02/17/1998 03:06 PM House HES
| Audio | Topic |
|---|
+ teleconferenced
= bill was previously heard/scheduled
HOUSE HEALTH, EDUCATION AND SOCIAL
SERVICES STANDING COMMITTEE
February 17, 1998
3:06 p.m.
MEMBERS PRESENT
Representative Con Bunde, Chairman
Representative Joe Green, Vice Chairman
Representative Al Vezey
Representative Brian Porter
Representative J. Allen Kemplen
Representative Tom Brice
MEMBERS ABSENT
Representative Fred Dyson
COMMITTEE CALENDAR
HOUSE BILL NO. 344
"An Act relating to paternity establishment and child support;
relating to the crimes of criminal nonsupport and aiding the
nonpayment of child support; and amending Rule 37(b)(2)(D), Alaska
Rules of Civil Procedure; and providing for an effective date."
- PASSED CSHB 344(HES) OUT OF COMMITTEE
SPONSOR SUBSTITUTE FOR HOUSE BILL NO. 148
"An Act relating to the public school funding program; relating to
the definition of a school district, to the transportation of
students, to school district layoff plans, to the special education
service agency, to the child care grant program, and to compulsory
attendance in public schools; and providing for an effective date."
- HEARD AND HELD
PRESENTATION: UPDATE ON THE TRAUMATIC BRAIN INJURY ACT OF 1996.
- SCHEDULED BUT NOT HEARD
(* First public hearing)
PREVIOUS ACTION
BILL: HB 344
SHORT TITLE: PATERNITY/CHILD SUPPORT/NONSUPPORT CRIMES
SPONSOR(S): RULES BY REQUEST OF THE GOVERNOR
Jrn-Date Jrn-Page Action
01/23/98 2114 (H) READ THE FIRST TIME - REFERRAL(S)
01/23/98 2115 (H) HES, JUDICIARY, FINANCE
01/23/98 2115 (H) INDETERMINATE FISCAL NOTE (ADM)
01/23/98 2115 (H) 3 ZERO FNS (2-ADM, REV)
01/23/98 2115 (H) GOVERNOR'S TRANSMITTAL LETTER
02/10/98 (H) HES AT 3:00 PM CAPITOL 106
(H) MINUTE(HES)
02/17/98 (H) HES AT 3:00 PM CAPITOL 106
BILL: HB 148
SHORT TITLE: SCHOOL FUNDING ETC./ CHILD CARE GRANTS
SPONSOR(S): HEALTH, EDUCATION & SOCIAL SERVICES
Jrn-Date Jrn-Page Action
02/18/97 382 (H) READ THE FIRST TIME - REFERRAL(S)
02/18/97 382 (H) HES, FINANCE
04/04/97 988 (H) SPONSOR SUBSTITUTE
INTRODUCED-REFERRALS
04/04/97 988 (H) READ THE FIRST TIME - REFERRAL(S)
04/04/97 989 (H) HES, FINANCE
04/08/97 (H) HES AT 3:00 PM CAPITOL 106
04/08/97 (H) MINUTE(HES)
04/24/97 (H) HES AT 3:00 PM CAPITOL 106
04/24/97 (H) MINUTE(HES)
04/28/97 (H) HES AT 3:30 PM CAPITOL 106
04/28/97 (H) MINUTE(HES)
04/30/97 (H) HES AT 3:30 PM CAPITOL 106
04/30/97 (H) MINUTE(HES)
08/25/97 (H) HES AT 10:00 AM CAPITOL 205
08/25/97 (H) MINUTE(HES)
09/30/97 (H) HES AT 9:00 AM ANCHORAGE LIO
09/30/97 (H) MINUTE(HES)
01/27/98 (H) HES AT 3:00 PM CAPITOL 106
01/27/98 (H) MINUTE(HES)
01/29/98 (H) HES AT 3:00 PM CAPITOL 106
01/29/98 (H) MINUTE(HES)
02/05/98 (H) HES AT 3:00 PM CAPITOL 106
02/05/98 (H) MINUTE(HES)
02/17/98 (H) HES AT 3:00 PM CAPITOL 106
WITNESS REGISTER
LARRY PERSILY, Special Assistant
to Commissioner Wilson Condon
Department of Revenue
P.O. Box 110400
Juneau, Alaska 99811-0400
Telephone: (907) 465-2300
POSITION STATEMENT: Testified on HB 344.
EDDY JEANS, Manager
School Finance Section
Education Support Services
Department of Education
801 West 10th Street, Suite 200
Juneau, Alaska 99801-1894
Telephone: (907) 465-2891
POSITION STATEMENT: Testified on SSHB 148.
ACTION NARRATIVE
TAPE 98-9, SIDE A
Number 0001
CHAIRMAN CON BUNDE called the House Health, Education and Social
Services Standing Committee to order at 3:06 p.m. Members present
at the call to order were Representatives Bunde, Green, Vezey,
Porter, Kemplen and Brice. Representative Dyson was absent.
CHAIRMAN BUNDE noted the update on the Traumatic Brain Injury Act
of 1996 has been postponed.
HB 344 - PATERNITY/CHILD SUPPORT/NONSUPPORT CRIMES
Number 0009
CHAIRMAN BUNDE announced the first item on the agenda was HB 344,
"An Act relating to paternity establishment and child support;
relating to the crimes of criminal nonsupport and aiding the
nonpayment of child support; and amending Rule 37(b)(2)(D), Alaska
Rules of Civil Procedure; and providing for an effective date." He
noted a proposed committee substitute had been drafted to
incorporate Representative Porter's amendment from the last meeting
as well as a couple of technical and conforming changes.
Number 0116
REPRESENTATIVE BRIAN PORTER made a motion to adopt proposed
committee substitute 0-GH2007\E, Lauterbach, 02/13/98, as a work
draft. There being no objection, it was so ordered.
CHAIRMAN BUNDE asked Larry Persily from the Department of Revenue
to come forward. Chairman Bunde inquired if committee members had
any questions on HB 344 or if there was further public testimony.
There being none, Chairman Bunde closed public testimony.
Number 0210
REPRESENTATIVE PORTER made a motion to move HB 344, Version 0-
GH2007\E, Lauterbach, 02/13/98, from committee with individual
recommendations and the attached fiscal notes.
Number 0244
REPRESENTATIVE J. ALLEN KEMPLEN objected for discussion purposes.
He inquired if the Department of Law had issued a report on the
requirement for individuals to provide a social security number
when purchasing a hunting or fishing license and how that
requirement fits with the Alaska Constitution's right to privacy
clause.
Number 0315
LARRY PERSILY, Special Assistant to Commissioner Wilson Condon,
Department of Revenue, said the Department of Law had been working
on a draft opinion, but to his knowledge it had not yet been
issued. He added the discussion had been that federal law requires
the social security number, and he was not aware the Attorney
General's Office had found any way out of it. House Bill 344 has
another referral to the Judiciary Committee where the question
could be addressed.
CHAIRMAN BUNDE asked if that would address Representative Kemplen's
concern.
REPRESENTATIVE KEMPLEN said he was uncomfortable giving his
approval for HB 344 without having the opinion from the Department
of Law. He maintained his objection.
Number 0460
A roll call vote was taken. Representatives Brice, Porter, Green
and Bunde voted in favor of moving the bill. Representatives
Kemplen and Vezey voted against it. Representative Dyson was
absent. Therefore, CSHB 344(HES) moved from the House Health,
Education and social Services Standing Committee by a vote of 4-2.
SSHB 148 - SCHOOL FUNDING ETC./ CHILD CARE GRANT
Number 0540
CHAIRMAN BUNDE announced the next order of business was SSHB 148,
"An Act relating to the public school funding program; relating to
the definition of a school district, to the transportation of
students, to school district layoff plans, to the special education
service agency, to the child care grant program, and to compulsory
attendance in public schools; and providing for an effective date."
CHAIRMAN BUNDE asked Eddy Jeans from the Department of Education to
come forward. He reminded Mr. Jeans of his request for a
spreadsheet that would indicate the implications of SSHB 148 in
future years.
Number 0580
EDDY JEANS, Manager, School Finance Section, Education Support
Services, Department of Education, responded he was waiting for
further direction from Chairman Bunde before completing the
spreadsheet.
CHAIRMAN BUNDE asked if the committee had any further questions
regarding the side-by-side school funding analysis or the
foundation formula.
Number 0672
REPRESENTATIVE AL VEZEY said the glaring question is the unknown
funding required to implement SSHB 148. It was his opinion the
committee was dealing with subjective portions of the formula, but
was failing to put enough objective analysis in it to actually see
what the legislation would actually do.
CHAIRMAN BUNDE remarked the committee could go through SSHB 148
section by section and examine the side-by-side analysis until
committee members were comfortable with it. He asked Mr. Jeans to
begin the sectional analysis.
MR. JEANS pointed out the reason for the unknown cost on the
spreadsheet for SSHB 148 is because the Department of Education was
anticipating the incorporation of the McDowell Study into the
school funding analysis.
CHAIRMAN BUNDE pointed out the representative from the McDowell
Group had been unable to attend this committee hearing, so the
committee would move the bill when committee members were satisfied
with it, and the Finance Committee could incorporate the figures of
the area cost differential.
Number 0798
MR. JEANS noted he would be addressing the fiscal note from last
year, inasmuch as the fiscal note for the current year had not been
updated. Beginning the analysis, he said that basically the
funding formula is a departure from the current funding formula
which is based on instructional units. Sponsor Substitute for
House Bill 148 will be based on students; those students will be
adjusted by a size factor for the size of the school; that will
also be adjusted by an area cost differential, as well as an
adjustment for special needs; i.e., special education, bilingual
education and vocational education. This legislation recommends a
20 percent adjustment for categorical funding and excludes a
category of intensive students which are severely multi-handicapped
students. There are approximately 12,000 intensive students
statewide and the cost runs about $20,000 per student.
Number 0884
MR. JEANS further stated that SSHB 148 is a student based
allocation formula, based on per pupil allocations. The
legislation does not call for an annual increase in the student
allocation number, so once the number is established in statute, it
would be up to the legislature to either increase or decrease the
funding. As mentioned earlier, the special needs factor is a 20
percent adjustment factor based on the students enrolled in schools
for categorical funding. This would include special education,
gifted/talented, bilingual and vocational education. There would
be no change from the current program for students identified with
intensive needs. The required local effort under SSHB 148 would
start at three mills, increase one-quarter of a mill each year
until it's back at the current level of four mills required
contribution.
Number 0953
CHAIRMAN BUNDE said there was a hold harmless clause written into
SSHB 148 to ease the transition, but he questioned what the chances
were that one or more districts would continue to try to function
under the hold harmless after the second year.
MR. JEANS responded the only two districts he could think of that
could possibly qualify for the hold harmless in the third year
would be the Aleutian region and possibly, Pelican.
CHAIRMAN BUNDE observed the amount of funds going into hold
harmless would decrease very rapidly.
Number 0997
MR. JEANS referred to page 2 of the school funding analysis and
said SSHB 148 does not have a redistribution based on property
wealth. He pointed out this is referred to in Senate Bill 36 as
supplemental equalization and in Senate Bill 146, as normalization
of property wealth. Basically, it's a redistribution of property
wealth based on a per student basis, and SSHB 148 does not contain
that provision.
Number 1026
CHAIRMAN BUNDE understood that under SB 36, the North Slope Borough
would have to pay $33 million to the state of Alaska.
MR. JEANS explained that's the recapture provision. Senate Bill 36
sets the required local effort for all municipal school districts
in the state at 4.5 mills. Any revenue generated over and above
basic need for a school district would come back to the state as a
revenue source to the foundation program, and that is approximately
$33 million.
CHAIRMAN BUNDE indicated the bottom line is the North Slope Borough
would be helping finance the rest of the state's schools.
MR. JEANS confirmed that.
Number 1068
MR. JEANS explained that SSHB 148 does not consider federal impact
aid in the formula, so the cap on local contributions is able to be
lifted. Currently, the cap on local contributions is equivalent to
23 percent of basic need, in addition to the four mill required
local effort.
CHAIRMAN BUNDE asked Mr. Jeans to address the disparity issue.
Number 1103
MR. JEANS pointed out the federal disparity test is a test of
equalization of revenues that are distributed to school districts.
On a per student basis, the test gets more difficult to apply and
to meet the standards. Under the instructional unit basis, it's
quite easy because a much larger figure is used in computing the
disparity; $61,000 as opposed to possibly $5,000 per student in
allocation. Impact aid funds are considered in the state
distribution plan, so the federal disparity equity test must be
met. He continued, "Once we no longer consider how much money a
school district receives in federal impact aid, we're not subjected
to the federal equity test; although you will still be subjected to
some test of equity within your own state, possibly within the
courts if a district filed suit."
CHAIRMAN BUNDE understood the federal equity concerns are to ensure
the poorest schools are not too greatly different from the richest
school districts, and it's done on a percentage basis.
MR. JEANS confirmed that.
Number 1200
REPRESENTATIVE PORTER reflected that if federal funds are not
considered in the state formula, the state is not held to the
requirement of limiting the disparity.
MR. JEANS said that was correct; the state would not be held to the
standard of equity that's in the federal law.
REPRESENTATIVE PORTER asked what happens to the federal funds.
MR. JEANS said the federal funds continue to go to the school
districts, as it does now.
REPRESENTATIVE PORTER asked, "We just don't add or subtract from
what the state gives based on what they received from the federal
government. Is that correct?"
MR. JEANS affirmed that.
REPRESENTATIVE PORTER inquired if there was a great disparity in
federal funds that go to school districts.
MR. JEANS explained, "The way I like to look at federal impact aid
funds are just like the required local effort - the four mills. In
many of our rural school districts, the revenue they get through
impact aid is in lieu of property taxes and that's because the
lands out there are held in trust by either the Native corporations
or the Natives, themselves. This is the federal government making
their contribution in local tax revenue because those lands have
been removed from the tax rolls due to federal intervention. So,
there is quite a variance out there as to which districts get how
much money and it all depends on who lives on the federal lands."
Number 1280
REPRESENTATIVE VEZEY said that no one has been able to show him
where the federal government applies a cost differential between
schools within the state in calculating disparity. There's never
been any disparity after cost differential is applied. He doesn't
have a problem with this approach, but he does get frustrated with
the discussions about the state being subject to a disparity test,
when the state has never challenged the federal government to rule
on that issue.
MR. JEANS acknowledged the Department of Education has not
challenged the federal government on the disparity test itself, but
the school districts historically have challenged the Alaska
Department of Education on the disparity test and the department
has gone through hours and hours of hearings to prove that the
state of Alaska does, in fact, meet the federal disparity test. He
said, "In terms of equity and the differentials, it's assumed that
all school districts are equal when we get to basic need."
REPRESENTATIVE VEZEY replied, "But your point being is that you're
saying the federal disparity test requires you to have a
geographical area differential - it doesn't. I never did see that
when I looked through the rules and regulations. It basically says
-- it assumes that you're going to allocate this, so much per
student or school or square foot of classroom. It never dreamed
of, when the feds sat down and wrote that set of regulations, that
some state would come along and give somebody a 43 percent cost of
living differential in their funding ..."
Number 1395
CHAIRMAN BUNDE pointed out that impact aid comes not only to rural
areas, but to Anchorage and Fairbanks as well because of the
military bases, which is in lieu of property taxes. He said, "We
can ignore the disparity to a certain extent, and just turn down
the impact aid."
MR. JEANS pointed out that it's not a matter of receiving or
turning down the impact aid funds; those funds are going to
continue to flow to the school districts. What is at question is
whether or not the state of Alaska is going to measure how much
impact aid a school district receives when determining that school
district's state aid allocation.
Number 1439
REPRESENTATIVE TOM BRICE cited a hypothetical situation of two
similar foundation formulas; one includes federal impact aid, the
other doesn't. He asked what the difference would be in terms of
the state allocation.
MR. JEANS said, "That's a difficult question to answer. Unless
you're assuming that we have the identical formula in both cases
and you take impact aid out of the equation, unit value is still
$61,000. What is the new entitlement to school districts? It will
increase by approximately $35 million of state aid because we
offset state aid by about $35 million -- federal impact aid."
CHAIRMAN BUNDE said it had been his assumption that impact aid was
in jeopardy if the state doesn't meet the disparity test. But
apparently that assumption was incorrect; the state ends up in
court if it is not met.
MR. JEANS replied that if the state does not meet the disparity
test, the state would first have to pay back those funds that were
withheld, which would be the $35 million, to those school districts
and the state would not be able to withhold those funds in the
future until the state has proven to the Office of Impact Aid that
the state has a new formula which meets the standard of equity.
Number 1529
MR. JEANS resumed his sectional analysis. He said that SSHB 148
has an adjustment for single site school districts, which is true
of all the bills, except HB 294. Also, SSHB 148 sets a minimum
size for a funding community at ten. He believed that currently
there are approximately ten funding communities that are serving
less than ten students.
CHAIRMAN BUNDE interjected that recent statistics indicated there
are 49 schools in the state with 20 or fewer students.
Number 1571
CHAIRMAN BUNDE said, "For an administrative concern to put a cap on
a minimum on the size of districts to form a school district - to
put a cap on the administrative costs - without HB 148 would
require separate legislation."
MR. JEANS advised that establishing new school districts or setting
a minimum size for school districts would require additional
legislation. Sponsor Substitute for House Bill 148 simply sets a
minimum size for a funding community and does not deal with the
school district.
Number 1620
CHAIRMAN BUNDE said he would like to discuss the area cost
differential after Mr. Jeans finished his overview.
Number 1643
MR. JEANS continued that SSHB 148 has transitional funding, or hold
harmless funding, for school districts. The rate of hold harmless
decreases quite rapidly. He directed the committee's attention to
the millage rate on the school funding analysis, and said it is not
an increase in required local contribution, it simply states that
to qualify for the hold harmless, a municipality must be making a
contribution at that millage level.
CHAIRMAN BUNDE asked what the local contribution mill rate is for
Juneau.
MR. JEANS said Juneau contributed 7.7 mills in FY 96.
REPRESENTATIVE PORTER pointed out that Anchorage is over eight
mills.
CHAIRMAN BUNDE asked if the hold harmless was addressed in the
Department of Education's fiscal note.
MR. JEANS replied the hold harmless was included in the fiscal
note.
CHAIRMAN BUNDE asked Mr. Jeans to address pupil transportation.
Number 1723
MR. JEANS explained that SSHB 148 includes a weighting factor in
the formula for pupil transportation. Currently, pupil
transportation is funded outside of the foundation program. This
would take the approximately $36 million allocated for the pupil
transportation program and distribute it through the foundation
program based on a ratio of what the pupil transportation program
costs in a district to their total budget.
CHAIRMAN BUNDE asked if that would be a net loss or a net increase
in areas like Fairbanks, Anchorage and Kenai who use a number of
buses.
MR. JEANS said the Department of Education views it as doing a
couple of things. First, if the money is provided to the school
districts and the department gets out of reviewing the Requests for
Proposals (RFPs) and setting parameters for the contracts, then the
districts could be more aggressive and hopefully, save some money.
Secondly, the pupil transportation program has been inflation-
proofed. That's because inflationary adjustments based on the
Anchorage Consumer Price Index (CPI) are built into the contracts
and the department budgets for that on an annual basis.
CHAIRMAN BUNDE inquired if that could be described as block
granting.
MR. JEANS affirmed that.
Number 1788
REPRESENTATIVE KEMPLEN asked if an accurate summation would be that
it was the department's thinking that school districts would get
more aggressive in cost reductions by allowing the districts more
discretion.
MR. JEANS said that was accurate.
REPRESENTATIVE KEMPLEN noted the Anchorage School District recently
bid out their school bus service and discovered the cost actually
increased significantly, which is one of the reasons the district
is working toward maintaining an independent bus system. Laidlaw
is the only private sector entity providing public transportation
and almost has a monopoly. His concern with this approach is that
as areas expand and populations spread out, significant amounts of
money will be required to transport students and if Laidlaw or some
other private sector entity is the dominant provider, it could
create a hardship for local school districts. The districts would
be forced to choose between providing transportation or using the
money for education. He asked Mr. Jeans to explain the weight
factor.
Number 1898
MR. JEANS said using FY 94 data which was the most recent, the
department ran the percentage of pupil transportation costs to the
total budget and used that percentage as a proxy for an allocation
through the formula. In terms of Laidlaw, the department is aware
that Laidlaw has a corner on the market in pupil transportation in
this state. He said transportation contracts in Alaska are fairly
fragmented. For example, Anchorage lets two contracts of
approximately 80 buses each, and Mat-Su lets three contracts.
Since Laidlaw does have a corner on the market in Alaska, the
department talked with other contractors around the nation about
what it would take to entice them to bid in Alaska. He explained
these contractors are not interested in coming to Alaska because
the start up costs are too high for the small contracts. The
department has been working with the Anchorage and Mat-Su School
Districts trying to get as many of the contracts on the same cycle,
so 300 buses are being bid out in a year on two bids, as opposed to
80 buses this year and 2 sets of 80 next year.
Number 1972
REPRESENTATIVE KEMPLEN again asked if it is likely a school
district will have to make a choice between pupil transportation
and education in order to meet the needs of a growing, scattered
population in the district.
MR. JEANS said school districts will definitely have to make some
decisions; Anchorage currently makes similar decisions in running
contracted routes along side the district-operated routes. The
department does not fully reimburse Anchorage for the district-
operated routes because the cost is much higher than the contracted
routes.
Number 2021
CHAIRMAN BUNDE noted that Representative Kemplen had recounted that
when the contracts were rebid, private transportation has come in
higher.
REPRESENTATIVE PORTER said, "Mr. Chairman, as I remember their
presentation, they said their bids were higher, but I don't think
they yet came into the area of the cost of their own service. The
costs went up of those private contracts, but I don't think they
reached the level of their own."
MR. JEANS verified that contracted costs are coming up, but still
have not reached what the district-operated routes cost.
CHAIRMAN BUNDE interjected the philosophy is that if there are no
district-operated routes, then Laidlaw sets whatever price they
choose.
Number 2063
REPRESENTATIVE VEZEY didn't understand what the problem was if the
contracts are still coming in below district cost. He explained
that three or four years ago, Laidlaw underbid everyone and got the
contracts, now the unit cost has gone up but it is still lower than
district operated routes.
MR. JEANS pointed out that Laidlaw bought out Mayflower, a major
competitor, so Laidlaw did get a corner on the market but as long
as there are fragmented contracts, no other company will come to
Alaska to bid.
Number 2149
REPRESENTATIVE BRICE asked if he was correct in saying that under
the current formula, there is a cap on the amount that a
municipality can contribute to their education.
MR. JEANS confirmed that.
REPRESENTATIVE BRICE asked if that was incorporated into SSHB 148.
MR. JEANS replied that under SSHB 148, the local cap is removed and
left to the discretion of the local municipality.
REPRESENTATIVE BRICE inquired if there would be a conflict with the
federal disparity test.
MR. JEANS responded the disparity issue would no longer be an issue
because federal funds would not be considered in the formula under
SSHB 148.
CHAIRMAN BUNDE interjected that if the disparity became too great,
there would probably be court suits that would challenge, under
federal law, that students were not being treated equally. He
pointed out that some municipalities have their own local caps.
Number 2221
REPRESENTATIVE BRICE expressed concern with it being silent in
SSHB 148 that if it should go to court, the court would then
mandate a cap. He asked for some feedback from the department.
Number 2281
CHAIRMAN BUNDE asked, "Would I be correct in saying that on this
disparity issue, if the North Slope Borough chose to assess
themselves at the four mill level, that $33 million you were
mentioning, they could put -- that would come into supporting all
schools -- they could actually put that in their own schools if
they chose to without any disparity, if the disparity concerns are
removed?"
MR. JEANS said that would be accurate under SSHB 148.
Number 2315
REPRESENTATIVE KEMPLEN referred to the categorical funding, and
inquired how the 20 percent figure was arrived at.
MR. JEANS stated the 20 percent figure came from the Governor's
bill last year. The department wanted a separate pot of money for
categorical funding, so the special interest groups in special,
bilingual and vocational education still felt they had funds
available for the special needs.
TAPE 98-9, SIDE B
Number 0001
MR. JEANS ... the department went back and calculated how much
money was going through the current foundation formula for each one
of these categories and took that ratio of the total pot of money,
and it worked out to be a 20 percent allocation.
Number 0011
CHAIRMAN BUNDE commented the genesis of this bill was the two years
of work done by the state school board and foundation formula
experts, coming up with their considered opinion in what a formula
rewrite should look like.
Number 0025
REPRESENTATIVE KEMPLEN noted that gifted/talented is separated out
as a distinct category under some of the other proposals listed on
the school funding analysis and asked if there was a specific
reason for that.
MR. JEANS explained that currently gifted/talented is included in
the categorical funding heading of special education. The reason
it is displayed as such in the side-by-side school funding analysis
is because SB 36 actually removes gifted/talented out of the
category of special education and creates its own separate category
of funding. The Governor's foundation formula rewrite proposes to
use the special education task force recommendation which was to
continue to have gifted/talented under the umbrella of special
education, but that it become its own separate allocation. It was
listed out separately so people didn't think that gifted/talented
had been forgotten.
Number 0098
REPRESENTATIVE KEMPLEN speculated about the possibility of the
number of gifted/talented children increasing as a result of the
emphasis society has placed on the importance of early childhood
development. He suggested that it would be prudent to
differentiate the gifted/talented category from bilingual and
vocational education to avoid potential competition for the 20
percent funding. He asked Mr. Jeans if he could foresee a conflict
in which there would be a tradeoff between the increasing
gifted/talent student population and the other categories.
MR. JEANS said that kind of competition for those revenue sources
currently exists. Under the current foundation program, there are
no categorical expenditure requirements in the state. The formulas
provide revenue and it's up to the school districts to spend that
revenue as they see appropriate. However, for special education,
there is an individual education program (IEP), which identifies
the services that have to be provided a child regardless of the
cost, whether the state fully reimburses the district or not.
Number 0251
REPRESENTATIVE PORTER asked how the money was currently allocated.
MR. JEANS said it was based on the number of students identified
with that need and receiving services.
CHAIRMAN BUNDE noted there had been problems with some districts
claiming a higher number of students in order to increase the level
of funding.
Number 0279
REPRESENTATIVE VEZEY recalled the committee had already heard
testimony that average daily memberships(ADM) are not audited.
MR. JEANS affirmed that Representative Vezey was right. He said
currently, the department does not go to each school and verify
average daily membership. Although, for the special education
category, the department has a review team that goes out on a 3- or
5-year cycle to review the IEPs. Every year the department sends
out bills or money to school districts for misclassifications. The
only mechanism available to the department at this point for the K-
12 students, is the October 1 enrollment which is strictly a head
count. That enrollment count is compared to the foundation reports
to identify any large discrepancies. There simply isn't the staff
to perform the audits.
Number 0346
CHAIRMAN BUNDE defined the head count for clarification. He said
it's a 20-day period, and the average of those 20 days. Under
SSHB 148, a second count will be required in the spring. He asked
Mr. Jeans what the best way would be of verifying the average daily
memberships figures.
MR. JEANS commented without additional staff, the department uses
the tools that are currently available.
CHAIRMAN BUNDE asked how the department would verify the figures
under the scenario of a per unit formula.
MR. JEANS said the department would continue to use the October 1
enrollment figure as a proxy. He explained that under the current
foundation formula, the department still gets average daily
membership counts, and would continue to get the average daily
membership under all of the proposed legislative bills. The
difference would be that under SSHB 148, an adjustment factor would
be applied to the students to derive at the number of students.
Whereas, under the current formula, the number of students is run
through a formula which converts the product to instructional
units.
Number 0443
CHAIRMAN BUNDE again asked how the department could authenticate
the average daily membership count without an audit team traveling
to the school to conduct a head count.
MR. JEANS stated the department has two counts that occur. The
school districts take a head count on October 1 by grade, by
ethnicity, which is used for federal reporting purposes. That
information is compared to the information submitted to the School
Finance Section, Mr. Jeans' Office, which is the 20-day count, for
any large discrepancies between the two reports.
CHAIRMAN BUNDE said the point is that both counts are being done by
the same people.
Number 0523
REPRESENTATIVE BRICE asked how the department verifies that school
districts are spending special needs funds for special needs
purposes. Under the current formula, special needs children do not
necessarily compete with vocational education programs being
offered, but under SSHB 148 it is possible that vocational
education programs could end up competing with the special needs
children.
MR. JEANS said the intent of the 20 percent allocation was to put
approximately the same dollars that are currently being allocated
to those three programs under the current foundation program out to
the districts. He said, yes, there will be some competition
between programs.
REPRESENTATIVE BRICE understood the difference was that SSHB 148
gives school districts more leeway to allocate those funds. His
preference would be to allocate funds for each category. He
reiterated his concern that some type of auditing or verification
function be performed to ensure that special needs monies are
actually being spent for special needs.
CHAIRMAN BUNDE confirmed that IEPs are a federal requirement so
there is a procedure for auditing in the special education area.
MR. JEANS added the individuals who actually do the field audits
are paid with federal funds.
Number 0704
CHAIRMAN BUNDE reflected the concern that special education
students might be victimized probably is not as well founded as
that monies for vocational education and gifted/talented students
might be usurped because there is no auditing procedure for those
two categories.
MR. JEANS pointed out that gifted/talented students also have IEPs.
CHAIRMAN BUNDE said he would like to discuss the area cost
differential study and asked Mr. Jeans for his comments.
MR. JEANS said he wanted everyone to understand that the area cost
differential study or "The Alaska School Operating Cost Study", is
not the cost differential study the department anticipated
receiving. The department was expecting a new list of area cost
differentials, either assigned at a funding community level or a
school district level. It is the department's opinion that the
report represents another formula proposal. He explained the
report deals strictly with inputs based on school size; i.e., how
many teachers, counselors, librarians, are needed based on school
size. The report goes on to state there should be an area cost
differential for nonpersonnel. So, basically the report is saying
the money needs to be split into two pots; one for instruction
which would be allocated strictly based on school size, and second
would be a pot of money that would be distributed based on the
nonpersonnel index created in the study. The study does not deal
with any of the categorical funding issues, which Mr. McDowell
pointed out, but it needs to be addressed in any proposal that
attempts to adopt the recommendations from this study. The study
also does not deal with what Mr. Jeans refers to as the back end of
the formula; i.e., what are the adjustments that will be made to
arrive at state aid. Will there be a formula requiring local
contributions? Will impact aid be considered in the formula? Will
the Rural Education Attendance Areas (REAAs) be taxed? It leaves
all the questions unanswered that need to be addressed to arrive at
state aid. This report dealt strictly with school size and
nonpersonnel costs. He said he wouldn't address the district
administrative portion of the study because the McDowell Group
indicated the variances were so huge, they couldn't justify them.
So, in the department's opinion they're really not valid.
Number 0910
CHAIRMAN BUNDE asked if Mr. Jeans was implying the study wouldn't
be accepted.
MR. JEANS responded he wasn't saying the study wouldn't be
accepted; the study has some good pieces in it. But he wanted to
point out that it fell short of providing the one list of
differentials the department was anticipating. The study really
gives the legislature another funding proposal for the foundation
program without all the pieces.
Number 0945
CHAIRMAN BUNDE asked if the committee would be able to get the
department's perspective on what the missing pieces are and, based
on the information from the area cost differential, a spreadsheet
showing what the impacts would be on various schools statewide.
MR. JEANS responded the department can't determine what the impacts
on the schools statewide will be until the adjustments are
determined; e.g., will there be an adjustment for special
education, whether there will be a deduct for required local effort
and at what level, will impact aid be considered in the formula,
whether or not there will a tax on the REAAs.
Number 1004
REPRESENTATIVE PORTER said, "Maybe I misunderstood the intent of
that study, but I thought it was a study to look at if all things
were equal, what things aren't equal - if that makes sense - not
all the other factors that you've brought in, but just in terms of
a cost to provide the service, what things should be higher in one
area and lower in another area of fixed costs, not the varying
kinds of revenue sources. And I thought -- I mean, they had their
own point of view on it and I don't know if I agree with it or not,
but I thought from their point of view that's what they provided.
Then it would be up to us to throw in the other considerations that
obviously you have to have before you come down to what's the
bottom line, here. But the study, I thought, was just an attempt
to see if it should cost more money in Kake than in Egegik."
REPRESENTATIVE VEZEY recalled the McDowell Group addressed the
instructional and nonpersonnel units at the presentation, but
didn't get to the administration unit. He was under the impression
there was going to be another presentation by the McDowell Group at
which time the administration unit would be addressed.
CHAIRMAN BUNDE indicated there would be another presentation but
they were unavailable to attend this committee hearing. He pointed
out the McDowell Group's contention was that cost of instruction,
cost per teacher, was the same statewide. Recently, the committee
received information from the North Slope Borough that cost of
instruction is 30 percent higher in the North Slope School
District.
MR. JEANS said he was unable to respond to the information reported
to the committee by Northwest Arctic School District, but the
McDowell Group's study did indicate there wasn't much difference in
average teacher salary because teachers in rural Alaska spend three
to five years and then leave, while teachers in urban areas tend to
stay longer.
Number 1210
REPRESENTATIVE KEMPLEN referred to the allocation on a per student
basis, and asked Mr. Jeans to explain what adjustments would be
made for districts that have a higher number of students with
challenges and/or obstacles; e.g., broken families, harsh
environment, et cetera.
MR. JEANS stated in SSHB 148, that adjustment is included in the
special needs adjustment - the 20 percent allocation. There would
no longer be a requirement of school districts to identify students
with special needs for the purpose of generating funding.
CHAIRMAN BUNDE reiterated the genesis of this formula was the work
completed by the State Board of Education who represented probably
a number of areas referred to by Representative Kemplen. There are
no areas nationwide that he is aware of that have moved from per
pupil to per unit, but there are areas that have moved from per
unit to per pupil and the preponderance of the districts nationwide
found the per pupil unit a more equitable way of distributing
money.
Number 1407
CHAIRMAN BUNDE indicated that HB 148 would be brought before the
committee at another time, and it was his intention to have the
area cost differential addressed in the Finance Committee.
REPRESENTATIVE VEZEY asked where the minimum size for schools was
addressed in SSHB 148.
MR. JEANS replied the average daily membership is on page 5. He
noted the minimum average daily membership is set at ten.
CHAIRMAN BUNDE noted that all the iterations of the formula are a
minimum size of ten, except for the Governor's bills which are set
at eight. He reminded committee members that SSHB 148 would be
brought before the committee at another meeting.
ADJOURNMENT
Number 1491
CHAIRMAN BUNDE adjourned the House Health, Education and Social
Services Standing Committee at 4:30 p.m.
| Document Name | Date/Time | Subjects |
|---|