Legislature(1997 - 1998)
05/01/1997 03:07 PM House HES
| Audio | Topic |
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE HEALTH, EDUCATION AND SOCIAL
SERVICES STANDING COMMITTEE
May 1, 1997
3:07 p.m.
MEMBERS PRESENT
Representative Con Bunde, Chairman
Representative Joe Green, Vice Chairman
Representative Al Vezey
Representative Brian Porter
Representative Fred Dyson
Representative J. Allen Kemplen
MEMBERS ABSENT
Representative Tom Brice
COMMITTEE CALENDAR
CS FOR SENATE BILL NO. 134(HES)
"An Act relating to home schooling for elementary and secondary
students."
- MOVED CSSB 134(HES) OUT OF COMMITTEE
* HOUSE BILL NO. 215
"An Act making an appropriation to the education facilities fund;
making an appropriation from the constitutional budget reserve fund
under art. IX, sec. 17(c), Constitution of the State of Alaska; and
providing for an effective date."
- HEARD AND HELD
* HOUSE BILL NO. 216
"An Act relating to the Education Facilities Financing Authority;
and providing for an effective date."
- HEARD AND HELD
* HOUSE BILL NO. 229
"An Act relating to the establishment and operation of charter
schools."
- HEARD AND HELD
(* First public hearing)
PREVIOUS ACTION
BILL: SB 134
SHORT TITLE: HOME SCHOOLING EDUCATION PROGRAM
SPONSOR(S): SENATOR(S) LEMAN, Miller, Phillips, Donley, Green,
Taylor, Ward, Parnell, Sharp
JRN-DATE JRN-DATE ACTION
03/12/97 695 (S) READ THE FIRST TIME - REFERRAL(S)
03/12/97 695 (S) HES
04/11/97 (S) HES AT 9:00 AM BUTROVICH ROOM 205
04/11/97 (S) MINUTE(HES)
04/11/97 1100 (S) HES RPT CS 3DP 1NR SAME TITLE
04/11/97 1100 (S) DP: GREEN, LEMAN, WARD NR: WILKEN
04/11/97 1100 (S) ZERO FN TO SB & CS (DOE)
04/14/97 (S) RLS AT 10:45 AM FAHRENKAMP RM 203
04/22/97 1385 (S) RULES TO CALENDAR 4/22/97
04/22/97 1422 (S) READ THE SECOND TIME
04/22/97 1422 (S) HES CS ADOPTED Y12 N8
04/22/97 1422 (S) COSPONSOR(S): DONLEY, GREEN, TAYLOR,
04/22/97 1422 (S) WARD, PARNELL, SHARP
04/22/97 1422 (S) ADVANCED TO THIRD READING
UNAN CONSENT
04/22/97 1422 (S) READ THE THIRD TIME CSSB 134(HES)
04/22/97 1423 (S) PASSED Y20
04/22/97 1433 (S) TRANSMITTED TO (H)
04/23/97 1285 (H) READ THE FIRST TIME - REFERRAL(S)
04/23/97 1285 (H) HES
05/01/97 (H) HES AT 3:00 PM CAPITOL 106
BILL: HB 215
SHORT TITLE: APPROP: EDUCATION FACILITIES FUND
SPONSOR(S): REPRESENTATIVE(S) KOTT, Green
JRN-DATE JRN-DATE ACTION
03/26/97 850 (H) READ THE FIRST TIME - REFERRAL(S)
03/26/97 850 (H) HES, FINANCE
05/01/97 (H) HES AT 3:00 PM CAPITOL 106
BILL: HB 216
SHORT TITLE: EDUC. FACILITIES FINANCING AUTHORITY
SPONSOR(S): REPRESENTATIVE(S) KOTT, Green
JRN-DATE JRN-DATE ACTION
03/26/97 850 (H) READ THE FIRST TIME - REFERRAL(S)
03/26/97 850 (H) HES, FINANCE
05/01/97 (H) HES AT 3:00 PM CAPITOL 106
BILL: HB 229
SHORT TITLE: STATE BOARD OF CHARTER SCHOOLS
SPONSOR(S): REPRESENTATIVE(S) VEZEY, Dyson, Mulder, Kohring, Kott
JRN-DATE JRN-DATE ACTION
04/04/97 989 (H) READ THE FIRST TIME - REFERRAL(S)
04/04/97 989 (H) HES
04/10/97 1068 (H) COSPONSOR(S): DYSON, MULDER
04/11/97 1085 (H) COSPONSOR(S): KOHRING
04/16/97 1125 (H) COSPONSOR(S): KOTT
05/01/97 (H) HES AT 3:00 PM CAPITOL 106
WITNESS REGISTER
RACHAEL MORELAND, Researcher
for Senator Leman
Alaska State Legislature
Capitol Building, Room 113
Juneau, Alaska 99801
Telephone: (907) 465-2095
POSITION STATEMENT: Provided sponsor statement for CSSB 134(HES)
NANCY BUELL, Ed. D., Director
Teaching and Learning Support
Department of Education
801 West Tenth Street, Suite 200
Juneau, Alaska 99801-1894
Telephone: (907) 465-8689
POSITION STATEMENT: Testified on CSSB 134(HES) and HB 229
GEORGE DOZIER, Legislative Assistant
to Representative Kott
Alaska State Legislature
Capitol Building, Room 204
Juneau, Alaska 99801
Telephone: (907) 465-6848
POSITION STATEMENT: Provided sponsor statement for HB 215 and HB
216
CARL ROSE, Executive Director
Association of Alaska School Boards
316 West 11th Street
Juneau, Alaska 99801
Telephone: (907) 586-1083
POSITION STATEMENT: Testified in support of HB 215 and HB 216;
testified on HB 229
B. A. WEINBERG, Lobbyist
Kashunamiut School District; Citizens for the Educational
Advancement of Alaska's Children
300 Hermit Street, Number 12
Juneau, Alaska 99801
Telephone: (907) 586-3897
POSITION STATEMENT: Testified on HB 215 or HB 216
STEPHEN McPHETRES, Executive Director
Alaska Council of School Administrators
326 Fourth Street, Number 404
Juneau, Alaska 99801
Telephone: (907) 586-9702
POSITION STATEMENT: Testified on HB 215 and HB 216
BOB LeRESCHE
Cominco / Red Dog Mine
4270 Glacier Highway
Juneau, Alaska 99801
Telephone: (907) 586-8338
POSITION STATEMENT: Testified on HB 215 and HB 216
ROSS A. KINNEY, Deputy Commissioner
Office of the Commissioner
Department of Revenue
P.O. Box 110400
Juneau, Alaska 99811-0400
Telephone: (907) 465-4880
POSITION STATEMENT: Testified on HB 215 and HB 216
MICHAEL A. MORGAN, Project Management Professional (PMP)
Facilities Section
Educational Support Services
Department of Education
801 West Tenth Street, Suite 200
Juneau, Alaska 99801-1894
Telephone: (907) 465-1858
POSITION STATEMENT: Testified on HB 216
BRAD PIERCE, Senior Policy Analyst
Office of Management and Budget
Office of the Governor
P.O. Box 110020
Juneau, Alaska 99811-0020
Telephone: (907) 465-4677
POSITION STATEMENT: Testified on HB 215 and HB 216
KEVIN RITCHIE, Lobbyist
Alaska Municipal League and the Alaska Conference of Mayors
217 Second Street, Number 200
Juneau, Alaska 99801
Telephone: (907) 586-1325
POSITION STATEMENT: Testified on HB 215 and HB 216
SANDY SHOULDERS
P.O. Box 236
Talkeetna, Alaska 99676
Telephone: (907) 733-3050
POSITION STATEMENT: Testified in support of HB 215 and HB 216
MAUREEN SWED, Representative
Talkeetna Elementary Parent Teacher Association
P.O. Box 646
Talkeetna, Alaska 99676
Telephone: (907) 733-1500
POSITION STATEMENT: Testified on HB 215 and HB 216
LARRY WIGET, Director
Government Relations
Anchorage School District
4600 DeBarr Road
Anchorage, Alaska 99516
Telephone: (907) 269-2250
POSITION STATEMENT: Testified in support of HB 215, HB 216
and HB 229
LINDA SHARP
P.O. Box 190051
Anchorage, Alaska 99519
Telephone: (907) 245-5501
POSITION STATEMENT: Testified on HB 215, HB 216
and HB 229
MIKE BOOTS, Member
Alaskans for Educational Choice
P.O. Box 92021
Anchorage, Alaska 99509
Telephone: (907) 276-1558
POSITION STATEMENT: Testified on HB 229
JOHN CYR, President
National Education Association-Alaska, NEA-Alaska
114 Second Street
Juneau, Alaska 99801
Telephone: (907) 586-3090
POSITION STATEMENT: Testified on HB 229
LAURIE PERKINS, Member
Juneau Charter School Committee
1535 Beach Street
Douglas, Alaska 99801
Telephone: (907) 364-3450
POSITION STATEMENT: Testified in support of HB 229
BECKY HUGGINS
P.O. Box 878115
Wasilla, Alaska 99687
Telephone: (907) 373-6419
POSITION STATEMENT: Testified in support of HB 229
BILL THOMAS
P.O. Box 5196
Ketchikan, Alaska 99901
Telephone: (907) 225-4833
POSITION STATEMENT: Testified on HB 229
NANCY SCHIERHORN
11935 Kristie Circle
Anchorage, Alaska 99516
Telephone: (907) 345-5567
POSITION STATEMENT: Testified on HB 229
BILL BJORK, President
Fairbanks Education Association
P.O. Box 333
Ester, Alaska 99725
Telephone: (907) 479-3479
POSITION STATEMENT: Testified on HB 229
ACTION NARRATIVE
TAPE 97-40, SIDE A
Number 0000
CHAIRMAN CON BUNDE called the House Health, Education and Social
Services Standing Committee meeting to order at 3:07 p.m. Members
present at the call to order were Representatives Bunde, Vezey,
Dyson and Kemplen. Representatives Porter and Green arrived at
3:22 p.m. and 3:23 p.m., respectively. Representative Brice was
absent.
CSSB 134(HES) - HOME SCHOOLING EDUCATION PROGRAM
Number 0070
CHAIRMAN BUNDE announced the first item on the agenda was CSSB
134(HES), "An Act relating to home schooling for elementary and
secondary students."
Number 0074
RACHAEL MORELAND, Researcher for Senator Leman, Alaska State
Legislature, explained that CSSB 134(HES) adds a paragraph to the
compulsory attendance policy, AS 14.30.010(b), providing an
exemption for children schooled at home by a parent or legal
guardian. Currently, there are no specific provisions in Alaska
statute pertaining to home schooled students. There are several
ways current home schoolers comply with the law. Home schoolers in
technical compliance are now required to follow the provisions for
private and exempt schools, or they may participate in a
government-sponsored course. Neither provision was designed with
home schoolers in mind. This bill codifies the current practices
of many home schoolers. Families in which children are home
schooled are numerous and the number is growing. It is the opinion
of Senator Leman and the Senate that home schoolers are
acknowledged in law.
Number 0152
CHAIRMAN BUNDE commented that other states have introduced
legislation which would remove the mandatory school attendance
provision.
MS. MORELAND could not comment on Senator Leman's position on this
type of legislation.
Number 0193
REPRESENTATIVE FRED DYSON stated that our state law has not made a
provision for children who are schooled at home. He felt Alaska
had a sympathetic administration which has been doing the right
thing on slightly questionable grounds. This bill, codifying the
process, is a good step and follows a national trend.
Number 0259
NANCY BUELL, Ed. D., Director, Teaching and Learning Support,
Department of Education, expressed support for CSSB 134(HES) as it
will provide clarification for parents choosing to home school.
Right now there are lots of parents who write in and declare
themselves a private school in order to qualify. This is not what
the private school legislation was intended to do. There are no
means to receive accurate numbers of either private schools or home
schools because both home schools and private schools are
registering on the same list, it is a voluntary registration.
Number 0329
REPRESENTATIVE DYSON asked whether a number of states have been
doing what Alaska has done and what we are now trying to codify.
Number 0346
DR. BUELL believed that most states have laws which legitimize home
schooling. Home schooling has a long tradition. The first court
case, regarding home schooling, was held in the 1920s. It has been
considered a legitimate alternative to the compulsory schooling
laws. Most states ask that home schooled children be tested in
some manner, so that people can see that they are doing as well as
other children.
Number 0387
REPRESENTATIVE DYSON commended the Administration on working with
these parents.
Number 0395
DR. BUELL commented that several Administration have done this.
Number 0403
CHAIRMAN BUNDE asked whether home schools used the state
correspondence school.
Number 0408
DR. BUELL said no, although there are a lot of home school parents
who use the correspondence school.
Number 0415
CHAIRMAN BUNDE mentioned that children who were home schooled would
not receive a diploma unless they were involved in the state
correspondence school.
Number 0427
DR. BUELL answered that the parents could declare their home school
a private school in which case they could give a diploma under
whatever name they might want to call it.
Number 0452
REPRESENTATIVE J. ALLEN KEMPLEN clarified that CSSB 134(HES) is
supported by the Administration.
Number 0457
REPRESENTATIVE DYSON made a motion to move CSSB 134(HES) from
committee with individual recommendations and attached zero fiscal
note. There being no objection, CSSB 134(HES) moved from the House
Health, Education and Social Services Standing Committee.
HB 215 - APPROP: EDUCATION FACILITIES FUND
HB 216 - EDUC. FACILITIES FINANCING AUTHORITY
Number 0487
CHAIRMAN BUNDE announced that the committee would address HB 215,
"An Act making an appropriation to the education facilities fund;
making an appropriation from the constitutional budget reserve fund
under art. IX, sec. 17(c), Constitution of the State of Alaska; and
providing for an effective date," and HB 216, "An Act relating to
the Education Facilities Financing Authority; and providing for an
effective date."
Number 0498
GEORGE DOZIER, Legislative Assistant to Representative Kott, Alaska
State Legislature, stated that Representative Kott has become
increasingly concerned about the inadequate and deteriorating
school facilities throughout the state of Alaska. Representative
Kott's bills, HB 215 and HB 216, address this deficiency. House
Bill 216 establishes an Education Facilities Financing Authority,
located within the Department of Education (DOE) and an Education
Facilities Fund, under the control of the Education Facilities
Financing Authority but administered by the Department of Revenue
(DOR). The Education Facilities Financing Authority would issue
bonds to directly finance the construction of those school
facilities specifically approved by the legislature. This bill
includes funding provisions for a number of new construction and
improvement projects. "In addition, HB 216 would permit the
authority to contract, to pay up to 70 percent of the net debt
service, on municipal bonds that are issued to finance municipal
school facilities and up to 100 percent of such bonds which are
issued by the University of Alaska." He reiterated that specific
projects would have to be approved by the legislature.
MR. DOZIER explained that the authority would apply only non-corpus
balances of the fund to debt service on bonds that are issued by
the authority and would also pay specified percentages of municipal
debt service on municipal bonds. The authority would have the
right to pledge assets of the fund as security for bonds that would
be issued. The fund corpus would not be utilized, only the
earnings of the corpus would be used. He said HB 215 transfers,
from the constitutional budget reserve fund (CBRF), $1.2 billion
into the education facilities fund.
Number 0696
CHAIRMAN BUNDE clarified that HB 215 would essentially dedicate
$1.2 billion to a permanent fund for school facilities. This bill
deals with school facilities as opposed to the educational
endowment which deals with the operation of the schools. He noted
that the fiscal note was for $500,000. He understood the need for
money to set up the Education Facilities Fund, but questioned why
it couldn't pay its own operating expenses.
Number 0756
MR. DOZIER answered that he had just received the fiscal note and
hadn't had a chance to review it.
Number 0778
CARL ROSE, Executive Director, Association of Alaska School Boards,
said the association supports the efforts of both HB 215 and HB
216. They feel that there is some value in restricting dollars for
the purpose of investment to address some of the long term problems
with schools in the state. The real value of these bills is that
a measure such as this can create latitude in the state's capital
budget in years to come. If the legislature has a concern
regarding downsizing or closing the fiscal gap, this type of
measure can create the needed latitude.
MR. ROSE felt the numbers looked favorable in terms of addressing
current issues before they become critical. Last year, the state
appropriated $7 million into the capital budget for schools while
a billion dollars of need has been identified. These bills address
this long term and large problem in a creative way.
Number 0888
CHAIRMAN BUNDE encouraged him to identify the differences between
wants and needs. The state needs very little, but wants a lot.
MR. ROSE responded that the state needs a lot.
Number 0907
CHAIRMAN BUNDE referred to the 30 percent local match requirement
and the zero percent match for the university. He asked whether
the association had taken a position on that requirement.
Number 0917
MR. ROSE answered that many of the school districts across the
state lack the ability to meet this match requirement. He felt
there would be ongoing negotiations and proposed amendments which
would lessen that matching figure. There is a statewide problem,
without the necessary resources statewide, about how to meet this
match requirement. He mentioned the inability of the Rural
Education Attendance Area (REAA) to meet such a match requirement
because of the small property value or their ability to garner a
local contribution.
Number 0957
B. A. WEINBERG, Lobbyist, Kashunamiut School District; Citizens for
the Educational Advancement of Alaska's Children, was next to
testify. He said the latter group is comprised of rural school
districts, parents and citizens who are concerned about the state's
mandate for providing adequate and equitable funding for public
education and facilities. The DOE has identified, through their
capital improvement program (CIP) application process, about $615
million of capital improvement projects that meet the criteria
established under law. This problem will not go away if it is
ignored or put off; it will only become worse and more expensive to
fix.
MR. WEINBERG explained that HB 215 and HB 216 provide for a long-
term, steady stream of revenue to begin addressing these needs.
The groups he represents endorse the concept of these bills,
especially the projects which are on the DOE's CIP priority list.
Number 1066
CHAIRMAN BUNDE asked whether the people he represented would be
able to meet the match requirement in order to take advantage of
this program.
Number 1077
MR. WEINBERG responded that REAAs, in most cases, have no means of
coming up with a 30 percent match. In the case of the Kashunamiut
School District, they are unable to come up with the 2 percent
match needed for their project under the current statute. The only
practical place for this money to come from is out of their
district's operating budget. If you were to require 15 times this
2 percent local match, it would equal several years of the total
operating budget of the school district. The Kashunamiut School
District facility has been independently documented as being a
life, health and safety hazard to students as well as being
educationally inadequate. Under the DOE's space guidelines it is
at 189 percent of capacity. This building is owned by the state,
and the state has statutory obligations with regard to education in
unorganized boroughs. He concluded that this school district and
many other REAAs could not meet a 30 percent match requirement.
Number 1160
CHAIRMAN BUNDE asked whether this meant that HB 215 and HB 216 were
urban school bills.
MR. WEINBERG answered possibly but he hoped that, as these bills
went through the process, they would incorporate the needs of the
rural school districts. Most of the highest capital improvement
projects, as identified in the need criteria of the DOE, are
located in rural school districts.
Number 1203
STEPHEN McPHETRES, Executive Director, Alaska Council of School
Administrators, stressed that HB 215 and HB 216 are not just
educator's bills. This project started off in cooperation with the
Cominco / Red Dog Mine Company, who recognized that schools across
the state are deteriorating and are in need of help. If work is
not done on these facilities, the local businesses and industries
will eventually pay higher taxes for the repairs and maintenance of
the educational facilities. Cominco felt this proposal had a lot
of merit.
MR. McPHETRES said that HB 215 asks the legislature to take $1.2
million from the CBRF in order to leverage the sale of revenue
bonds which would then finance school construction and major
maintenance projects across the state for years to come. This fund
would be able to operate for five to ten years, providing a growing
stream of revenue to pay for these projects. This is different
from general obligation bonds which are one shot deals with a list
of projects on the ballot. This fund would address the rising
needs of school construction and major maintenance.
MR. McPHETRES explained that the $1.2 billion would be given back.
Money would be invested through the Alaska Permanent Fund
Corporation, the interest off the Education Facilities Fund would
be used to secure revenue bonds. Once the revenue bonds have been
expended, the $1.2 billion would be available for further use by
the legislature. He stated that these expenditures would also
stabilize the construction industry.
Number 1329
BOB LeRESCHE, Cominco / Red Dog Mine, referred to a handout located
in the committee file. These bills involve appropriations of $1.2
billion from the CBRF to a new fund, which these bills set up,
called the education facilities fund. That money is then invested
by the permanent fund corporation under exactly the same rules it
uses to invest permanent fund money. The education facilities fund
wouldn't require any special management; it would allow the
Education Facilities Financing Authority to sell revenue bonds
based on corporate assets, not secured specifically by this $1.2
billion. This bill provides three different channels to authorize
revenue bonds. Revenue bond proceedings could be used, with
legislative authorization under Section A, to directly fund the
school construction project. This funding amount is determined by
the authorization section of these bills.
MR. LeRESCHE mentioned that the Education Facilities Financing
Authority can be authorized to use the bond proceeds to pay
reimbursement contracts with municipalities or the university for
special school projects. These projects, authorized by the
legislature, would be reimbursed up to 70 percent of debt service.
The legislature would authorize specific projects in an annual
authorization bill. The legislature may authorize the authority to
reimburse 100 percent of university bonds for university deferred
maintenance.
MR. LeRESCHE said the actual authorizations, which are included in
this initial bill, could be for the amount listed or they could be
greater or less than that amount. A proposal to change this bill
calls for an authorizations in the first box. It applies the
formula under AS 14.11.008, the school district participation, in
the grant program. This would make the required match dependent on
the ratio of full value assessments to the average daily membership
(ADM). The minimum amount of local share would be 2 percent, going
up to 10 percent with a maximum percentage of 30 percent. Most
large municipalities would have a 30 percent local match. Some
smaller municipalities including Unalaska, Valdez and the North
Slope Borough would also have a 30 percent match.
Number 1635
MR. LeRESCHE explained that these bills provide an ongoing
solution. The authority would stay in place as long as the
legislature decides to maintain it and the legislature could
annually authorize specific school projects off the budget. These
projects would be funded through bond proceeds. Part of the
earnings from this fund would be used to pay the debt service on
the bonds. This would allow the state to build schools when they
are needed, rather than waiting for earnings to accrue. The longer
the waiting period, the greater the cost of the project will be.
MR. LeRESCHE stated that this fund would actually gain in value
while it paid off these bonds. This occurs through the magic of
arbitrage which the state has the right to do. Cominco's bond
counsel and the DOR's bond counsel have been discussing this
proposal. There is some question of whether or not this fund would
be forced to yield restrict by the Internal Revenue Service (IRS).
The Cominco bond counsel is convinced that this bill is written so
that there wouldn't be a yield restriction. The fiscal note was
written by the "permanent fund" for the permanent fund on the
assumption that they would have to restrict the yield on these
investments. It would cost $500,000 a year to do the investments
differently than the standard corpus. He felt that once it was
determined that yield restriction does not apply to this fund, the
fiscal note would decrease. This fund could easily support itself.
Number 1800
MR. LeRESCHE announced that this bill should have chosen the title,
"corporation" instead of "authority." This paper authority is
necessary if the state is going to sell revenue bonds secured by
the assets of a corporation under the Education Facilities
Financing Authority. This bill suggests that the authority consist
of the commissioners of the Department of Revenue, the Department
of Transportation/Public Facilities and the Department of
Education. The commissioners would only be able to sign the bonds,
which are directed by the legislature in the annual allocations.
Number 1858
MR. LeRESCHE explained that a simple, but accurate way to look at
this authority is that it is modeled after the Alaska Housing
Finance Corporation (AHFC) and the Alaska Industrial Development
and Export Authority (AIDEA) system of financing. The Education
Facilities Financing Authority does not contain the same management
or authority models of AHFC and AIDEA. Basically AHFC and AIDEA
started out with appropriations to their corporate assets and used
those appropriations to leverage billions of dollars in private
development and homes. The Education Facilities Financing
Authority is a financially similar entity, using the basic deposit
to leverage early construction of necessary capital facilities and
major maintenance. The Education Facilities Financing Authority
would be as profitable as AIDEA and AHFC.
MR. LeRESCHE referred to the legislative majority's five-year
budget strategy which uses the earnings from this $1.2 billion as
revenue. The proposed committee substitute was consolidated into
the five-year spending plan. The result is that $731 million worth
of schools can be obtained and a certain dividend can still fall
back into the revenue stream. This is done by allocating a portion
of the earnings of the CBRF to the retirement of the school bonds.
This does not impact the spending plan and the fiscal gap comes
down almost as fast as in the five-year budget strategy.
Number 1920
CHAIRMAN BUNDE referred to the "Molly Hootch situation," where the
state built far more schools than were needed. Now there is the
problem of having schools consisting of four to ten students,
costing the state a lot of money. He asked whether these bills
would start another construction bonanza focused more on enriching
contractors than on educational excellence.
Number 1947
MR. LeRESCHE explained that the only school projects that would be
done are the ones authorized by the legislature in the
authorization section of the bill. This bill would allow
authorization of regional high schools and does not have to create
a construction bonanza. It is the process and the technique that
he is advocating with this bill, not a specific item on the
allocation list. If there is an agreement that schools need to be
built, that the university needs money to for deferred maintenance,
then this bill is the most cost-effective and efficient way to do
accomplish these goals.
Number 1985
CHAIRMAN BUNDE pointed out that the university gets 100 percent,
while local school districts have to come up with some match, 30
percent initially and perhaps smaller. He asked why the university
was being given a free ride, when the municipalities were required
to come up with a match.
Number 2000
MR. McPHETRES answered that the university is more directly state-
supported than a school that is part of another governmental
structure such as a school district.
Number 2012
CHAIRMAN BUNDE referred to an initiative petition which is being
circulated about an educational endowment. This educational
endowment also finds the CBRF to be a useful vehicle. He asked
whether it was possible to do both the endowment and the
construction of facilities.
Number 2020
MR. McPHETRES answered that it was not possible to do both with the
CBRF.
Number 2025
CHAIRMAN BUNDE clarified that they were familiar with the sweep
provision on the CBRF and that it would be conceivable that money
would not be available for any of these projects if the sweep were
required.
Number 2036
MR. LeRESCHE understood the budget process to be such that there is
a "sweep provision" in the front section and then a reappropriation
back from where it was originally swept. This would fit in the
same category. If the sweep were fully enforced and it couldn't be
put back in, then all AHFC's assets, including the science
foundation and AIDEA's liquid assets, would be put back in the
CBRF. This Education Facilities Financing Authority is not in a
different category.
Number 2064
REPRESENTATIVE KEMPLEN clarified that the Education Facilities
Financing Authority is similar to the AHFC. He asked the
connection between the capital on one side and the operations and
maintenance on the other side. The endowment referendum focuses on
the operating side of the equation and the Education Facilities
Financing Authority is on the capital side of the equation. He
asked who would be paying for the operations and maintenance and
discussed the difficulties in coming up with state money to fund
the additional facilities.
Number 2168
MR. McPHETRES referred back to the chair's question about whether
or not the CBRF would be able to support the endowment and the
authority. The answer to the question was that both sides could
not be supported. He said an endowment could be set up somewhere
else and still have authority under the CBRF. Whenever any school
district gets into a design plan for a facility in their school
district, the cost of operations is part of the determination of
whether or not they can afford it and if they need to have it. The
operational component is written into their proposed design. Many
of the repairs, there are 61 projects currently on the list which
have not been addressed for years, are health and safety issues.
In the case of a new facility, many of those facilities are
replacing older facilities. He referred to the Juneau School
District's closing Capital School and replacing it with Riverbend
Elementary School. The costs are being shifted from one facility
to the other.
TAPE 97-40, SIDE B
Number 0000
MR. McPHETRES added that he felt the proposed committee substitute
would include a local contribution. He felt the local school board
should be trusted to come up with a fundable operating budget.
Number 0031
REPRESENTATIVE KEMPLEN asked who made the decision to fund which
project first.
Number 0071
MR. LeRESCHE answered that the legislature decides. Even though
the DOE priority list is put into statute, the legislature can
still authorize what they choose to authorize.
Number 0120
ROSS A. KINNEY, Deputy Commissioner, Office of the Commissioner,
Department of Revenue, stated that in January, 1997, the Treasury
Division of DOR came before the legislature and outlined a long
range investment plan for the CBRF. This plan was comprised of
three components; an investment strategy, reserve strategy and an
asset allocation. During this time, the division asked for a
supplemental appropriation for the fiscal 1997 budget to begin to
implement the asset allocation and these strategies. This
appropriation was approved by the legislature. The DOR also asked
for an increment to the fiscal year 1998 budget of $100,000 to
continue the operation and implementation of this asset allocation.
This increment has thus far been approved in the fiscal year 1998
operating budget.
MR. KINNEY explained that HB 215 appropriates $1.2 billion from the
CBRF. This appropriation would dramatically change the asset
allocation, the reserve policy and the investment strategy which
was presented to the legislature. It will reduce the investment
horizon and may also take the described equity component, making it
no longer feasible for CBRF investments. The DOR thinks that the
CBRF is an important component of the state's long range financial
plan and it should be managed accordingly. At this point the DOR
is back before the legislature asking for direction. If HB 215 is
to pass, then the DOR has to change the approved strategy. The DOR
would redeploy those assets into a different mechanism in order to
be able to earn the highest rate of return with the least risk, but
information is needed to determine what the time constraints should
be on each of these categories of money.
MR. KINNEY said HB 216 requires that the fund and any other funds
of the authority be invested through the Alaska Permanent Fund
Corporation, which is responsible for investing the assets of the
permanent fund with a diversified asset allocation. The
legislature has added a couple investment authorities to the Alaska
Permanent Fund Corporation through the mental health trust fund and
through the science and technology fund.
MR. KINNEY said there needs to be a recognition that the asset
allocation on those three funds is the same; it does not change.
Every time the Alaska Permanent Fund Corporation board of directors
changes the asset allocation for the permanent fund, the asset
allocations for the other two funds change along with it. This is
extremely important because the DOR focuses the investment of those
funds on a single asset allocation which makes it very easy to
implement and to monitor.
MR. KINNEY explained that the state has a bond attorney, who is
counsel to the state bond committee, and a financial advisor.
These bills have been provided to them for their review. The state
believes, based on the opinions that have been received, that bonds
issued in the form of revenue bonds, utilizing a portion of the
CBRF to collateralize or pledge as security the interest earnings
of that fund, would be yield restricted. This means that the
investments that are acquired to pay the interest on the bonds
would be restricted to the same rate of interest that are paid on
the bond issue. Therefore, there would be no net gain. If the
state were able to sell bonds for 6 percent, then the investment
income would be limited to 6 percent on what has been pledged as
collateral to pay for the bond issue. No gain whatsoever. In the
permanent fund situation, this scenario changes the asset
allocation for this particular section of money, the $1.2 billion
or the portion that has been pledged.
MR. KINNEY explained that, in the normal course of events, revenue
bonds are normally sold based on a revenue stream provided by the
project. Historically, this would comprise a building that has a
rent stream coming to it, a water or sewer treatment plant with
recognized revenues from users. In the proposed situation, revenue
bonds would be sold based on earnings off of money which has been
set aside and restricted for that particular purpose.
MR. KINNEY said this proposed situation creates some concerns for
the DOR. He questioned what would happen if the IRS doesn't allow
it. The interest rate would be changed because it becomes taxable,
the bond holders would incur a liability and they would come back
to the state of Alaska to ask to be made whole. The bond holders
would probably succeed in their litigation and the state of Alaska
would be liable for making up that difference, resulting in a
significant loss.
MR. KINNEY realized that there are a number of differences of
opinion with respect to this bill. While the DOR recognizes the
need for some mechanism to fund school construction, they are
waiting for a legal opinion from Mr. LeResche and his bond
attorney. Currently, the DOR has to take this position based on
the recommendations from their legal counsel and financial advisors
hired by the Alaska State Bond Committee.
Number 0463
CHAIRMAN BUNDE referred to his previous question about whether or
not there was enough money to create both the Education Facilities
Financing Authority and the educational endowment. He assumed that
Mr. Kinney would concur that there is not enough money in the CBRF
to fund both of them.
Number 0500
MR. KINNEY answered that there will be approximately $3 billion in
the CBRF. The Education Facilities Financing Authority would take
$1.2 billion and the endowment would need more than what would
remain in the CBRF. Based on the asset allocation, agreed upon by
the legislature, there will be an investment rate of return of 7.19
percent on the CBRF. The DOR divided that amount into three
components; a short term reserve component to meet the cash flow
needs of the current fiscal gap within the budget, a transition
portion that will get the state to the point where the budget will
be balanced shortly after 2002 or 2003, and a long term component.
The first component, the short term, is comprised of $800 million.
The intermediate term has $1.2 billion and the long term has $800
million. The DOR began to shift that amount from the long term to
the intermediate. When that money is taken away, then there is not
the ability to employ the same long term strategies. By reducing
the CBRF by $1.2 million, the expected rate of return is reduced
from 7.19 percent to 6.31 percent. Moving the principal and
reducing the rate will result in $100 million less being generated
on an annual basis. This money would otherwise be used to fund the
fiscal gap according to the majority plan.
Number 0583
CHAIRMAN BUNDE questioned that if this bill were to pass it would
preclude the educational endowment from being funded by the CBRF.
He assumed the educational endowment would face the same issues as
being faced by HB 215 and HB 216.
Number 0596
MR. KINNEY believed that the state needs to look at another
mechanism for dealing with the fiscal gap if the legislature
segregates portions of the CBRF and dedicates the earnings for
other purposes.
Number 0608
REPRESENTATIVE JOE GREEN referred to the state bond counsel's
stating that the DOR would be restricted on the amount of earnings.
This finding is in opposition to the findings of Mr. LeResche's
bond counsel. He asked what caused this discrepancy in view.
Number 0623
MR. KINNEY explained that there have been a number of cases dealing
with arbitrage requirements. The Tax Reform Act of 1986 made
substantial changes in the way governments can do business in
respect to tax exempt financing. If arbitrage was not an issue, he
would probably be counseling the legislature to issue $100 billion
in bonds and stick it in the permanent fund. The problem is that
the money supply is fixed. The state is fighting with the federal
government from the standpoint that there are entities which pay
taxes and entities which don't who are all competing for scarce
resources. When the state goes out and issues bonds that are tax
exempt, the bond holder does not pay income tax on the interest
that they receive. The IRS and the United States Treasury
Department would like to have as much income tax as possible. They
don't want the state to compete for those scare resources because
of the non-taxable status. The federal attitude, for the most
part, is that the state of Alaska is sitting on a large sum of
money and why should the state bond in a tax exempt capacity when
the state has available cash and the interest income off of it to
meet those needs. He explained that it is a tax situation, the IRS
wants to make sure that they get their fair share and don't want to
allow the state to take advantage of it.
MR. KINNEY referred to the Alabama case, the Deereborne (Ph.) case,
the Pyramid bonding case, and a number of other cases where the IRS
has come in and made changes to statutes, regulations or laws after
the fact. If the CBRF money is put into certain kinds of
investments and certain locations, then the state doesn't want to
be subjected to a unadvantageous tax review.
MR. KINNEY said DOR would like to see Mr. LeResche's legal opinion,
it would be passed on to the state bond attorney and other counsel
would probably be asked to review it in order to try to achieve a
consensus. Currently, the Administration is firmly entrenched in
their position based on the opinions that they have received.
Number 0794
MICHAEL A. MORGAN, Project Management Professional (PMP),
Facilities Section, Educational Support Services, Department of
Education, stated that HB 216 looks at a great need, providing a
stable, long-term source of funding for educational facilities in
the state. The bill addresses projects which have been approved
under AS 14.11.015. Alaska Statute 14.11 is the process DOE uses
to approve and rank projects, the result of SB 11 in 1993.
MR. MORGAN said the mechanism used to implement those statutes has
undergone a significant improvement in the last two years.
Although the current prioritization process establishes a statewide
need, the districts and the DOE feel that the competition for
limited resources creates a situation where this process, or any
other prioritization process, cannot succeed. This bill seeks to
provide a funding mechanism, allowing for a systematic plan to
address educational facility needs.
MR. MORGAN expressed concerns regarding the bill. First, it does
not equally address the statewide needs, it seems to give slight
leverage to those communities which have the ability to bond.
Those communities are shown in provisions (a) and (b), AS
44.27.140. Also, HB 216 does not show which types of university
projects are funded or what that mechanism is. This would allow a
broad range of projects and would not be limited to facilities
needs.
MR. MORGAN mentioned that there would still be a competition for
limited resources, even under the provisions of HB 216. His final
concern is that a specification of this bill is that projects must
meet the criteria under 14.11.015. However, the last part of this
bill lists a whole series of projects, some of which would be
ineligible under the current statute. This bill already sets up a
conflict between what this bill proposes and the existing statute.
If these issues are resolved, it would allow an allocation of funds
which would address needs on a priority basis and would allow
school districts to plan, in a systematic way, the maintenance and
facility needs for elementary and secondary education.
MR. MORGAN referred to the bottom line of the fiscal note. He said
it should read that the first year money is taken out of general
fund monies, and that in succeeding years, the cost would be funded
by this authority.
Number 0964
BRAD PIERCE, Senior Policy Analyst, Office of Management and
Budget, Office of the Governor, stated that the idea of endowing a
source of funding for school construction is intriguing. The
Administration has proposed a similar-sized bond package in the
six-year capital plan, which would address different types of
capital needs and not just school construction. The Governor has
made it clear that he is committed to an educational endowment. He
believes that if anything should be endowed, it should be the
foundation formula.
MR. PIERCE discussed the effects of HB 216 on the majority's long-
range fiscal plan. This plan relies heavily on CBRF earnings as an
annual revenue source. He noted that Mr. LeResche's spread sheet
went out five years. Once you remove $1.2 billion and the state
begins earning a lower rate of interest, the earnings drop off and
the fiscal gap widens. Without any new taxes or without use of
permanent fund earnings, the CBRF would be drained in about nine
years, by 2005. The Administration is interested in putting
together a bond package to fund capital needs. The state is not
investing enough in our infrastructure, and we should look at the
needs in a broader context, with the use of all available fiscal
tools.
Number 1074
CHAIRMAN BUNDE referred to the Commissioner Condon's concerns about
tieing up the CBRF in negotiations regarding the sale of natural
resources, specifically gas. There are foreign entities that look
at the CBRF as the state's fall-back position in the event of
economic hard times. He asked: If the CBRF was tied up in the
Education Facilities Financing Authority or an endowment, would
foreign entities be less inclined to enter into long-range
contracts with the state?
Number 1120
MR. KINNEY responded that the reserve policy, which the DOR
presented in January, addressed that particular issue. The
financial community, both domestic and international, look at the
state of Alaska and its capabilities from a financing standpoint.
The state has not hidden the fact that there is a fiscal gap and
the state needs to put forth a long-range fiscal plan that fills
this gap. Until the state does this, many people in the financial
community consider such things as the CBRF because it is relatively
easy to get to in comparison to the permanent fund or the excess
earnings from the permanent fund. Reserves will be extremely
important to the financial community until the state comes in with
a plan that shows that the state can and will fill that fiscal gap.
Even when this plan is in place, there will still need to be some
measure of reserve maintained in the state of Alaska as the state
is subject to the volatility of oil and gas prices on an annual
basis. Part of this reserve policy and the CBRF is designed to
meet that need should it arise. The state has been fortunate that
in this last fiscal year we have had escalating oil prices. At
some point, the state might have the need to draw from that reserve
pool in order to meet the obligations which have been incurred
through the budgetary process. This is the reason that people are
very concerned about adequate reserves for the state of Alaska.
Number 1186
MR. PIERCE indicated that the $800 million short-term fund is
designed to take care of the average standard deviation of oil
prices over a two-to-three-year period.
Number 1209
KEVIN RITCHIE, Lobbyist, Alaska Municipal League and the Alaska
Conference of Mayors, stated that fixing schools is at the top of
the list of many municipalities. The concern of all the
municipalities is the future costs of dealing with the
deterioration of schools. Even though it is not a part of the
municipal and state budgets, it is a growing liability. It will
be paid in the future if it is not paid now. He referred to
resolutions from the Alaska Municipal League and the Alaska
Conference of Mayors which are located in the committee file.
Number 1303
SANDY SHOULDERS testified next via teleconference from Mat-Su. She
testified in support of HB 215 and HB 216. She referred to the
current situation where municipalities and boroughs have had to
fight for needed projects. She mentioned the technical problems
with the bills that should be worked out, specifically the
differences between the rural schools and the (indisc.) fund.
"Whether they mention we're not quite frankly doesn't really matter
to me right now." She wanted the state to fund those projects
listed on the priority list as they comprise safety and health
issues.
Number 1414
MAUREEN SWED, Representative, Talkeetna Elementary Parent Teacher
Association, had her statement read into the record by Ms.
Shoulders. Ms. Swed believed that the problems of capital
improvement funding could be solved this session with HB 215 and HB
216. These funds would allow communities to break ground in the
spring of 1998, allowing students into new facilities in the fall
of 1998. Design work has already been completed and they are ready
to begin construction in Talkeetna.
Number 1447
LARRY WIGET, Director, Government Relations, Anchorage School
District, testified next via teleconference from Anchorage. The
Anchorage School District supports the concept of establishing an
Education Facilities Financing Authority and funding it. They feel
that it is an exciting idea and a way in which statewide needs of
school construction can be responsibly met now and in the future.
He referred to legislative control over the allocation of the funds
on an annual basis. The construction and maintenance needs of
both rural and urban schools have to be addressed. The longer it
takes, the most costly it will become. If this process is done in
a systematic method, allocating funds in a reasonable manner and
over an extended period of time, it will allow all communities
around the state to plan for the building and maintenance of
facilities in a way which does not overtax the existing
construction ability of contractors within the state. This will
enable us to put money into the local economies in a reasonable and
prudent manner while meeting both the long-term and short-term
needs of school construction within the state.
Number 1533
CHAIRMAN BUNDE mentioned that testimony has been given that it is
not possible to use the CBRF for both the Education Facilities
Financing Authority and the educational endowment. He asked him to
take the question to the Anchorage School District of what they
would prefer.
Number 1558
LINDA SHARP testified next via teleconference from Anchorage. She
felt that a broad overview as well as equity was needed in terms of
the health and safety of children. She was not as concerned about
the university facilities.
Number 1612
CHAIRMAN BUNDE mentioned the conflicting projections. He referred
to the testimony from Mat-Su which felt that if these bills passed
this session that construction could begin immediately and children
could enter new schools within a year. He understood that this
fund would have to generate some income before bonds could be
issued.
MR. DOZIER answered that the fund would not have to generate income
immediately. Bonds could be issued to raise the money.
CHAIRMAN BUNDE announced that this was the first time these bills,
HB 215 and HB 216, were heard; they would be held for further
consideration.
HB 229 - CHARTER SCHOOL ESTABLISHMENT & OPERATION
Number 1692
CHAIRMAN BUNDE announced the next item on the agenda was HB 229,
"An Act relating to the establishment and operation of charter
schools."
REPRESENTATIVE AL VEZEY, Sponsor of HB 229, introduced Mr. Boots,
who provided information on HB 229.
Number 1710
MIKE BOOTS, Member, Alaskans for Educational Choice, was in support
of HB 229. He worked with a number of the proposed charter schools
in Anchorage and with other proposed charter schools around the
state. The charter schools are a means to an end. These schools
help bring back people into the public education system who, for
whatever reason, have become dissatisfied. Those people are
increasingly moving their children into home school situations or
private school situations. He referred to the increasing number of
private schools and stated that he would be surprised if that
growth rate discontinued. The very people who are able to afford
those alternatives are likely to be property tax payers. Once
those people leave those system, then their public education
funding support diminishes. This creates an overall decline in
public support for public education.
MR. BOOTS felt that charter schools provided a way to deal with the
dissatisfactions and to bring those dissatisfied people back into
the public school setting. To have their children attend a public
school, which is what charter schools are, is to reestablish
support for public education. There are a large majority of people
who are relatively satisfied with the public education and charter
schools address the margins. Charter schools provide equity for
those people who are dissatisfied with public education, but do not
have the monetary resources to deal with this dissatisfaction.
Number 1841
MR. BOOTS explained that creating charter schools provides an
exterior incentive to the educational establishment. It gives that
entity the opportunity to become more responsive to whatever it is
that is causing dissatisfaction. In order to accomplish this goal
and prevent manipulation, some omissions from the original charter
school law need to be remedied. There are three major
accomplishments envisioned in HB 229. One goal is to create an
independent means of approval for charter school proposals,
independent of the local school board. The bill is designed to
maintain local control in the sense that it envisions a municipal
charter school board as an alternative. Charter school proposals
would still have the ability to go to their local school board or
they could go to the locally appointed municipal charter school
board. If they lived in an area where there was no municipality to
create such a board or if the municipality refused to do so, then
the charter school proposers would have the option to go to the
state board. That state board would not be an option if the
locality creates their own local board.
MR. BOOTS hoped that the appointed board would be approved by an
elected body such as the assembly or city council with some
objective criteria by which charter school proposals would be
judged. That criteria could be formulated on a local level and
could be done through the school district as long as the rules
applied to everyone.
Number 1938
MR. BOOTS stated that the second thing HB 229 does is to create a
system that cannot be manipulated. It provides an incentive for
responsiveness by the bureaucracy, by removing the limit on the
number of charter schools. The number of charter schools will
reach a natural limit as that incentive creates responsiveness in
regular schools and people become more satisfied. He explained
that forming a charter school is not an easy undertaking. It takes
hours and hours of work, planning, coordination of a great number
of people; parents, teachers and the governing body, to make it all
happen.
Number 1970
MR. BOOTS said the third thing that HB 229 does is to establish
provisions by which charter contracts will require, by grade level,
stated levels of attainment of students and the methods by which
those students will be assessed. The bill does not set out what
those methods should be or what those levels of attainment will be,
it simply requires that it be included in the contract. This
provision would provide some accountability, the state doesn't want
bad charter schools. If the charter school does not meet their
objectives, then they would be closed down.
Number 2005
CHAIRMAN BUNDE commented that the credo for this legislative
session was smaller and smarter government. He felt HB 229 might
be smarter, but it would not be smaller. He expressed concerns
that HB 229 creates an unfunded mandate for the municipalities to
create a second school board, it increases bureaucracy by creating
another state school board and it undermines and circumvents the
duly elected school board. He felt that elections were the way to
address concerns about school boards.
TAPE 97-41, SIDE A
Number 0000
CARL ROSE, Executive Director, Association of Alaska School Boards,
stated that his association is in support of charter schools,
recognizing the latitude and the opportunity that they provide.
Last week the National School Board Association took up this issue
and passed a resolution that recognizes that charter schools are
one of several mechanisms to improve or address the quality of
education. The association was united on the issue of sole
authority behind a charter school because it concerns such issues
as local control, representative government and accountability at
the ballot box. There should be the ability to decertify a school
if the agreed upon contracted issues of student performance and
fiscal management are not met. The association also unanimously
agreed that there needs to be some way in which we can hold someone
accountable for the criteria that is set for a charter school.
There was also a need for some assurance that a charter school law
would not foster racial, economic, social segregation or
segregation of children with special needs.
MR. ROSE stated that the charter school movement in Alaska is alive
and well. He focused on three areas of concern with charter
schools and with HB 229 in particular. One is the issue of
entering into a contract with a school board, state charter board
or municipality. The issue comes down to the local board and a
sense of accountability, someone needs to be responsible for the
educational progress of that school. An appointed body could be
somewhat biased in terms of the creation of the school. A
municipal authority was created for the purpose of municipal
affairs and a local board runs for election in order to address the
educational needs of a school district. He felt that three
different entities could decertify a school, but he did not know if
all three of those entities would be held accountable for the
purpose of education.
MR. ROSE stated that he is concerned about having unlimited numbers
of charter schools because of the static level of educational
funding. Schools are continuing to do more with less. The
potential numbers of charter schools, which could be granted
outside the authority of the local school board, would have serious
consequences for any school district. These charter schools will
be public schools, but they will not be held accountable in the
same fashion. People who have to come up with the money and the
resources to operate these schools will be accountable to the
public. Until the state can determine the costs and successes of
charter schools and formulate provisions to fund them, the number
should be limited.
MR. ROSE said that this law allowing charter schools has only been
in effect one year. Many charter schools have been denied for
various reasons. He could not say why any local school district
would chose not to approve a charter school, but the elected people
on those school boards probably have more of an ability to identify
what the restricting issues might be. He concluded by saying that
his association does not support HB 229, this bill shares the
authority but only holds one group accountable and there is the
additional issue of cost.
Number 0405
NANCY BUELL, Ed. D., Director, Teaching and Learning Support,
Department of Education, stated that the DOE and the State Board of
Education, though not in an official capacity, would agree with
both Mr. Rose and the chair. She commented that there could not be
a more supportive school board for charter schools than the current
state board. The school board does not want to turn down any
schools that have been approved at the local level and they have
not moved to do so. The board has directed the DOE to work
endlessly with local districts and local boards to come up with
charterable schools.
DR. BUELL said half of the quota allowed by law has been formed,
and the DOE has every reason to believe that this number will
increase. At this point, it is the feeling of the DOE and the
board that another board would not be a facilitating factor because
of their realization that there are glitches in the present law.
Hearings have been held to address a number of issues, one of which
is funding. Almost no schools, that they know of, have been turned
down at the local level. One of those schools that was turned down
is still working with the local board and may be approved sometime
in the future. Some of the pieces of HB 229 could be pieces that
could be incorporated into future law, but at this point the state
needs to work with the existing law to see what those glitches are.
DR. BUELL said the United States Department of Education, which
funds a competitive national charter school grant, assists local
districts with planning and implementing charter schools. The U.S.
Department of Education said that regardless of the law, states
seem to go through the same type of phases with charter schools.
At first, it is difficult to figure out what level of details are
required in an application and what should be required of schools.
Districts evolve and then the procedure appears to settle into
place and it becomes an easier process for schools to get
chartered. In studies, Alaska was perceived to have a weak law,
and other states were perceived to have stronger laws because they
had a structure in place that allowed a bypass of the local board
and allowed for chartering at a municipal or state level. Those
other states went through the same phases that Alaska is going
through in terms of seeing the same kinds of applications and
issues being raised. This tells us that it is not the law that is
the issue, but the process of accommodating these needs.
DR. BUELL stated that they would not recommend any great changes at
this point, but would look forward to working on incorporating some
requested changes in the law.
Number 0671
JOHN CYR, President, National Education Association-Alaska (NEA-
Alaska), stated that his organization is also on record as being
supportive of charter schools. Charter schools are a testing
ground for new ideas and ways of dealing with students in the
manner in which they are applicable to regular schools. He
expressed concern with funding and with sections of the bill. Some
concerns have already been addressed and so he chose to focus on
concerns which have not been raised. The bill states that a
charter school is operated in the local school district where it is
located. He asked whether a charter school could be chartered in
one community and then operate in another community.
MR. CYR said the bill also says that charter schools can establish
contract provisions and local contracts, this is inconsistent with
specific portions of this bill. He referred to page 4, line 27.
He questioned what HB 229 would do for the operation of charter
schools that isn't currently being done. Charter schools have been
proposed and accepted throughout the state. The current law seems
to be working, and although the mechanism changes with HB 229, he
did not understand how it would work differently.
MR. CYR expressed that the numbers were interesting. There has to
be a realization that if the state is to have charter schools, the
state has to address funding them. Even on a limited basis, there
is still a drain to the local school district. He questioned that
if the numbers increase, then will every school eventually become
a charter school. The purpose of charter schools is to begin to
explore a new way to bring parents into the schools.
Number 0920
LAURIE PERKINS, Member, Juneau Charter School Committee, voiced
support for HB 229 and for the issues raised by Mr. Boots. The
issue of draining funding away from the current schools does not
take into account that most charter school students come from
families who are home schooled or attend private schools. Most of
the founding members of the Juneau Charter School and most
application requests have been for children who are currently being
home schooled or are enrolled in private schools. Charter schools
will actually bring more children into the public school
environment. The charter school committee especially supports AS
14.03.028 which removes the limit currently placed on communities
regarding the number of charter schools which can be established.
If parents want to start a school in a community, they should not
be limited by an arbitrary number under the current law.
Facilities severely limit the number of students who can be served
by a charter school. Removing an imposed limit on charter schools
will allow communities to match their available facilities to the
sizes and numbers of schools which are established. This bill will
also raise the standards of accountability for charter schools.
The additional requirement for performance standards can only
increase the chances of a charter school's success.
Number 1053
BECKY HUGGINS testified next via teleconference from Mat-Su. She
explained that, after viewing the current charter school process in
the Mat-Su area and following the process in other areas of the
state, she strongly supports HB 229. The changes in this bill are
positive, improving the application process and bringing a
standardization of accountability.
Number 1085
BILL THOMAS testified next via teleconference from Ketchikan. He
stated that he was involved in the process of getting a charter
school in Ketchikan. The statements from Mr. Boots are a breath of
fresh air to people like himself. He felt that parents were
excluded from the local Parent Teacher Association (PTA). He is
supportive of charter schools. The provisions of the bill, the
memorandum from Mr. Chenoweth and the sponsor statement are all in
order and timely. He felt there were arbitrary limits placed on
the number charter schools.
Number 1292
LINDA SHARP testified next via teleconference from Anchorage. The
charter school law was passed two years ago and the state is now
entering the third year in which charter schools could be
implemented. Anchorage will open the first charter schools this
year. She stated that the people who are opposed to HB 229 are
people who are earning $50,000 to $100,000 a year, they represent
the establishment and want to keep a status quo. She encouraged
the committee to ask the Anchorage School District for the test
scores on all the schools they operate. If the establishment wants
to maintain the status quo, then she wanted the legislature to hold
them accountable to the schools which ought to close.
MS. SHARP said this bill is a small step in the right direction.
More radical suggestions could be proposed such as asking for a
totally independent board for charter schools and asking charter
schools to answer to that independent board alone. There could be
a request that teachers be taken out of the teacher's union and
that vouchers be supplied to allow students to attend whatever
school they chose. This bill merely asks the mayor to appoint a
local board of volunteers, that the charter school law require
goals and tests to prove that the children have learned and it
lifts the lid on the number of charter schools. She stated that
school districts are not used to holding schools accountable for
what children learn. She felt that schools, including charter
schools, ought to be closed if they fail to educate children on an
annual basis.
Number 1473
NANCY SCHIERHORN, Member, Alaskans for Educational Choice,
testified next via teleconference from Anchorage. She has been
involved, in one way or another, with the charter school law for
approximately a year and a half. She does not plan to send her
children to the Anchorage charter schools that are opening, but is
simply a strong supporter and advocate for school choice. She was
frustrated about the lack of options existing in the Anchorage
district or the inability to obtain access to those options,
specifically the long waiting lists to obtain access to those
alternatives.
MS. SCHIERHORN has studied the charter school law in Alaska and in
other states. Accountability for success is ultimately measured by
attendance at the schools. An alternative review board for the
charter school approval is not going to alter the parents' ability
to decide whether or not the school is achieving its goals. She
was active in last summer's process that the Anchorage School
District undertook to implement procedures for the existing charter
school laws. Those procedures resulted in approximately 20 to 25
pages incorporating almost all the existing district regulations,
policies, procedures, et cetera. This paperwork needed to be
completed before the application process began.
MS. SCHIERHORN stated that the result of the Anchorage School
District application process is that the school district has
retained almost complete control of the approved charter schools.
The district administrators are not subject to public elections.
Even though the law states that it is the school board which
approves or disapproves the charter schools, it would be
unrealistic to view the Anchorage School District administrators as
not playing an integral role in that project. The problems
associated with not having an alternative review board is that it
inhibits innovation, discourages people from proposing charter
schools, makes it costly for the charter schools that are approved
and subjects the charter schools to the politics of the district.
These things allow the school district to retain its existing
monopoly. Almost half of the states with charter school laws have
some sort of alternative review, either a board or an appeals
process. Charter schools are flourishing in those states. Alaska
needs an alternative board or an appeals process and she urged the
committee to listen to the comments of people who are working with
this law.
Number 1638
LARRY WIGET, Director of Government Relations, Anchorage School
District, supported the testimony of Mr. Rose and his
organization's resolution. He disagreed with the previous two
speakers. The Anchorage School Board's position on the charter
school laws is that they are diligently working to implement this
process. The school district retains the liability for these
charter schools. The school board and school district are asking
that they have the opportunity to work out the glitches with the
existing law, to put forth the charter schools under the guidelines
of the existing law before the law is changed. The Anchorage
School District has the possibility of putting in eight charter
schools over the course of the next five years. Three charter
schools will be opened in the fall and the district anticipates
that more charter schools will be formed this year to add to the
numerous options that are already available.
Number 1717
CHAIRMAN BUNDE asked him to take a message back to the Anchorage
School District and School Board that "failing to live up to the
letter of the law, and I am not saying that that has occurred, but
should that occur, is often begot serious and onerous regulation
from the state. So, I want to encourage the Anchorage School Board
to be diligent in their application of the existing school board
law."
Number 1756
BILL BJORK, President, Fairbanks Education Association, explained
that after the charter school bill was passed, the Fairbanks
Education Association and the North Star Borough School District
cooperatively developed a process in Fairbanks which was
instrumental in getting the first real charter school off the
ground. Fairbanks has approved another charter school for next
year, and another one will be proposed this year. For all three of
these proposals, the Fairbanks Education Association worked
cooperatively with the charter school proponents, entering into
amicable negotiations and pointed out sections of the contract
which could be problematic for these small schools. The
association agreed to waivers for each of those schools and has
worked throughout this year with the established charter school to
ensure that they were successful and to do what they could to help
them.
MR. BJORK stated that the Fairbanks Education Association and the
North Star Borough School District support charter schools.
Charter schools provide exciting and enthusiastic choices for
students within the public school system. Allowing an appointed
board to approve charter schools that the local school board would
have denied moves the decision out of the community. He felt that
the support for charter schools would also move out the community.
He was not advocating for the status quo, but that the legislature
should look carefully. The education of these students is too
important to move radically. Charter schools are an exciting
alternative.
Number 1861
CHAIRMAN BUNDE stated that this bill would be held over for further
consideration.
ADJOURNMENT
There being no further business to conduct, CHAIRMAN BUNDE
adjourned the meeting of the House Health, Education and Social
Services Standing Committee at 5:10 p.m.
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