                           
  Wasilla, Alaska 99687-9345                                                   
  Phone:  (907) 376-6445                                                       
  Position Statement:  State Board of Education member                         
                                                                               
  June Nelson                                                                  
  P.O. Box 158                                                                 
  Kotzebue, Alaska 99752-0158                                                  
  Phone:  (907) 442-3501                                                       
  Position Statement:  State Board of Education member                         
                                                                               
  Judy Norton                                                                  
  9824 Atka Circle                                                             
  Eagle River, Alaska 99577                                                    
  Phone:  (907) 696-2477                                                       
  Position Statement:  State Board of Education member                         
                                                                               
  Karen Meehan                                                                 
  3640 Chiniak Bay                                                             
  Anchorage, Alaska 99515                                                      
  Phone:  (907) 344-0662                                                       
  Position Statement:  Student advisor on the State Board                      
                       of Education                                            
                                                                               
  Jerry Covey, Commissioner                                                    
  Alaska Department of Education                                               
  801 W. 10th St., Suite 200                                                   
  Juneau, Alaska  99801-1894                                                   
  Phone:  (907) 465-2800                                                       
  Position Statement:  Explained the Alaska 2000 program                       
                                                                               
  Barbara Martin                                                               
  Assistant Superintendent of Business and Finance                             
  Fairbanks North Star Borough School District                                 
  P.O. Box 1250                                                                
  Fairbanks, Alaska 99707-1250                                                 
  Phone:  (907) 452-2000                                                       
  Position Statement:  Introduced members of the Alaska                        
                       Association of School Business                          
                       Officials (AASBO), including herself;                   
                       described the foundation formula                        
                                                                               
  Janet Stokesbary, Director                                                   
  Finance and Accounting                                                       
  Anchorage School District                                                    
  4600 DeBarr Ave.                                                             
  P.O. Box 196614                                                              
  Anchorage, Alaska 99519-6614                                                 
  Phone:  (907) 269-2394                                                       
  Position Statement:  Member of the AASBO                                     
                                                                               
  Richard M. Swarner                                                           
  Executive Director, Business Management                                      
  Kenai Peninsula Borough School District                                      
  44955 Ptarmigan Place                                                        
  Soldotna, Alaska 99699                                                       
  Phone:  (907) 262-4056                                                       
  Position Statement:  Member of the AASBO                                     
                                                                               
  John Anttonen, Superintendent                                                
  Hoonah School District                                                       
  P.O. Box 157                                                                 
  Hoonah, Alaska 99829                                                         
  Phone:  (907) 945-3611                                                       
  Position Statement:  Member of the AASBO                                     
                                                                               
  Laraine Derr, Director of Business                                           
  Juneau School District                                                       
  10014 Crazy Horse Drive                                                      
  Juneau, Alaska 99801                                                         
  Phone:  (907) 463-1700                                                       
  Position Statement:  Member of the AASBO                                     
                                                                               
  ACTION NARRATIVE                                                             
  TAPE 93-7A, SIDE A                                                           
  Number 000                                                                   
                                                                               
  CO-CHAIR CYNTHIA TOOHEY called the meeting to order at                       
  3:00 p.m. and noted members present.  She announced that the                 
  purpose of the meeting was to hear a presentation from the                   
  State Board of Education on the Alaska 2000 proposals,                       
  followed by a presentation by the Alaska Association of                      
  School Business Officials on the mechanics of the Alaska                     
  school foundation formula.                                                   
                                                                               
  CHAIR TOOHEY introduced the members of the STATE BOARD OF                    
  EDUCATION who were present at the meeting.  They were:                       
  Chairman Joe Montgomery and members Don Fancher, Robert                      
  Walp, John Hotzfield, June Nelson, Judy Norton, and Karen                    
  Meehan.  She also welcomed members who were present from the                 
  ALASKA ASSOCIATION OF SCHOOL BUSINESS OFFICIALS:  Barbara                    
  Martin, Richard Swarner, Janet Stokesbary, Laraine Derr, and                 
  John Anttonen.                                                               
                                                                               
  Number 072                                                                   
                                                                               
  JOE MONTGOMERY, CHAIRMAN OF THE STATE BOARD OF EDUCATION,                    
  introduced himself.  He explained that the seven-member                      
  board is appointed by the governor with the legislature's                    
  approval and meets 10 or 11 times a year, meeting around the                 
  state and in Juneau while the legislature is in session.                     
                                                                               
  MR. MONTGOMERY asked the board members who were present to                   
  introduce themselves and briefly describe their backgrounds.                 
                                                                               
  ROBERT WALP, of Anchorage, introduced himself as a former                    
  state director of telecommunications and a retired president                 
  of General Communications, Inc.                                              
                                                                               
  JOHN HOTZFIELD, of the Palmer-Wasilla area, introduced                       
  himself as a Christian educator.                                             
                                                                               
  KAREN MEEHAN introduced herself as a senior at Dimond High                   
  School in Anchorage and a nonvoting student member of the                    
  board.                                                                       
                                                                               
  JUNE NELSON, a native of Kotzebue, said she represented                      
  rural educators.                                                             
                                                                               
  JUDY NORTON introduced herself as a teacher in the Anchorage                 
  School District in Eagle River.                                              
                                                                               
  DON FANCHER, of Bethel, introduced himself as the newest                     
  member of the board.                                                         
                                                                               
  MR. MONTGOMERY noted that Dr. Roger O. Jarvis was on                         
  temporary duty with the U.S. Air Force and could not be                      
  present.  Likewise, Patricia Norheim of Petersburg was                       
  unable to attend.                                                            
                                                                               
  Number 256                                                                   
                                                                               
  JERRY COVEY, COMMISSIONER OF THE DEPARTMENT OF EDUCATION                     
  (DOE), began his detailed presentation on the Alaska 2000                    
  initiative at Chair Toohey's invitation.                                     
                                                                               
  COMMISSIONER COVEY presented a document explaining the                       
  Alaska 2000 program and the recommendations from the State                   
  Board of Education.  (The document, incorporated herein, is                  
  identified as Attachment 1 and is on file in the House HESS                  
  committee room.)                                                             
                                                                               
  COMMISSIONER COVEY said the department had introduced its                    
  Alaska 2000 package, which consisted of four bills covering                  
  three major components.  One was a large capital                             
  improvements budget aimed at addressing longstanding                         
  statewide construction needs and using the unreserved                        
  earnings of the permanent fund.  He said no funding plan was                 
  initially included in the package, but as the Alaska 2000                    
  committee did its work and received supportive public input,                 
  they decided to seek funding through the permanent fund.                     
  After the governor expressed a preference for the permanent                  
  fund earnings over long-term bonding debt, the committee                     
  approached the legislature.                                                  
                                                                               
  COMMISSIONER COVEY said the plan tries to spread about half                  
  of the $150 million through the top priority levels of                       
  capital projects, not just the top level, and others as                      
  funding remained.  This was an effort to win statewide                       
  support for the proposal by giving each school district some                 
  benefit in the first two years and to perform some                           
  preventative maintenance that might save larger costs later.                 
  He then asked for questions.                                                 
                                                                               
  Number 328                                                                   
                                                                               
  REP. CON BUNDE asked for a point by point description of the                 
  Alaska 2000 program, starting with charter schools.                          
                                                                               
  COMMISSIONER COVEY said the charter school idea, which he                    
  had also helped Rep. Bettye Davis work on, was an effort to                  
  create alternatives to local public schools funded with                      
  public money and using public school teachers though                         
  requiring no additional money.  Charter schools would have                   
  more latitude than regular schools in organization, in                       
  teaching methods and other factors as long as they followed                  
  all sate regulations.  They would be established at the                      
  proposal of and with close involvement by parents.                           
                                                                               
  Number 350                                                                   
                                                                               
  REP. BUNDE asked whether parents would have the power to                     
  fire teachers.                                                               
                                                                               
  COMMISSIONER COVEY answered no; teachers in charter schools                  
  would remain as school district employees subject to regular                 
  personnel policies.  Parents would more have influence over                  
  the programs and methods than over individual teachers.                      
  Commissioner Covey said he did not foresee parents having a                  
  disruptive influence, for example, firing teachers in the                    
  middle of a term.                                                            
                                                                               
  Number 375                                                                   
                                                                               
  CHAIR TOOHEY asked about the size and location of charter                    
  schools.                                                                     
                                                                               
  COMMISSIONER COVEY responded that such issues would be up to                 
  the local board and subject to the provisions of the                         
  contract, but they could range from a single classroom to an                 
  entire school, or possibly in a different building, as long                  
  as it did not require additional funding.  He said it might                  
  be possible for a group of parents to propose a partnership                  
  with an independent entity, such as a corporation or                         
  regional corporation, which could supplement the public                      
  funding.                                                                     
                                                                               
  REP. BUNDE asked whether such an arrangement could lead to                   
  charter schools being much better funded than other schools.                 
                                                                               
  COMMISSIONER COVEY answered affirmatively.                                   
                                                                               
  Number 410                                                                   
                                                                               
  REP. BUNDE asked whether students at charter schools would                   
  be required to pass standardized benchmark achievement                       
  tests.                                                                       
                                                                               
  COMMISSIONER COVEY indicated that they would.  He added that                 
  schools must be subject to open enrollment policies.                         
                                                                               
  CHAIR TOOHEY noted the meeting's time constraints and urged                  
  Commissioner Covey to continue his item-by-item presentation                 
  on the Alaska 2000 handout (Attachment 1).                                   
                                                                               
  Number 444                                                                   
                                                                               
  COMMISSIONER COVEY moved on and said the department was                      
  soliciting proposals and had received previous legislative                   
  funding to determine interest and need for alternative                       
  schools for rural students.  He stated the process would                     
  offer information on which to decide whether to build more                   
  boarding schools like Mt. Edgecumbe, or to build dormitories                 
  at some existing schools, or some other options.                             
                                                                               
  Number 464                                                                   
                                                                               
  REP. BUNDE inquired as to the fiscal impact of boarding                      
  schools.                                                                     
                                                                               
  COMMISSIONER COVEY responded that a trial program with the                   
  Yukon Flats School District and Nenana city schools showed                   
  that it would cost as much to educate a child from the Yukon                 
  Flats area in a boarding school with more programs as it                     
  would to send him to a Nenana school.                                        
                                                                               
  Number 475                                                                   
                                                                               
  COMMISSIONER COVEY said another element of the Alaska 2000                   
  plan would be choice of postsecondary courses, allowing high                 
  schoolers to attend colleges, trade schools, or other                        
  institutions at no cost as part of their high school                         
  curriculum.  This would encourage students to do well in                     
  secondary school and would only cost the state the price of                  
  tuition at the postsecondary institution, he said.                           
                                                                               
  (Rep. Tom Brice arrived at 3:28 p.m.)                                        
                                                                               
  Number 503                                                                   
                                                                               
  COMMISSIONER COVEY continued his discussion on the program.                  
  He said the advisory board program would attempt to get more                 
  input from the public by establishing advisory boards for                    
  all schools, similar to those required for Rural Education                   
  Attendance Area (REAA) school districts.  Local school                       
  districts would decide on such boards' powers and duties,                    
  and whether members would be elected or appointed.                           
                                                                               
  COMMISSIONER COVEY said the state board has heard testimony                  
  on the need to encourage parental responsibility and felt                    
  their plan should be a public information campaign to                        
  encourage them to help their preschool age children prepare                  
  for schooling.                                                               
                                                                               
  Number 529                                                                   
                                                                               
  REP. BUNDE commented that parental encouragement was crucial                 
  to any educational system.                                                   
                                                                               
  CHAIR TOOHEY countered that many two-job families do not                     
  have time to spend at school, despite the possible benefits                  
  to their children.                                                           
                                                                               
  Number 541                                                                   
                                                                               
  COMMISSIONER COVEY began a swifter description of the Alaska                 
  2000 proposals, as outlined on page 3 of Attachment 1.  The                  
  proposals had several elements aimed at improving student                    
  performance, including:  developing performance standards                    
  for 10 subject areas; measuring student achievement by                       
  standardizes testing at three age levels; issuing state                      
  certificates of mastery to students who pass the third                       
  benchmark tests, in addition to issuing diplomas at                          
  graduation; increasing the school year from 180 days to 200                  
  days by the year 2000; funding schools to provide 13 years                   
  of education; and encouraging communities to prepare                         
  preschool aged children for classroom education.                             
                                                                               
  COMMISSIONER COVEY expanded on the proposal to expand the                    
  school year, saying that the state board would provide more                  
  detail on how other expanded school year programs operate                    
  around the world and how students in them perform compared                   
  to Alaska's students.  He said decisions are yet to be made                  
  about how the extra school time would be used, possibly                      
  alternate educational experiences such as on-the-job                         
  training.  He predicted that the board would make more                       
  detailed proposals on this question in a few weeks.                          
                                                                               
  Number 600                                                                   
                                                                               
  REP. BUNDE expressed concern that a longer school year                       
  should not become large-scale child care.  He said he looked                 
  forward to developing solid educational programs for the                     
  extra time.                                                                  
                                                                               
  COMMISSIONER COVEY stated there is a need for a complete                     
  multi-agency approach to addressing the needs of early                       
  childhood education.  He said an interagency group in                        
  Anchorage was working on such a plan.                                        
                                                                               
  COMMISSIONER COVEY began discussing the proposals listed                     
  under the aim of keeping kids in school, as listed on page 3                 
  of Attachment 1.  He said a School Conservation Corps would                  
  combine public service with school work.  Deregulating                       
  vocational programs and increasing funding would return some                 
  of the emphasis necessary to such programs lost during                       
  earlier budget cuts, he said.                                                
                                                                               
  Number 639                                                                   
                                                                               
  REP. GARY DAVIS asked which vocational education regulations                 
  would be dropped.                                                            
                                                                               
  COMMISSIONER COVEY answered that the state has verification                  
  requirements for vocational education funding that according                 
  to some indications do not result in improved education.  He                 
  said reducing the reporting load on school districts would                   
  save money that could be better used for instruction.                        
                                                                               
  REP. G. DAVIS expressed support of that approach and asked                   
  if certificates of mastery might be issued for vocational                    
  educational programs.                                                        
                                                                               
  COMMISSIONER COVEY answered no, but it was possible to                       
  include such recommendations in his proposals.                               
                                                                               
  REP. TOM BRICE asked whether state regulations that are                      
  obstructing vocational education programs were established                   
  by statute, and how the proposals would change the                           
  regulations.                                                                 
                                                                               
  COMMISSIONER COVEY responded that there was no need to                       
  change statutes.  He explained that regulations were                         
  established by the State Board of Education and are                          
  supported by statutes.  At one time, both funding and                        
  expenditure for voc-ed programs were by category.                            
  Expenditure by category has since been eliminated, and the                   
  proposals would also eliminate requirements for categorical                  
  funding for voc-ed programs.  He said the changes would not                  
  decrease funding for voc-ed programs.                                        
                                                                               
  Number 682                                                                   
                                                                               
  COMMISSIONER COVEY said reporting student contact time by                    
  hours instead of days was aimed at allowing school districts                 
  more allocating and reporting flexibility.                                   
                                                                               
  REP. BUNDE asked whether the residential high school                         
  proposal would conflict with the Molly Hootch decision.                      
                                                                               
  TAPE 93-7A, SIDE B                                                           
                                                                               
  Number 000                                                                   
                                                                               
  COMMISSIONER COVEY said it did not pose any legal problems.                  
  The state has complied with the decision and affords rural                   
  students access to local schools.  But some students want                    
  more programs than are available locally.  He mentioned the                  
  300 student waiting list at Mt. Edgecumbe.                                   
                                                                               
  Number 040                                                                   
                                                                               
  REP. IRENE NICHOLIA commented that if many students                          
  transferred away from Molly Hootch schools they may have to                  
  close, requiring all students to go elsewhere for                            
  educations.                                                                  
                                                                               
  COMMISSIONER COVEY acknowledged that possibility.  He said                   
  the state board was responding to requests from parents and                  
  they would try to avoid skimming off certain students.                       
                                                                               
  Number 082                                                                   
                                                                               
  REP. NICHOLIA mentioned deregulating vocational education.                   
  She expressed her belief that it was more important to have                  
  certified teachers in the classrooms and noncertified                        
  vocational instructors teaching voc-ed classes than to have                  
  a noncertified voc-ed instructor teaching academic classes.                  
                                                                               
  COMMISSIONER COVEY said the deregulation would involve                       
  shifting the talented and gifted program to a formula-driven                 
  program, which would free up $4.5 million statewide to be                    
  used for voc-ed programs.  He said it did not direct the                     
  school district to act in any certain way.  He added that                    
  teacher hiring, layoff and tenure would continue to be                       
  governed by contracts.                                                       
                                                                               
  Number 100                                                                   
                                                                               
  CHAIR TOOHEY reminded the committee of their need to vacate                  
  the meeting room by 5:00 p.m. and asked how long the                         
  foundation formula presentation would last.                                  
                                                                               
  MR. MONTGOMERY responded that a similar presentation had                     
  taken 90 minutes.                                                            
                                                                               
  COMMISSIONER COVEY said he would be available later to                       
  finish his presentation and he would gladly yield to the                     
  next presenters.                                                             
                                                                               
  Number 110                                                                   
                                                                               
  REP. G. DAVIS mentioned waivers from regulations and asked                   
  Commissioner Covey whether the state board had discussed the                 
  possibility of allowing students to prove competency in a                    
  subject area and therefore winning a waiver of the                           
  requirement for that class, and for the hours of instruction                 
  time it would require.                                                       
                                                                               
  COMMISSIONER COVEY noted that this was an interesting idea                   
  that had not arisen in discussion, but it could fit into the                 
  proposals.  He added that the board was to solicit public                    
  comment on a regulation that would allow the board to waive                  
  its own regulations.                                                         
                                                                               
  CHAIR TOOHEY thanked Commissioner Covey and the state board                  
  for their presentations and said the committee would                         
  reschedule time to complete their presentation.                              
                                                                               
  Number 155                                                                   
                                                                               
  CHAIR TOOHEY called an at-ease.                                              
                                                                               
  (Rep. Bunde left the meeting at 3:50 p.m.)                                   
                                                                               
  CHAIR TOOHEY called the meeting back to order at 4:02 p.m.                   
  She introduced Barbara Martin to begin her presentation on                   
  the state foundation funding formula.                                        
                                                                               
  Number 200                                                                   
                                                                               
  BARBARA MARTIN introduced herself as ASSISTANT                               
  SUPERINTENDENT FOR BUSINESS AND FINANCE FOR THE FAIRBANKS                    
  NORTH STAR BOROUGH SCHOOL DISTRICT, and as PRESIDENT OF THE                  
  ALASKA ASSOCIATION OF SCHOOL BUSINESS OFFICIALS.  She                        
  introduced Richard Swarner of the Kenai Peninsula Borough                    
  School District, and Janet Stokesbary of the Anchorage                       
  School District.  She announced her intent to describe the                   
  technicalities of how the foundation formula was calculated.                 
                                                                               
  MS. MARTIN began a series of overhead projections showing                    
  foundation formula calculations (copies of which are                         
  incorporated herein as Attachment 2 and are on file in the                   
  committee room).                                                             
                                                                               
  MS. MARTIN differentiated between city school districts and                  
  REAAs (Rural Education Attendance Areas).  She said school                   
  districts are run by cities or boroughs in which the city                    
  government shares some management, construction and funding                  
  functions.  She said REAAs get most of their money from the                  
  state and are responsible for managing their money and,                      
  along with the state, for managing their construction                        
  projects.                                                                    
                                                                               
  MS. MARTIN said all districts rely on the state as a primary                 
  funding source.  The Fairbanks district gets about 70                        
  percent of its budget from the state and, if it were an                      
  REAA, would get 90 percent from the state, she said.                         
                                                                               
  MS. MARTIN noted that all districts spend from 50 percent to                 
  90 percent of their budgets on salaries and benefits,                        
  averaging about 85 percent for larger districts.  Rural                      
  districts spend more on utilities and less on salaries.                      
                                                                               
  MS. MARTIN identified the schedule of district budgeting                     
  during a school year, as outlined on page 3 of Attachment 2.                 
  She stated that district enrollment projections are due by                   
  October 15, budgets are due to the city or borough by April                  
  1, cities must approve minimum budgets by April 30, final                    
  local appropriation must be done by May 31, and the final                    
  budget is due to the Department of Education by July 15.                     
                                                                               
  Number 280                                                                   
                                                                               
  MS. MARTIN said the foundation formula is a simple equation                  
  with some complicated features.  It is based on                              
  instructional units, each worth $60,000.  Schools are                        
  allocated units based on the number of students and on how                   
  dispersed they are.  A small school with fewer than 10                       
  students get two units, or $120,000.  The larger the school,                 
  the more students required for a unit.  At the higher end of                 
  the scale, a school with 17 elementary students would                        
  receive one unit, and 13 secondary students would receive                    
  one unit.  Smaller districts get more units because of their                 
  higher overhead costs.                                                       
                                                                               
  MS. MARTIN said schools get units for special education                      
  services:  gifted and talented; resource students, who                       
  require extra services such as speech or learning therapy;                   
  self-contained students, who require more specialized                        
  services because they are in more restrictive environments;                  
  and intensive students, such as autistic students, who need                  
  tremendous amounts of attention.  Three intensive students                   
  make one unit.  Forty gifted and talented students make one                  
  unit.  Units are also provided for bilingual and vocational                  
  services.                                                                    
                                                                               
  Number 327                                                                   
                                                                               
  MS. MARTIN discussed two mythical school districts - one was                 
  a city district, one was an REAA - to demonstrate the                        
  differences in how they are funded.  She referred to the                     
  area cost differential (ACD) rates, which are established in                 
  statute and therefore subject to change by the legislature,                  
  aimed at measuring differences in the cost of providing                      
  similar services at different school districts.  Anchorage                   
  is the basis, and Fairbanks' area cost differential is 4                     
  percent more than Anchorage.                                                 
                                                                               
  REP. BUNDE asked whether there had been attempts to change                   
  the ACD.                                                                     
                                                                               
  MS. MARTIN answered that the ACDs were adopted in 1987,                      
  along with the current foundation formula, and have not                      
  since been changed.  The Alaska 2000 bills from the governor                 
  would substitute the ACD with the Alaska school price index,                 
  which would change the area adjustment differential numbers.                 
                                                                               
  MS. MARTIN said multiplying the number of units by the ACD                   
  results in the adjusted units.  Adjusted units times the                     
  unit value results (originally set at $60,000 per unit, but                  
  now set at $61,000 per unit) in the basic need amount, or                    
  the amount necessary for a basic education, including                        
  overhead and administrative costs.                                           
                                                                               
  Number 373                                                                   
                                                                               
  REP. BRICE asked why the unit value was originally $60,000.                  
                                                                               
  MS. MARTIN answered that the number was selected when the                    
  foundation formula system of budget allocation was                           
  initiated, because it afforded an amount of state support                    
  similar to that provided under the previous allocation                       
  system.                                                                      
                                                                               
  Number 455                                                                   
                                                                               
  MS. MARTIN resumed her presentation.  She said there are two                 
  kinds of deducts from basic needs:  the deductible PL874 and                 
  the required local tax effort, which, when subtracted from                   
  the basic need, results in the foundation amount.                            
                                                                               
  MS. MARTIN explained PL874 as money paid by the state to                     
  school districts with students living on federal land which                  
  falls outside a district's property tax rolls, such as                       
  Indian lands or military bases, as compensation for lost                     
  property tax revenues.  She explained that there is a second                 
  category of students who are connected to the federal                        
  government but who do not live on federal land.  Category A                  
  students are worth $3,800 from the state through PL874, and                  
  Category B students are worth about $75.  In figuring the                    
  formula, the state cannot take into account much of the                      
  money the district gets for PL874, she said.                                 
                                                                               
  MS. MARTIN said the deduct for PL874 is an attempt at                        
  equalizing the financial benefit and therefore the level of                  
  education between districts with different levels of federal                 
  lands.  A federal disparity test requires that a state can                   
  allow no more than 25 percent funding disparity between                      
  districts.                                                                   
                                                                               
  MS. MARTIN said calculations of PL874 deducts are different                  
  for municipal school districts and REAAs.  Since local                       
  effort is not required of REAAs, the state takes 90 percent                  
  of their PL874 deduct.  Ms. Martin said she believed the                     
  district gets to keep 10 percent as an incentive for them to                 
  perform the paperwork and participate in the system.                         
                                                                               
  MS. MARTIN stated districts which contribute more than the                   
  minimum required local tax effort get to keep more of their                  
  PL874 deduct, as PL874 funds are meant to be benefits paid                   
  in lieu of taxes.  She noted that PL874 varies in importance                 
  among various school districts and the state receives about                  
  $50 million in PL874 funds each year.  Without the                           
  equalization of the PL874 funds, the state would have to pay                 
  out an additional $30 million in formula funds each year.                    
                                                                               
  Number 489                                                                   
                                                                               
  MS. MARTIN continued her presentation, moving on to the                      
  required local effort, calculated as the lesser of 4 mills                   
  of the annual assessed valuation set by the Department of                    
  Community and Regional Affairs, or at 35 percent of the                      
  prior year basic need.  The resulting required local effort,                 
  based on the assumption of a community's ability to raise                    
  school funds through property taxation, is deducted from the                 
  state's payment.  Only Valdez, the North Slope Borough and                   
  Unalaska use the second test, because they have large                        
  assessed valuations.                                                         
                                                                               
  Number 520                                                                   
                                                                               
  MS. MARTIN said the state obligation to a municipal school                   
  district is the combination of the foundation money and the                  
  local contribution.  An REAA's budget is what the state pays                 
  in foundation formula funding, plus the 10 percent of PL874                  
  funds they get to keep and any interest earnings on their                    
  treasury.                                                                    
                                                                               
  MS. MARTIN stated most municipalities can and will pay more                  
  to their school districts than the minimum local effort to                   
  provide better than minimum educational services.  There is                  
  a maximum local effort allowed.  The maximum local effort is                 
  calculated as the greater of either 2 mills of the property                  
  tax plus the required local effort, or 23 percent of the                     
  basic need plus the required local effort.                                   
                                                                               
  MS. MARTIN then introduced Mr. Richard Swarner to explain                    
  maximum local effort, as his school district has been up                     
  against the maximum local effort for years.                                  
                                                                               
  Number 566                                                                   
                                                                               
  RICHARD SWARNER, EXECUTIVE DIRECTOR OF BUSINESS MANAGEMENT                   
  FOR THE KENAI PENINSULA SCHOOL DISTRICT, introduced himself.                 
  He referred to a handout showing funding calculations for                    
  his district under the foundation formula.  (The document,                   
  on file in the committee room, is herein incorporated as                     
  Attachment 3.)  He said the 2 mill test for maximum local                    
  effort would probably apply in districts with high property                  
  assessments.                                                                 
                                                                               
  Number 587                                                                   
                                                                               
  MR. SWARNER noted that the Kenai school district has been at                 
  its cap for the last four years and has run out of new                       
  creative ways to increase its budget.  Under state law, the                  
  only way the district can increase its budget without                        
  violating the federal disparity test is to raise the                         
  instructional unit higher than $61,000.                                      
                                                                               
  MR. SWARNER said it is not true, as is believed by some,                     
  that the maximum local contribution for schools is 6 mills                   
  of assessed valuation.  The Kenai local effort, bolstered by                 
  a sales tax dedicated to education, is equivalent to an 8.4                  
  mill levy of assessed valuation.  Likewise, the effort from                  
  the Matanuska-Susitna district contributes an equivalent to                  
  about 9.5 mills and Anchorage is about 7 mills.                              
                                                                               
  CHAIR TOOHEY asked for questions from the committee.                         
                                                                               
  Number 621                                                                   
                                                                               
  REP. G. DAVIS asked what would be the effect of raising the                  
  instructional unit value to $63,000 from $61,000.                            
                                                                               
  MR. SWARNER answered that each $1,000 increase in the unit                   
  value costs an additional $12 million statewide.                             
                                                                               
  REP. BRICE asked whether the Fairbanks school district was                   
  bumping against its maximum local effort limit.                              
                                                                               
  MS. MARTIN responded that this is true under current                         
  calculations, but there is a proposed change in how students                 
  living on military bases are funded, which would raise the                   
  maximum local effort by about $5 million.                                    
                                                                               
  Number 642                                                                   
                                                                               
  REP. BUNDE asked about the governor's proposed funding                       
  formula changes.                                                             
                                                                               
  MS. MARTIN responded that she could discuss the components                   
  of the changes, but offer no opinion as yet.  She said there                 
  are four major components to the governor's plan as it                       
  pertains to funding.  The first is to adopt the school price                 
  index in lieu of the area cost differential.  The price                      
  index was developed through a committee work process in an                   
  effort to develop indices that truly reflect the cost of                     
  doing business in school districts, as opposed to                            
  households.  She said the department intended to create an                   
  index that could be updated each five years.  The second                     
  component was to eliminate the mandate to fund gifted and                    
  talented students and allow districts to devote some of the                  
  money now allocated to them to vocational educational                        
  programs.  The changes would remove some regulatory                          
  components of the gifted student program and give more local                 
  control.                                                                     
                                                                               
  MS. MARTIN said the fourth (sic) component of the changes                    
  would reduce the number of funding communities used along                    
  with educational units in calculating state funding.                         
  She said the changes would come in two ways.  The first                      
  would be a change in how small a district can be before it                   
  loses up-front money to help operate the school, which she                   
  said was controversial, especially as it relates to small                    
  REAAs.  The second way the changes would come is in changing                 
  the limits on how close larger districts on the state's road                 
  system can be to each other before they stop collecting up-                  
  front overhead operating money.  While Fairbanks now has                     
  five funding communities and Anchorage has three, the                        
  Department of Education says that each might have one under                  
  the new system.  The Mat-Su district might be most impacted                  
  by the change, she said.                                                     
                                                                               
  TAPE 93-7B, SIDE A                                                           
  Number 000                                                                   
                                                                               
  REP. BUNDE thanked Ms. Martin for her presentation, but                      
  lamented that the foundation formula program may soon change                 
  under the governor's proposals.  He asked for a similar                      
  presentation on the proposed changes in state educational                    
  funding processes.                                                           
                                                                               
  MS. MARTIN said she would be happy to do so.                                 
                                                                               
  Number 030                                                                   
                                                                               
  CHAIR TOOHEY asked if the Department of Education was ready                  
  to deal with students with fetal alcohol syndrome.                           
                                                                               
  MS. MARTIN said the state mandated training a few years ago                  
  on such children - training the Fairbanks district provided                  
  with outside experts, and requiring that new teachers also                   
  take such training.                                                          
                                                                               
  Number 045                                                                   
                                                                               
  REP. G. DAVIS asked whether there was a consensus among                      
  school districts that the FY 94 budget should include a                      
  raise in the foundation formula or more attention to debt                    
  reimbursement.                                                               
                                                                               
  MR. SWARNER responded that he did not know if there was a                    
  consensus, but both issues were on their way to being major                  
  statewide concerns and each required money.  He feared that                  
  the lack of new construction to meet increasing need would                   
  eventually require shockingly high levels of funding                         
  requests, possibly up to $1 billion.  He said he was                         
  encouraged at the governor's desire to frame the school                      
  construction issue as a problem to be resolved through a                     
  five-year process.  He stated that modern school districts                   
  face problems, such as crime in the school and teen                          
  pregnancy, that require much more money to address under                     
  governmental mandate than the relatively simple problems of                  
  gum-chewing and running in the halls faced by school                         
  districts of 50 years ago.                                                   
                                                                               
  Number 127                                                                   
                                                                               
  MS. MARTIN mentioned the question of single-site school                      
  districts.                                                                   
                                                                               
  REP. BUNDE complained that more attention was paid to                        
  pupil-teacher ratios than to teacher-administrator ratios.                   
                                                                               
  MS. MARTIN said the disparity in school districts sizes,                     
  locations and needs around the state posed problems in                       
  finding meaningful data.  She said there is a need to be                     
  able to explain such disparities to the public.                              
                                                                               
  (Rep. Olberg left at 4:43 p.m.)                                              
                                                                               
  Number 162                                                                   
                                                                               
  JOHN ANTTONEN, SUPERINTENDENT OF THE HOONAH SCHOOL DISTRICT,                 
  described his background as a superintendent in a borough in                 
  an REAA and in a small single-site school district.  He said                 
  equity in school funding of different districts is a                         
  subjective consideration, but there are definite problems                    
  working against single sites, or single attendance areas.                    
                                                                               
  MR. ANTTONEN said multiple-site districts can count from                     
  zero for each funding category area, such as bilingual,                      
  special, or vocational education; whereas, single-site areas                 
  must count from zero in its budgets for the entire district,                 
  which he said short-changes them.  He commented that the                     
  single-site consortium has unsuccessfully proposed                           
  legislation to deal with this problem, and he accused the                    
  legislature of not wanting to tinker with the foundation                     
  formula.  The single-site districts have received                            
  supplemental appropriations for five or six years to address                 
  the inequities.  He said Hoonah schools receive about                        
  $160,000 in supplementals.                                                   
                                                                               
  Number 200                                                                   
                                                                               
  MR. ANTTONEN stated most single-sites serve from 400 to 500                  
  students.  Small municipality single-sites often have a                      
  small property tax base, or federal lands, which makes it                    
  hard for them to raise funds for schools, he said.                           
                                                                               
  REP. B. DAVIS asked whether the administration's proposed                    
  funding changes would address these inequities.                              
                                                                               
  Number 247                                                                   
                                                                               
  MR. ANTTONEN answered that the changes from area cost                        
  differential to a price index system would grant some                        
  single-sites an amount approximately equal to their recent                   
  annual supplemental appropriations.  But Hydaburg, Skagway                   
  and Yakutat, and one other single-site, would not see their                  
  inequities fully addressed by the changes.                                   
                                                                               
  CHAIR TOOHEY thanked those making the presentations and                      
  ADJOURNED the meeting at 4:50 p.m.                                           

Document Name Date/Time Subjects