Legislature(1995 - 1996)

03/14/1995 02:08 PM HES

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
           HOUSE HEALTH, EDUCATION AND SOCIAL SERVICES                         
                       STANDING COMMITTEE                                      
                         March 14, 1995                                        
                           2:08 p.m.                                           
 MEMBERS PRESENT                                                               
 Representative Cynthia Toohey, Co-Chair                                       
 Representative Con Bunde, Co-Chair                                            
 Representative Al Vezey                                                       
 Representative Gary Davis                                                     
 Representative Norman Rokeberg                                                
 Representative Caren Robinson                                                 
 Representative Tom Brice                                                      
 MEMBERS ABSENT                                                                
 COMMITTEE CALENDAR                                                            
 * HB 230:   "An Act making appropriations to the Department of                
             Education for support of kindergarten, primary, and               
             secondary education and for community schools programs            
             for fiscal year 1996 and fiscal year 1997; making                 
             appropriations 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                                                    
 * HB 228:   "An Act reducing payment levels for the program of aid            
             to families with dependent children and the adult                 
             public assistance program."                                       
             HEARD AND HELD                                                    
 (* First public hearing)                                                      
 WITNESS REGISTER                                                              
 REPRESENTATIVE MARK HANLEY                                                    
 Alaska State Legislature                                                      
 Room 507, State Capitol                                                       
 Juneau, AK  99801                                                             
 Telephone:  (907) 465-4939                                                    
 POSITION STATEMENT:  Testified in favor of HB 230.                            
 DICK SWARNER, Executive Director of Business Management                       
 Kenai Peninsula Borough School District                                       
 148 N. Binkley                                                                
 Soldotna, AK  99669                                                           
 Telephone:  (907) 262-5846                                                    
 POSITION STATEMENT:  Testified against HB 230 via teleconference.             
 ROBERT DOYLE, Finance Director                                                
 Matanuska-Susitna Borough School District                                     
 1900 Porcupine Trail                                                          
 Wasilla, AK  99654                                                            
 Telephone:  (907) 376-3172                                                    
 POSITION STATEMENT:  Testified against HB 230 via teleconference.             
 ALICE WALSH, PTA President                                                    
 Cottonwood Creek Elementary School                                            
 5240 Shenum Drive                                                             
 Wasilla, AK  99654                                                            
 Telephone:  (907) 376-6719                                                    
 POSITION STATEMENT:  Testified against HB 230.                                
 PAM McCAUL, Parent, PTA President, former PTA Vice-president                  
 High School Varsity Coach                                                     
 361 Gastman                                                                   
 Wasilla, AK  9964                                                             
 Telephone:  (907) 376-3550                                                    
 POSITION STATEMENT:  Testified against HB 230.                                
 MELINDA BROOKS, Member                                                        
 Matanuska-Susitna Budget Committee                                            
 P.O. Box 873796                                                               
 Wasilla, AK  99687                                                            
 Telephone:  (907) 376-3860                                                    
 POSITION STATEMENT:  Testified against HB 230.                                
 CAROL KANE, Educator                                                          
 1000 Woodcrest Circle                                                         
 Wasilla, AK  99654                                                            
 Telephone:  (907) 376-2467                                                    
 POSITION STATEMENT:  Testified against HB 230.                                
 LARRY HEALY, Educator                                                         
 Matanuska-Susitna School District                                             
 1320 Ivy Circle                                                               
 Wasilla, AK  99654                                                            
 Telephone:  (907) 373-0165                                                    
 POSITION STATEMENT:  Testified against HB 230.                                
 LINDA STOLL, Parent                                                           
 P.O. Box 875555                                                               
 Wasilla, AK  99687                                                            
 Telephone:  (907) 746-5555                                                    
 POSITION STATEMENT:  Testified against HB 230.                                
 KEITH EVANS, Superintendent                                                   
 Dillingham City Schools                                                       
 P.O. Box 170                                                                  
 Dillingham, AK  99576                                                         
 Telephone:  (907) 842-5223                                                    
 POSITION STATEMENT:  Testified against HB 230.                                
 BRUCE BACHEN, President                                                       
 Sitka School Board                                                            
 713 Sirstad St.                                                               
 Sitka, AK  99835                                                              
 Telephone:  (907) 747-6850                                                    
 POSITION STATEMENT:  Testified against HB 230.                                
 CAROL MEARS, Legislative Chair                                                
 Fairbanks District Council PTA                                                
 P.O. Box 9                                                                    
 Fairbanks, AK  99725                                                          
 Telephone:  (907) 479-3247                                                    
 POSITION STATEMENT:  Testified against HB 230.                                
 JOHN TONGEN, President                                                        
 Alaska Association of School Business Officials                               
 P.O. Box 1896                                                                 
 Valdez, AK  99686                                                             
 Telephone:  (907) 835-4924                                                    
 POSITION STATEMENT:  Testified against HB 230.                                
 LELAND DISHMAN, Superintendent                                                
 Yupiit School District                                                        
 P.O. Box 100                                                                  
 Akiachak, AK  99551                                                           
 Telephone:  (907) 825-4428                                                    
 POSITION STATEMENT:  Testified against HB 230.                                
 GARY CHRISTENSEN, Director of Business Affairs                                
 North Slope School District                                                   
 P.O. Box 169                                                                  
 Barrow, AK  99723                                                             
 Telephone:  (907) 852-5311                                                    
 POSITION STATEMENT:  Testified against HB 230.                                
 BOB VAN SLYKE, Superintendent                                                 
 Juneau School District                                                        
 10014 Crazy Horse Drive                                                       
 Juneau, AK  99801                                                             
 Telephone:  (907) 463-1700                                                    
 POSITION STATEMENT:  Testified against HB 230.                                
 JIM NORDLUND, Director                                                        
 Division of Public Assistance                                                 
 Department of Health and Social Services                                      
 350 Main Street, Suite 309                                                    
 Juneau, AK  99801                                                             
 Telephone:  (907) 465-3347                                                    
 POSITION STATEMENT:  Testified against HB 228.                                
 ANGIE SALERNO, Executive Director                                             
 National Association of Social Workers, Alaska Chapter                        
 1727 Wickersham Drive                                                         
 Anchorage, AK  99507                                                          
 Telephone:  (907) 563-4502                                                    
 POSITION STATEMENT:  Testified against HB 228.                                
 CURTIS LOMAS, Program Officer                                                 
 Welfare Reform Program, Div. of Public Assistance                             
 Department of Health and Social Services                                      
 350 Main Street, Room 317                                                     
 Juneau, AK  99801                                                             
 Telephone:  (907) 465-3347                                                    
 POSITION STATEMENT:  Testified against HB 228.                                
 PREVIOUS ACTION                                                               
 BILL:  HB 230                                                               
 SHORT TITLE: APPROP: FY 96 & FY 97 EDUCATION PROGRAMS                         
 SPONSOR(S): HEALTH, EDUCATION & SOCIAL SERVICES                               
 JRN-DATE     JRN-PG               ACTION                                      
 03/03/95       566    (H)   READ THE FIRST TIME - REFERRAL(S)                 
 03/03/95       566    (H)   HES, FINANCE                                      
 03/14/95              (H)   HES AT 02:00 PM CAPITOL 106                       
 BILL:  HB 228                                                                
 SPONSOR(S): HEALTH, EDUCATION & SOCIAL SERVICES                               
 JRN-DATE     JRN-PG               ACTION                                      
 03/03/95       565    (H)   READ THE FIRST TIME - REFERRAL(S)                 
 03/03/95       565    (H)   HES, FINANCE                                      
 03/14/95              (H)   HES AT 02:00 PM CAPITOL 106                       
 ACTION NARRATIVE                                                              
 TAPE 95-19, SIDE A                                                            
 Number 000                                                                    
 CO-CHAIR CON BUNDE called the meeting of the House Health,                    
 Education and Social Services standing committee to order at 2:08             
 p.m.  Present at the call to order were Representatives Bunde,                
 Toohey, Robinson, Brice, and Vezey.  He announced that a quorum was           
 present, read the calendar, and stated that the meeting was on                
 teleconference.  He asked that testimony be limited to two minutes            
 due to the large number of sites on teleconference.                           
 HHES - 03/14/95                                                               
 HB 230 - APPROP: FY 96 & FY 97 EDUCATION PROGRAMS                         
 Number 080                                                                    
 REPRESENTATIVE MARK HANLEY said one of the reasons he is testifying           
 in favor of a bill sponsored by the HESS committee is because this            
 bill fits into Representative Hanley's overall plan submitted                 
 earlier.  He asked if HESS Committee members had a copy of the                
 press release that was distributed.  This press release explains              
 that 75 percent of the spending in the state's budget occurs in               
 three areas:  Education, health and social services, and employee             
 salaries and benefits.                                                        
 Number 113                                                                    
 REPRESENTATIVE HANLEY said trying to make significant reductions to           
 the budget while not touching 75 percent of the budget makes it               
 very difficult to significantly reduce the budget.  The state is              
 trying to close the $500 million fiscal gap, which is one of the              
 major problems Representative Hanley perceives the state is                   
 presently facing.                                                             
 REPRESENTATIVE HANLEY said a bill was discussed that would flat-              
 fund education as part of an attempt to help school districts plan            
 for their budgets.  This bill addresses two concurrent years, to              
 fund both this year and next year.  Basically, Section 1 of the               
 bill is the same as Section 2.   Section 1 goes into effect for               
 fiscal year (FY) 1996, and Section 2 takes effect for FY 97.                  
 Number 174                                                                    
 REPRESENTATIVE HANLEY asked HESS Committee members to notice that             
 dollar amounts are essentially the same as in the current year's              
 budget.  Single-site schools are included as they were for the                
 current year.  Therefore, the same dollar amount will be flowing              
 through the formula.  This is not to say that everyone will get the           
 same dollar amount.  This is because as students increase, the                
 formula readjusts the allocations within the foundation formula.              
 Therefore, school districts will receive varying amounts of money.            
 REPRESENTATIVE HANLEY explained that if all schools had the exact             
 same number of students in the school district, they would all get            
 the same dollar amount.  However, some will have more, and some               
 will have less.  That will change the allocations.   The money is             
 out of the constitutional budget reserve, largely because two year            
 funding cannot totally be paid for out of the general fund.                   
 REPRESENTATIVE HANLEY said some people are concerned about flat-              
 funding.  Essentially, with projected increases in next year's                
 budget, this may mean about a $60,000 instructional unit.  That is            
 about accurate with projections concerning increased student                  
 Number 257                                                                    
 REPRESENTATIVE HANLEY said this is a base-level funding, and                  
 districts do have an ability to plan.  This is important.  He                 
 suggested that, if the price of oil drops $3.00 per barrel, people            
 may want to consider this as a base-level of funding.  If the price           
 of oil drops, legislators next year may be back and they would not            
 be suggesting flat funding.  They would be forced to consider                 
 reductions in budgets.  Right now, however, the dollars per barrel            
 prices are relatively stable.                                                 
 REPRESENTATIVE HANLEY suspects there will be more money available             
 in the future, for those people who want to add more money to the             
 budget.  There will be opportunities in the future.  Whether                  
 suggestions to add money are adopted or not is an option.  This               
 bill does at least give all districts what Representative Hanley              
 feels is a base level.  They can plan for two years.  It will not             
 be easy, but closing the fiscal gap is not going to be easy on                
 REPRESENTATIVE HANLEY said as budget caps are released, there are             
 going to be a lot of other programs around the state experiencing             
 reductions.  There will also be many other people who are concerned           
 about their budgets.  However, Representative Hanley would like to            
 remind everyone that the state is facing a $550 million deficit.              
 If anyone has suggestions as to how the state can reach its goal of           
 $70 million below last year and still increase funding, whether               
 this is in education or any other area, Representative Hanley is              
 more than willing to listen.                                                  
 REPRESENTATIVE HANLEY said full finance will also be reallocating             
 money within the different budgets if it is appropriate.  This bill           
 is part of the plan, and it is important that this issue be moved             
 forward and discussion is initiated.  Representative Hanley had to            
 go back to the Finance Committee meeting, however, he would try to            
 return to the HESS Committee meeting later.                                   
 Number 380                                                                    
 CO-CHAIR BUNDE said Representative Hanley is the Co-Chair of the              
 Finance Committee.  He was asked to speak before the HESS Committee           
 because the Finance Committee is assisting in the coming year's               
 budget construction.  He has access to all the factors that impact            
 the state's budget and the education budget.                                  
 CO-CHAIR BUNDE announced that he did not plan to move HB 230 out of           
 committee today.  Public testimony is being taken, and HB 230 will            
 be addressed again in the future.                                             
 CO-CHAIR BUNDE announced that Representative Rokeberg and                     
 Representative Davis arrived at the meeting at 2:12 p.m.                      
 Number 484                                                                    
 DICK SWARNER, Executive Director of Business Management, Kenai                
 Peninsula Borough School District (KPBSD), testified via                      
 teleconference that the KPBSD is opposed to HB 230.  The district,            
 over the years, has experienced growth.  The district also                    
 continues to grow.  This bill would be detrimental to a district              
 such as his that is growing so fast.                                          
 MR. SWARNER asked to share some facts with the committee.  The                
 KPBSD appreciates and understands the state's finance problems.               
 The district believes education should share the responsibility of            
 trying to bring the state budget into balance.  However, HB 230               
 goes too far in that the bill asks the KPBSD to absorb inflation              
 and an increased number of students.  The district has been doing             
 that for a number of years, and things are getting difficult "in              
 the trenches."                                                                
 MR. SWARNER said over the last ten years, the district's total                
 budget has gone up 29.8 percent.  Enrollment has increased 28                 
 percent.  Cost per pupil, over a ten-year period, has only                    
 increased 1.44 percent.                                                       
 Number 612                                                                    
 MR. SWARNER said the Consumer Price Index (CPI) in Anchorage has              
 increased 35.5 percent.  The local taxes in Mr. Swarner's district            
 have increased 48.1 percent, and the state foundation funding has             
 only increased 24.3 percent.  Mr. Swarner said education is one of            
 the basic services mandated by the state Constitution.  The                   
 legislature needs to trim things back, and it is going to have to             
 do what has been done in the school districts--it must prioritize             
 MR. SWARNER thought the optional state programs need to be                    
 eliminated before basic services are eliminated.  That is the                 
 situation the state is getting into now.  In order for the KPBSD to           
 balance its budget for the current year, it is looking into making            
 reductions.  They must try to do the same things this year with               
 $2.3 million less for next year.  That number figures in the                  
 increased number of pupils without absorbing that cost.                       
 Number 703                                                                    
 CO-CHAIR BUNDE reiterated the state is facing a $500 million                  
 challenge.  Mr. Swarner had said the state should eliminate some              
 options.  Co-Chair Bunde asked if there were options in the schools           
 that could be eliminated, such as the athletic program or band.  He           
 also asked what other options should be eliminated from the state             
 budget before education is addressed.                                         
 MR. SWARNER said since he is in education, he follows politics to             
 a certain degree.  Everybody says they are fed up with the federal            
 government.  But there are a lot of things in the district's budget           
 that are mandated.  To date, Mr. Swarner has not seen any change in           
 those mandates.  Districts are mandated with Occupational Health              
 and Safety Administration (OSHA) laws, special education laws, sex            
 equity training, alcohol training, Environmental Protection Agency            
 (EPA) rules and Department of Environmental Conservation (DEC)                
 Number 781                                                                    
 MR. SWARNER said none of these mandates are going away.  Still, the           
 legislature is asking the districts to run their budgets with less            
 money and still contend with the mandates.  Mr. Swarner said some             
 of the mandates need to disappear to give the districts the                   
 latitude to operate in a more efficient manner.                               
 CO-CHAIR BUNDE hoped the legislature has the option of addressing             
 the unfunded federal mandates.  Of course, those items must be                
 addressed in an arena other than the HESS Committee.  However, Co-            
 Chair Bunde shares this goal with Mr. Swarner.                                
 Number 820                                                                    
 REPRESENTATIVE GARY DAVIS asked about the proposed extra foundation           
 units for the Kenai School District.  He asked how many additional            
 units were being anticipated.                                                 
 MR. SWARNER said that 20 additional units are being anticipated.              
 CO-CHAIR BUNDE asked if that meant 20 additional classrooms, and              
 Mr. Swarner answered when all the numbers are worked through the              
 formula and special education, bilingual assistance and other                 
 mandates are included, as well as the increased enrollment, there             
 are 20 additional instructional units over the current year's                 
 Number 892                                                                    
 ROBERT DOYLE, Finance Director, Matanuska-Susitna (Mat-Su) Borough            
 School District, supported all Mr. Swarner's comments and concerns            
 with HB 230.  Mr. Doyle explained there is a projected increase in            
 student enrollment next year for his district as well.  Currently,            
 enrollment was 11,880.  Last year, enrollment was 11,300, and next            
 year, projected enrollment is 12,378.  In two years, that is an               
 increase of 1,000 children.                                                   
 MR. DOYLE said the total budget this year did not increase from               
 last year.  The district held the line and tried to work more                 
 efficiently with a lot less money.  It is unfair to ask the                   
 district to do that again with 500 more children.  There are 500              
 total classrooms in the district.  If the enrollment increase                 
 cannot be funded, the net effect would be the increase in every               
 class size by one.  That costs a little over $1 million.                      
 Number 965                                                                    
 MR. DOYLE said the cumulative effects need to be carefully weighed            
 by the state.  There are federal cuts being discussed, and there              
 are local tax concerns.  The cumulative effects between the cuts on           
 the local level, the state level and the federal level can impact             
 the children in many ways.                                                    
 MR. DOYLE said 80 percent of his district's budget is tied up in              
 personnel.  The district has already gone to self-insurance                   
 programs, and has considered, but not passed many other significant           
 reforms.  The district is trying to do things more efficiently to             
 same money.   The district is cutting things that are not directly            
 in the classroom and that do not affect the children.                         
 Number 1000                                                                   
 MR. DOYLE said that the efficient use of existing budgets can be              
 jeopardized by unfunded mandates.  Mr. Doyle said he is not new to            
 the state of Alaska.  He moved to Alaska in 1968 and graduated from           
 East Anchorage High School.  At that time there was no oil money in           
 the state, and many of the school programs that may be faced with             
 cuts, such as band and athletics, were in place.  Class size was              
 significantly smaller and many school programs were offered.                  
 MR. DOYLE said today, students who travel for extracurricular                 
 activities must sleep on gym floors, travel by bus and bring their            
 own meals.  When Mr. Doyle attended school, students flew on                  
 planes, stayed on hotels and ate meals paid for by the school.  Mr.           
 Doyle again reminded HESS Committee members that there was no oil             
 revenue money then.                                                           
 MR. DOYLE said he is concerned that legislators are only looking at           
 the expenditure side of the budget, and they are not studying                 
 revenue generation.  If cuts have to be made, they should be made             
 equitably across all districts.  However, for Mr. Doyle's district,           
 the cut on the foundation unit would amount to about $1.2 million.            
 There is also going to be a $250,000 cut on the district's                    
 transportation budget.  Mr. Doyle is not exactly sure how the                 
 nutritional services budget is going to be perceived.                         
 Number 1070                                                                   
 MR. DOYLE said when those are added all up with the contemplated              
 cuts at the local level, schools are not going to be the same next            
 CO-CHAIR BUNDE shared Mr. Doyle's frustration, and he knows that              
 both Kenai-Soldotna and the Matanuska-Susitna Borough School                  
 Districts have been doing an extraordinary job of stretching                  
 dollars and running efficient programs.  However, as Mr. Doyle                
 pointed out, when funding is reduced it must be spread across the             
 board in an equitable fashion.  It seems ironic that some of the              
 more efficient districts are asked to do more with less, however,             
 the legislature cannot hold certain groups harmless.                          
 CO-CHAIR BUNDE said he was in Anchorage in 1968 as well.  He worked           
 for the school system and remembers that there were only 150,000              
 people in Anchorage at that time.  That probably made a significant           
 difference.  In addition, Alaskans paid an income tax at that time.           
 Co-Chair Bunde still thought it was a pretty good place to live.              
 Number 1138                                                                   
 REPRESENTATIVE NORMAN ROKEBERG recalled that Mr. Doyle's district             
 spends 80 percent of its budget on personnel.                                 
 MR. DOYLE said 82 percent includes all salaries and benefits.  The            
 district is totally self-insured, it does not buy health insurance.           
 The district spends about $4,500 per employee to guarantee all                
 their health insurance coverage.  Mr. Doyle offered to mail the               
 HESS Committee members a budget package.  This would include all              
 the facts and figures reviewed by their Citizen's Advisory                    
 REPRESENTATIVE ROKEBERG explained the reason he asked is because he           
 has heard many different figures.  He has heard that Anchorage                
 spends about 87 percent on personnel, and that other districts in             
 the state spend upwards of 90 percent.  He commended Mr. Doyle's              
 district for its efficiency.                                                  
 CO-CHAIR BUNDE thanked Mr. Doyle and asked him to please send the             
 district's budget information.  Co-Chair Bunde also announced that            
 more sites were now on teleconference.                                        
 Number 1208                                                                   
 ALICE WALSH, PTA president, Cottonwood Creek Elementary School,               
 testified via teleconference.  She read a statement prepared by               
 Marie Burton, principal of Cottonwood Creek Elementary School:                
 "The Matanuksa-Susitna Community cannot afford a reduction in                
 funding in our schools.  It would directly reflect on the                     
 quality of education that our children receive.  Many of our                  
 students need to be served with fewer resources in an already                 
 dangerously overcrowded system.  HB 230 is an irresponsible                   
 and inconveniently timed action.  If the framers of this bill                 
 were truly dedicated to serving the community they represent,                 
 they should have sought appropriate input from the citizens of                
 the communities that HB 230 directly reflects on.                             
 "A reduction in our funds for our schools will be an obstacle                
 that this economically limited community cannot endure. Our                   
 schools struggle not only with providing a quality education                  
 with already limited funds, but also with the violent and                     
 destructive social problems of our community as well.                         
 "In addition, I find it very disturbing that when the four                   
 biggest school districts are on spring break, the opportunity                 
 is taken to sidestep the very people you represent."                          
 Number 1279                                                                   
 CO-CHAIR BUNDE asked Ms. Walsh to pass the message onto the                   
 principal that the timing of this hearing had nothing to do with              
 spring break.  The legislative process simply allowed for the bill            
 to be heard at this time.  Co-Chair Bunde then addressed the idea             
 that the HESS Committee members have not consulted the people most            
 directly affected by HB 230.  For the past three years, all                   
 committee members have been hearing from people throughout the                
 state, "Cut the budget, get the spending in line."                            
 CO-CHAIR BUNDE said 65 percent of the people in this state do not             
 have children in school.  Those people have a right to be heard               
 Number 1304                                                                   
 PAM McCAUL, parent, PTA president and former vice-president, high             
 school varsity coach, testified via teleconference that her varsity           
 team is totally unfunded by anyone other than their own resources.            
 They have no support from the school, other than the principal and            
 vice-principal who stand behind the team.  She read a prepared                
 "As a parent volunteer putting in at least 25 hours a week and               
 an untold amount of my own pocket money, I work as a PTA                      
 president and vice-president, and I am here to tell the makers                
 of HB 230 they have gone too far.  To ignore everyone that                    
 this cut reflects on is underhanded and under the table. It is                
 truly falling (indisc.).                                                      
 "As a group you decided that you deserved a raise of $150 to                 
 $200 per day in per diem.  Now you cut school children $200 a                 
 year.  How do you justify this?  I see it this way:  Every day                
 a school child gets to fund a legislator for a day.  I, as an                 
 adult taxpayer, find that reprehensible.  If this is how                      
 Juneau is going to represent the school children of Alaska,                   
 their future, and spend my tax dollars, we need to make some                  
 drastic changes.                                                              
 Obviously, your priorities do not lie in educating the future                
 or in operating above the board.  It lies in your own pocket,                 
 and obviously the 65 percent who do not have children in                      
 school.  Take a good close look at HB 230, it will come back                  
 to haunt you all.  Your yes votes will be noted.  I will                      
 follow this closely and I will bring it up publicly whenever                  
 I am given an opportunity.  Thank you."                                       
 Number 1385                                                                   
 CO-CHAIR BUNDE observed that he did not think her perceptions match           
 his own or are necessarily accurate.  He felt this was true                   
 particularly in reference to Ms. McCaul's tax dollars.  Co-Chair              
 Bunde did not think the average citizen pays much in state taxes in           
 this state.                                                                   
 Number 1401                                                                   
 MELINDA BROOKS, Mat-Su District Budget Committee member, testified            
 via teleconference.  She did not know how the district can afford             
 this kind of cut.  They are already in terrible, terrible financial           
 difficulty.  She agrees with Co-Chair Bunde that Alaska residents             
 do not pay enough taxes.  She thinks it is about time that is                 
 CO-CHAIR BUNDE does not think that cuts can be absorbed without               
 harm.  He agrees with most people who testify on that.                        
 Number 1455                                                                   
 CAROL KANE, taxpayer, property owner, educator and Alaska resident            
 testified via teleconference.  She thanked HESS Committee members             
 for the opportunity to speak and for their efforts.  She and her              
 husband value the quality of life in Alaska and have decided to               
 spend the rest of their lives here.  She has had the opportunity to           
 have a leadership role in education through professional                      
 organizations at the local, state and national level.  She is proud           
 to be an Alaskan educator.                                                    
 MS. KANE believes that Alaska provides exemplary educational                  
 programs for students regardless of where they live, or their                 
 ethnic origin.  Educators today have met and will strive to meet              
 the challenges in the future presented by society.  Ms. Kane said             
 teachers have accepted full responsibility to provide curricular              
 and co-curricular programs which will enable students to become               
 productive citizens of the 21st century.                                      
 Number 1497                                                                   
 MS. KANE added that out of necessity, and because educators are               
 empathetic caregivers, they provide family life support by                    
 escalating proportions.  She is alarmed to realize the current                
 language proposed in HB 230 would result in a reduction in the                
 funding level for FY 96 and FY 97.                                            
 MS. KANE said for FY 96, the current level of funding should be no            
 less than the currently funded level for FY 95.  The education of             
 students in this state must not be held hostage because funding has           
 not been allocated to meet constitutional obligations.  To allow              
 adequate planning and assessment, Ms. Kane proposed that the state            
 look at options to determine how education will be funded after the           
 next fiscal year and in the future.                                           
 MS. KANE said the current funding allocation, with high emphasis on           
 property owners, must be revisited.  Because the people she                   
 represents educate all children, it would seem equitable that a               
 combination of revenue resources be utilized to come up with a more           
 fair and appropriate funding formula.                                         
 MS. KANE said she does not believe in a free ride.  In Alaska                 
 people must pay their dues by generating new funding and                      
 reallocating that which is already utilized in revenues.                      
 Number 1551                                                                   
 MS. KANE proposed that revenue sources might include a combination            
 of the following based on percentage allocations for a full                   
 education formula:  A percentage from federal resources, a                    
 percentage from an education tax to be paid by every citizen                  
 (senior citizens exempt at 60 years), a percentage from the                   
 permanent fund to be paid by every citizen (no exemptions for                 
 senior citizens, and a percentage from property taxes to be paid by           
 all property owners (not personal property).                                  
 MS. KANE said where possible, education appropriations would go               
 directly to the school district and not through the borough                   
 political structure.  The state should provide a funding structure            
 for a two year budget appropriation for every district.  This would           
 eliminate the annual "knee jerk" panic that encompasses the public,           
 educators, and legislators.  The expanded two year funding                    
 allocation would allow for better planning and an improved                    
 educational community.                                                        
 Number 1596                                                                   
 MS. KANE said she is willing to work with a committee to review               
 this funding dilemma and hopefully develop a new formula that would           
 result in long-term stability.  Collectively, the people of the               
 state can provide what Alaska's children need today for tomorrow's            
 work force.                                                                   
 CO-CHAIR BUNDE thanked Ms. Kane for the constructive suggestions,             
 and asked if she would fax them to the HESS Committee members.                
 Number 1620                                                                   
 LARRY HEALY, Educator, Mat-Su School District, testified via                  
 teleconference.  He said his wife is also employed by the district.           
 Therefore, "on one hand" his opinion may slightly biased.  On the             
 other hand, he is a taxpayer and he has been in Alaska for 18                 
 years.  He is closer to a senior citizen than he is to a middle-              
 aged man, and he does not have any children in school.  However, he           
 does believe that people such as himself have an obligation to                
 Alaska's young for an education.                                              
 MR. HEALY said he does not mind paying his share of the property              
 tax, income tax, or other ways the state can raise revenue.                   
 Number 1653                                                                   
 MR. HEALY asked to briefly describe the situation in Mat-Su to the            
 HESS Committee members.  For the past four years, he has seen the             
 Mat-Su school district downsize the number of employees.  That can            
 be understood in terms of the number of employees per students.  As           
 the HESS Committee members are aware, the Mat-Su school district's            
 enrollment is increasing.                                                     
 MR. HEALY added that the district has cut out a number of                     
 significant education programs due to the budget plans.  One                  
 example of the cuts has been limits on maintenance programs in the            
 schools.  Maintenance has been delayed in critical areas.  The                
 district has reduced some of the foreign language programs, etc.              
 At the same time, there has been an increase in students, and the             
 numbers show Mat-Su is the fastest growing school district in the             
 MR. HEALY said the district has an obligation to parents who are              
 bringing students to the district.  On the other hand, the                    
 district's students have an increasing number of needs.  The                  
 students today are far different than the students of years past.             
 Number 1707                                                                   
 MR. HEALY continued by saying the district needs to help its                  
 teachers meet those needs.  There are a number of approaches that             
 need to be studied, all of which are going to take time, effort and           
 money to maintain the quality of services and the quality of life             
 for the people in the valley.                                                 
 MR. HEALY said he, like Ms. Kane, supports the mechanisms that she            
 described to generate revenue and deal with the budget.  However,             
 he hopes the legislature would solve this problem, especially in              
 terms of the needs of the children and the society, by dealing with           
 it as more of a responsibility rather than a budget problem.  Mr.             
 Healy noted, however, that he does realize there is a budget                  
 Number 1740                                                                   
 REPRESENTATIVE ROKEBERG asked Mr. Healy to what the district                  
 attributes this 4 percent to 5 percent growth in student population           
 in the Mat-Su Valley.  He asked if there was some sort of economic            
 activity occurring to cause this population growth.                           
 MR. HEALY answered that it is a mystery to many people.  The Mat-Su           
 Valley, however, has a good reputation as a school district.   In             
 addition, there is a four-lane highway leading to Anchorage that              
 has given people the ability to acquire housing at a reduced cost             
 in the Mat-Su valley.  There is a large commuting population and              
 that seems to be increasing.                                                  
 Number 1768                                                                   
 MR. HEALY said there is also a large population of slope workers in           
 the Mat-Su Valley.  This is where the slope workers look for                  
 housing because this is closer to the streams and wilderness they             
 like to visit when they are off the slope.                                    
 MR. HEALY did not know if there was any increase in industry or               
 business in the valley.  There is an increase in tourism, and there           
 are probably some other areas that are growing that Mr. Healy does            
 not know about.  He added that many small businesses are coming to            
 the valley.  He asked Ms. Kane if she had any ideas about the                 
 population growth.                                                            
 Number 1798                                                                   
 MS. KANE added that in talking to local realtors and business                 
 people she has met, she has found the quality of the Mat-Su schools           
 are definitely an attraction, and are a reason people are moving to           
 the valley.  The valley provides an opportunity for people to work            
 in the Anchorage area and still enjoy a rural lifestyle.                      
 MS. KANE said there is a real effort on the part of the business              
 community to attract businesses to come to this area, and also to             
 increase tourism.  The valley is beautiful, and there are a lot of            
 dedicated people who are trying to provide services to the                    
 Number 1841                                                                   
 MR. HEALY said one of the areas studied in demographics is the                
 continual increase in low income and free/reduced lunch                       
 applications over the past three years.  The numbers have gone from           
 about 22 percent to 30 percent.                                               
 CO-CHAIR BUNDE encouraged the schools to poll all the new people              
 moving to an area and ask how many of them are interested in paying           
 taxes to support the school system.  It would be very helpful to              
 the legislature.  Co-Chair Bunde said the thrust of Representative            
 Rokeberg's comment was that the legislators have two imminent                 
 challenges:  To cut spending and to generate revenue.  Resource               
 development is one of the ways to generate revenue.  Co-Chair Bunde           
 said support from the community is very helpful.                              
 MS. KANE added that during public hearings on the school district             
 budget, people came forward to say they are willing to pay taxes to           
 support the schools.                                                          
 CO-CHAIR BUNDE said he would see if people who do not have children           
 in school have opinions on the subject.                                       
 Number 1887                                                                   
 REPRESENTATIVE TOM BRICE had a comment on growth in the Mat-Su.  A            
 lot of that does have to do with renewed interest in agriculture.             
 LINDA STOLL, parent, testified via teleconference.  She said one of           
 her children graduated from a Mat-Su high school last year, and               
 another child will graduate this year.  She is very relieved they             
 are done with their public education.  They have both been accepted           
 at good colleges, and thanks to the high quality of their high                
 school experience, they are attending college partially funded by             
 scholarships.  These scholarships are both athletic and academic.             
 MS. STOLL has a daughter who is just entering high school, and she            
 fears that if HB 230 should pass, her daughter will not have the              
 same opportunities her siblings have had.  She feels her daughter's           
 education will not be of the same high quality that her other                 
 children were able to receive.                                                
 Number 1930                                                                   
 MS. STOLL added that limiting classes and limiting extracurricular            
 activities, which passage of this bill will encourage, will all               
 have the effect of limiting her daughter's future.  This is an                
 unacceptable choice for her daughter and for all students.                    
 MS. STOLL continued by saying that with devastating cuts planned at           
 the national level for many programs that deal with children, the             
 state's decision to further jeopardize educational opportunity                
 cannot be made.  If budget cuts must be borne, she asked that the             
 cuts not be borne by the state's youngest and most vulnerable                 
 Number 1950                                                                   
 CO-CHAIR BUNDE reminded Ms. Stoll and all people on teleconference            
 that suggestions on programs the state can do without are very                
 KEITH EVANS, Superintendent, Dillingham City Schools, testified via           
 teleconference.  He said the school is a single-site school of                
 about 500 students.  The school's ability to absorb a great many              
 cuts that seem to be coming its way is very limited.  This bill               
 would appear to make additional cuts to the school.  Mr. Evans does           
 not perceive that his school is going to have a big increase in               
 enrollment--the increase will be minor.  However, certainly the               
 funds available to the Dillingham district will diminish due to the           
 effects of HB 230.                                                            
 MR. EVANS strongly supported Ms. Kane's statements concerning                 
 funding.  He said his district is looking at already cutting about            
 $250,000 for next year's budget.  The district has already looked             
 at the city to combine their business offices and maintenance                 
 support in an effort to be more sufficient.                                   
 MR. EVANS said the district has been forced to not support student            
 activities and athletics.  About $90,000 is now being raised by               
 local community groups and interested citizens.  If the federal               
 government cuts the lunch program, Dillingham's program will go out           
 the window because it cannot absorb $29,000 in cuts.                          
 Number 2010                                                                   
 MR. EVANS said his district is very concerned about existing with             
 the basic programs, and more cuts will be quite devastating for his           
 CO-CHAIR BUNDE noted that HB 230 does include funding for single-             
 site schools.  Another bill which addresses more efficient spending           
 has provisions for consolidating or closing some of the small                 
 schools.  Co-Chair Bunde said Mr. Evans should study that issue,              
 however, he does not have to comment on that subject today.                   
 Written comment would certainly be welcome.                                   
 Number 2042                                                                   
 BRUCE BACHEN, President, Sitka School Board (SSB), testified via              
 teleconference.  He said his district spends the least amount of              
 money per student.  His district tries to do the most with the                
 least.  He has been through about five budget cycles, and he must             
 tell the HESS Committee members what it is like right now compared            
 to the last few years.                                                        
 MR. BACHEN said the SSB held a total of about 12 hours of hearings            
 with the public.  These hearings were attended by about 150 people.           
 This attendance is by far the largest the SSB had ever experienced.           
 Mr. Bachen said there is a real sense of frustration.  Cuts have              
 been made and people have had enough.  This year, the public                  
 demanded that the SSB produce a needs-based budget.  The outcome of           
 that was somewhat surprising to everyone.                                     
 MR. BACHEN said the new budget showed that the SSB is about ten               
 percent below what it needs to be to have what people are                     
 demanding.  Some of the cost increases are coming from special                
 education, and this was mandated by the state.  If a student needs            
 special education, they receive an Individual Educational Program,            
 and the district is obligated to pay for those services.  The state           
 pays about 55 cents on the dollar, and the district pays the rest.            
 MR. BACHEN said therefore, what is going on with increasing special           
 education demands is that funding for other programs is being taken           
 Number 2106                                                                   
 MR. BACHEN said the Sitka School District (SSD) is about $1.1                 
 million short, and HB 230 would further exacerbate the problems of            
 the SSD, and decrease funding further by about $300,000.  Mr.                 
 Bachen thinks the caps need to be studied.  That is another problem           
 coming for Sitka in terms of what the population wants to spend on            
 education.  Mr. Bachen said the SSD is against HB 230 the way it is           
 currently written.  He is in support of the Governor's position.              
 The SSD recognizes the state is growing, and he asks that funding             
 be kept comparable to where it has been on a per student basis.               
 Number 2134                                                                   
 CO-CHAIR BUNDE observed that the Governor's budget will cut $8                
 million (best case scenario) from a $500 million deficit.  Co-Chair           
 Bunde said he does not need modern math to tell him the state would           
 be broke before the deficit could be addressed if that route was              
 Number 2149                                                                   
 CAROL MEARS, Legislative Chair, Fairbanks District Council PTA,               
 testified via teleconference.  She thanked the HESS Committee                 
 members for the chance to speak.  She also said she is totally                
 against any cuts in the foundation formula.  She continued that               
 Alaska's children have been feeling the pain of cuts through this             
 formula for years.  Inflation has been putting the squeeze on the             
 spending power of the dollar.                                                 
 MS. MEARS said, "Shame on you folks for even considering squeezing            
 more out of their education."  Every year, there are more and more            
 cuts to school district operating budgets.  These cuts are in                 
 everything from administration, to teachers, to programs and                  
 supplies.  These cuts directly affect the education of Alaska's               
 MS. MEARS said the cuts being considered would mean the equivalent            
 of cutting an additional 30 teachers in the Fairbanks North Star              
 Borough School District.  Raise the Pupil-Teacher ratio (PTR) or              
 cut all librarians, nurses and counselors.  Cut the entire                    
 vocational education program or cut band, orchestra and general               
 music.  These are the kinds of decisions that HB 230 would force              
 her school district to make.                                                  
 Number 2184                                                                   
 MS. MEARS said the district is already having to whittle away at              
 these programs.  The district has been very responsible in setting            
 class size as a priority, cutting administration where it can.                
 This year's proposal includes cutting an assistant superintendent,            
 a central office secretary, a personnel director, a principal, and            
 1.5 administrative interns.                                                   
 MS. MEARS said administration in her district is lean and is                  
 becoming less effective to the point that it will directly affect             
 the children in the classroom.  On top of this, the legislators are           
 saying there should be no extra funding for these students.  It is            
 the state's responsibility to fund education for all Alaska's                 
 children.  Children of new residents qualify as children of Alaska,           
 too.  It would be grossly negligent to not recognize that.                    
 MS. MEARS said Fairbanks is looking at growth in the student                  
 population due to mining operations.  Freezing supplemental funding           
 will be detrimental to the education of all the children.  She                
 again shamed the HESS Committee members for considering further               
 cuts.  She thanked the members for the opportunity to speak, but              
 added that they should "pick on somebody your own size."                      
 Number 2230                                                                   
 CO-CHAIR BUNDE asked Ms. Mears to remember that HESS Committee                
 members are trying to do a job, and education is the largest single           
 expenditure in the state.  The committee is perfectly willing to              
 accept suggestions on other programs to cut so education might be             
 left alone.                                                                   
 Number 2250                                                                   
 JOHN TONGEN, President, Alaska Association of School Business                 
 Officials, testified via teleconference.  He said in the 1987-88              
 school year, the current foundation funding program was established           
 with an instructional unit value of $60,000.  If, at that time, an            
 inflation-proofing mechanism was implemented, similar to what                 
 occurs with the permanent fund, the current instructional unit                
 would be worth an excess of $76,000.  Of course, that did not                 
 MR. TONGEN said in fact, the opposite occurred.  The purchasing               
 power for the current instructional unit (IU) is worth less than              
 $50,000.  The Alaska educational dollar continues to erode away.              
 The state has an obligation to provide basic services, and                    
 education is a basic service.  That is where the priorities for the           
 dollar should be.   Mr. Tongen thanked the HESS Committee members             
 for the opportunity to provide input.                                         
 TAPE 95-19, SIDE B                                                            
 Number 000                                                                    
 CO-CHAIR BUNDE noted that if the foundation formula was $68,000 the           
 state would be bankrupt today.                                                
 Number 044                                                                    
 LELAND DISHMAN, Superintendent, Yupiit School District, testified             
 via teleconference from Akiachak.  He said he had to chuckle at the           
 folks who didn't know where all the kids were coming from in Mat-             
 Su, but he suggested they find a 10th grade biology book and find             
 MR. DISHMAN said since 1990, his district's enrollment has                    
 increased about 23 percent.  He said the purchasing power has                 
 eroded, and the migrant education program has decimated many of the           
 district's programs.  He said he thinks people voted wrong on the             
 national level this year, but he hopes that mistake was not                   
 repeated at the local level.                                                  
 Number 097                                                                    
 MR. DISHMAN wished he could say he pays taxes to help pay for                 
 education.  Someone paid for his education in Tennessee by paying             
 property taxes.  His family was too poor to pay any taxes, however.           
 He is glad, therefore, to pay his share to educate the upcoming               
 MR. DISHMAN thought most of that 65 percent of people without                 
 children, to which Co-Chair Bunde referred, did have an opportunity           
 to go to school.  More than likely, someone paid for their                    
 education.  Those people would probably not be too bitter about               
 MR. DISHMAN asked the HESS Committee members to look long and hard            
 at reducing the foundation units.  He said that Ms. Kane made some            
 good points, and so did Mr. Tongen.  It is almost impossible to               
 deliver anywhere close to the services previously provided by the             
 schools on today's budgets.                                                   
 Number 158                                                                    
 MR. DISHMAN said in rural Alaska, they are strapped with tremendous           
 costs and distance.  It costs a great deal for anything bought, and           
 then the products must be flown to Akiachak.  Consolidation is                
 always a good idea as long as it is the other guy.  He suggested              
 that the Anchorage legislator who would like to see the                       
 consolidation of small rural schools consider consolidation of the            
 legislators from Anchorage.  Mr. Dishman can see no reason why so             
 many are needed, although perhaps they are.  Mr. Dishman said that            
 it would be great if they can justify their positions.                        
 MR. DISHMAN asked the HESS Committee members to look long and hard            
 at this bill, to study income tax possibilities and other revenue             
 sources, and to remember that most of the wealth in the state of              
 Alaska comes from rural Alaska.  Most of the wealth comes from                
 Prudhoe Bay, the forest and the rivers throughout rural Alaska.               
 The rural folks have generously shared their wealth with everyone             
 in the state for many years.  Mr. Dishman thinks perhaps that the             
 rural folks have been too generous.  Most of the people in                    
 Anchorage think the wealth belongs to them.                                   
 MR. DISHMAN repeated his request for the HESS Committee members to            
 study the bill long and hard, and to remember the children.  They             
 are Alaska's future.  He asked them to remember all children, not             
 just those in Anchorage, Juneau and Mat-Su.  No child's education             
 should be placed ahead of another child's.                                    
 Number 248                                                                    
 CO-CHAIR BUNDE noted that legislators who are not from Anchorage              
 seemed to be in agreement with the idea of consolidating the                  
 Anchorage legislature.  He also noted that there are 21 schools in            
 Alaska with 12 or fewer students.  Each of those schools costs                
 $160,000.  The 21 legislators from Anchorage do not cost $160,000             
 a piece.                                                                      
 Number 280                                                                    
 GARY CHRISTENSEN, Director of Business Affairs, North Slope School            
 District, testified via teleconference.  He wanted to echo a few of           
 the topics that had been previously mentioned.  The foundation                
 program, for the last eight years, has had the unit value of                  
 $60,000 to $61,000.  It has not been inflation-proofed.  The                  
 district has, in effect, lost a substantial amount of purchasing              
 power.  That has squeezed out any excesses that may have existed in           
 the school district budgets across the state.                                 
 MR. CHRISTENSEN asked HESS Committee members to keep that in mind.            
 He also asked them to consider that there is really not much more             
 to be squeezed out.                                                           
 Number 396                                                                    
 BOB VAN SLYKE, Superintendent, Juneau School District, thanked the            
 HESS Committee members for the opportunity to speak.  He said                 
 budget constraints are not new to the district.  Last year the                
 district had to cut the operating budget or maintain the current              
 level of funding.  This resulted in the district cutting back on              
 the maintenance level from about $2.5 million.  As a result, the              
 district has 40 fewer teachers this year for about the same number            
 of students as the previous year.                                             
 MR. VAN SLYKE has had to increase class sizes to an average of 27             
 students per teacher at the elementary level, 26 to 1 at the middle           
 school level and 27 to 1 at the high school level.  When one                  
 calculates into the equation, preparation time that is traditional            
 for secondary school teachers, the district is running 32 and 33 to           
 1 as an average class size in the middle and high schools.                    
 Number 464                                                                    
 MR. VAN SLYKE said the district has pared everything it can from              
 its budget.  It has very few people now, relative to total staff,             
 that are untenured.  If the district is to survive additional                 
 constraints in terms of revenue, the district is going to be "in a            
 world of hurt."                                                               
 MR. VAN SLYKE said as it is, commitments for the coming year in               
 terms of increases in health insurance costs and normal increases             
 in operations, the district has had to look at ways to slash the              
 budget by an additional $1.5 million for this year.                           
 MR. VAN SLYKE added that now, if the district is faced with losing            
 another $500,000 from state funds based on HB 230, plus the                   
 accompanying reduced capability of the city and borough to provide            
 the district with funds by another $100,000, the district is going            
 to have to cut another $600,000 from the budget.  The only place              
 the district has to make those cuts is in those few remaining                 
 untenured teachers.  This will further increase class size.                   
 MR. VAN SLYKE said the district has run out of room.  The district            
 is in collective bargaining, and it is trying to do the best it can           
 in that regard.  Mr. Van Slyke asked the HESS Committee members to            
 look carefully at what is being proposed.                                     
 Number 570                                                                    
 CO-CHAIR BUNDE assured Mr. Van Slyke that HESS Committee members              
 are looking very carefully at the bill.  Co-Chair Bunde said he has           
 a great deal of sympathy with all those that testified, and the               
 challenges they are facing as individual school districts.  As                
 tragic as these stories are, they do not diminish the challenge the           
 state is facing.  Co-Chair Bunde said the purpose of a hearing is             
 to work together to come up with the least onerous way to address             
 the challenges that face the state as a whole.                                
 CO-CHAIR BUNDE said everyone is going to be impacted negatively in            
 some fashion, and the HESS Committee members want to make the                 
 impact as painless as possible.                                               
 MR. VAN SLYKE said that the adults will survive, but it is not a              
 good deal for the children.  That is the concern of the district.             
 Number 630                                                                    
 REPRESENTATIVE ROKEBERG recalled that Mr. Van Slyke indicated last            
 year the district had a $2.5 million cutback, and this year it is             
 experiencing another $1.5 million decrease.  He asked if that was             
 correct, and what had caused that.  Representative Rokeberg thought           
 that the state had been increasing, not decreasing funding the last           
 two years.                                                                    
 MR. VAN SLYKE said the state has not increased the funding for his            
 district in the last two years.  The district had an increase in FY           
 93 to a $61,000 IU.  However, revenue has been relatively flat, but           
 costs have continued to increase.  It would have taken $2.5 million           
 last year to have a maintenance level operation.  Therefore,                  
 operations had to be slashed by that amount to stay within the                
 MR. VAN SLYKE continued that in the coming year, given the costs              
 that are built in, the district would need an additional $1.5                 
 million immediately to have a maintenance level operation.  In                
 other words, if a district does not have enough money for a                   
 maintenance level operation, cuts must be made.                               
 Number 699                                                                    
 REPRESENTATIVE ROKEBERG asked if that was to say the state was                
 responsible for the district's personnel, bargaining and other                
 contracts; and if every time teacher and personnel salaries are               
 raised, the state is responsible for paying for those raises?                 
 MR. VAN SLYKE said the district is doing the best it can, but it is           
 not all just bargaining.  There are other costs that have gone up             
 as well.                                                                      
 REPRESENTATIVE ROKEBERG said that he was from the private sector,             
 and it seems like everybody in the public sector feels they have a            
 right to cost-adjusted, inflatable dollars.  That just doesn't                
 happen in the private sector, and it seems like that is an attitude           
 in the public sector.                                                         
 Number 732                                                                    
 MR. VAN SLYKE said the district is doing the best it can to hold              
 the line.  There are some things that he would be glad to comment             
 on if the district was not right in the middle of bargaining.                 
 However, the intent of the district, should it get some monetary              
 relief, is to reduce class size.  The district will do everything             
 it can to avoid increasing class size further.                                
 REPRESENTATIVE ROKEBERG said that there are many people in the                
 private sector who have been actually cutting wages and salaries              
 for the last few years.                                                       
 MR. VAN SLYKE said again there are things he cannot comment on                
 because the district is in the middle of bargaining.                          
 CO-CHAIR BUNDE hoped the message that less money is available is              
 not lost on the other side of the bargaining table.                           
 Number 777                                                                    
 CO-CHAIR TOOHEY did not want to belabor the point, but she said               
 everyone realizes that 87 percent of the school budget is in                  
 teacher salaries and benefits, and this is not acceptable.                    
 However, knowing that the state faces a $550 million gap, she asked           
 Mr. Van Slyke to realize that this is not the last of the cuts.               
 She wanted to make it clear that this is painful for everyone.                
 Everyone will survive.                                                        
 MR. VAN SLYKE hoped the district could have some time to work this            
 CO-CHAIR TOOHEY said she would love to provide that time, but                 
 everyone has known this was coming for the last ten years.  The               
 state is at the edge of the cliff right now, and the state must               
 make cuts.  It has no choice.                                                 
 MR. VAN SLYKE said there are disagreements on that point.  Some               
 people see that the state has choices, or people would not be                 
 Number 833                                                                    
 REPRESENTATIVE ROKEBERG said he has heard figures anecdotally about           
 the Juneau district's personnel share.                                        
 MR. VAN SLYKE said that all personnel, not just teachers, comprise            
 91 percent of the budget.                                                     
 CO-CHAIR BUNDE closed the public hearing on HB 230.  It will be               
 heard again on Thursday.  An at-ease was taken at 3:15 p.m.                   
 Number 885                                                                    
 CO-CHAIR BUNDE called the meeting back to order at 3:25 p.m.                  
 HHES - 03/14/95                                                               
 HB 228 - REDUCTION IN PUBLIC ASSISTANCE PAYMENTS                            
 Number 899                                                                    
 JIM NORDLUND, Director, Division of Public Assistance, Department             
 of Health and Social Services (DHSS), acknowledged that he was once           
 a representative of Representative Rokeberg's district.  He                   
 recognized that he and Representative Rokeberg had a good contest,            
 of which Representative Rokeberg was the victor.  Mr. Nordlund                
 wished Representative Rokeberg much success in his job.                       
 MR. NORDLUND said in his new capacity he does not see himself as              
 partisan or competitive in what takes place in the legislature,               
 rather, his job is to work with both legislative parties to move              
 welfare reform forward.  This is going to be a big issue.                     
 Number 933                                                                    
 MR. NORDLUND said that he would like to testify on HB 228.  This              
 bill is known as the ratable reduction for Assistance to Families             
 with Dependent Children (AFDC) and Adult Public Assistance (APA).             
 While the Administration does not have a written position statement           
 on this bill, he can say with a great deal of confidence that the             
 Administration is opposed to this measure.  Mr. Nordlund                      
 understands the commitment behind the bill, and he does not think             
 it is not a mean-spirited measure on the part of the bill's                   
 MR. NORDLUND understands the motivation of the bill is one of                 
 trying to reduce the state budget.  However, there are other ways             
 of reducing the state budget in terms of welfare payments than                
 reducing benefit levels.  The approach of the Knowles                         
 Administration is one of reducing the caseload.  The calculations             
 are made a little differently, but basically the bottom line could            
 be the same.  Less money will be spent on welfare payments.                   
 Number 1012                                                                   
 MR. NORDLUND said his office is promoting caseload reduction by               
 finding work for people, particularly in private sector jobs, and             
 getting them off the welfare rolls.  The Governor's blueprint for             
 welfare reform is riddled with ideas about moving people from                 
 welfare to work.  Combined with caseload reduction through jobs,              
 Mr. Nordlund's division will continue to be vigilant to insure                
 benefit payments are accurate.  There is always a little bit of               
 error that causes additional benefits to be paid out that should              
 not be.                                                                       
 MR. NORDLUND said his office will also continue to be vigilant                
 concerning misuse and fraud that takes place within the system.               
 This is not a budget hearing, but his office has put a budget                 
 before the House Finance Committee which shows that the requested             
 AFDC budget is being reduced this year.  This is due to the                   
 continued efforts to move people into jobs, to make sure payments             
 are accurate, and to insure there is no fraud.                                
 Number 1072                                                                   
 MR. NORDLUND mentioned that his staff has been working with the               
 HESS Committee members to make sure that what the HESS Committee              
 plans to do with the bill in terms of benefit reductions are                  
 accurate.  There were some problems with that.  A staff member                
 would testify when the committee came to discussion of that part of           
 the bill.  There are federal limits concerning how much payments              
 can be reduced.  In some cases, the bill went too far in the                  
 original draft.  Mr. Nordlund understands that is the reason for              
 the Committee Substitute (CS).                                                
 MR. NORDLUND commented on the cuts to APA.  The Adult Public                  
 Assistance program is assistance that goes to blind, aged and                 
 disabled adults.  Those are people who cannot reasonably find work.           
 They are, by definition, the truly needy.  They are the most needy            
 in the state.  The APA cuts in this bill are particularly                     
 troublesome to Mr. Nordlund for that reason.                                  
 Number 1126                                                                   
 MR. NORDLUND noted that the sponsor statement contains some wording           
 he would like to correct.  The statement says, "Health and Social             
 Services, along with education and state employee benefits and                
 salaries have traditionally been left out of budget reductions."              
 In terms of social services cuts, HB 67, which passed several years           
 ago, was a budget reduction to both AFDC and APA.                             
 MR. NORDLUND's office has calculated that the savings for the                 
 upcoming fiscal year, FY 96, due to the passage of that bill, will            
 be about $15 million.  This saves payments that would otherwise be            
 made if that law had not gone into effect.  There definitely have             
 been budget reductions in welfare payments in the past legislature.           
 Number 1188                                                                   
 CO-CHAIR BUNDE thanked Mr. Nordlund for his vigorous pursuit of               
 fraud.  One of the problems with welfare reform is public                     
 confidence in the system.  Pursuing potential fraud raises the                
 public's confidence and makes them more comfortable with the                  
 REPRESENTATIVE DAVIS said it was nice to see Mr. Nordlund and                 
 wished him good luck in his current position.  It is the                      
 understanding of Representative Davis that the Knowles                        
 Administration currently agrees with the disparity in the state's             
 basic AFDC payments compared to the next level of spending in the             
 United States, as seen in Connecticut.                                        
 Number 1230                                                                   
 MR. NORDLUND said the Administration has not taken a position on              
 the level of benefits in Alaska versus any other state.  Mr.                  
 Nordlund knows that Alaska is ranked very high in terms of payment            
 amounts, if not the highest.  The position of the Administration is           
 that need must be studied.  It is an attitude of "we don't care how           
 they do it on the Outside."  There are needy people in the state,             
 and it must be determined what is an adequate amount of money to              
 support those people.                                                         
 MR. NORDLUND passed out a sheet which contained the results of an             
 analysis of the APA program.  The sheet showed in a typical case,             
 how much recipients get in APA, how much they get in food stamps,             
 and how much they get in federal Supplemental Security Income                 
 (SSI), which is a complement to APA.  By making some assumptions              
 about what recipients pay in rent, utilities and food, Mr.                    
 Nordlund's office determined that a typical recipient family then             
 has $46 left over each month.  This $46 would be for                          
 transportation, clothing, household and personal care items.                  
 Number 1290                                                                   
 MR. NORDLUND said therefore, Alaska might be high compared to other           
 states, but certainly Alaska's recipients are not living "high off            
 the hog" on the assistance paid by Alaska.  Mr. Nordlund personally           
 thinks the assistance is adequate, but not too much.                          
 CO-CHAIR TOOHEY asked if the chart showed APA, and if the chart               
 assumed it was a family of two.                                               
 MR. NORDLUND said the analysis was based on a household consisting            
 of a single disabled individual residing in a one-bedroom.  The               
 analysis also was based on a nonsubsidized housing unit in                    
 Anchorage.  A different chart shows what the figures would be like            
 in a subsidized housing unit.  In addition, the same sort of                  
 analysis is going to be done for AFDC.                                        
 Number 1350                                                                   
 ANGIE SALERNO, Executive Director, National Association of Social             
 Workers, testified via teleconference.  She spoke in opposition to            
 HB 228.  She sees this bill as short-sighted social and fiscal                
 policy.  This bill is justified by sponsors and supporters as                 
 necessary because the state is facing a budget crisis.  They also             
 feel a budget gap must be closed.  While this is true, and everyone           
 understands that state spending must be brought more closely to               
 state income, it is not true the place to start is with programs              
 that serve poor families and individuals who are elderly or                   
 MS. SALERNO said such statements are misleading at best.  Every               
 dollar cut from these programs result in the loss of a federal                
 dollar.  Both of these dollars are then lost to the Alaska economy.           
 In return for this false economy, more citizens lose the                      
 opportunity for decent productive lives.  In addition, the goal of            
 the AFDC program is undermined.  Poor families will be less able to           
 care for their families.                                                      
 Number 1403                                                                   
 MS. SALERNO said cutting the social welfare budget is bad business            
 for Alaska.  She thanked Director Nordlund for offering a spirit of           
 cooperation and hope for real answers to reform, and for offering             
 some figures on the reality of living off welfare.  Ms. Salerno               
 added that welfare has already taken cuts in the last legislative             
 session.  Ms. Salerno offered to answer any questions.                        
 REPRESENTATIVE DAVIS said that Ms. Salerno made the statement that            
 welfare was not the place to start cutting the deficit.                       
 Representative Davis said the legislature has not started with                
 welfare.  Seventy-five percent of the state's budget relates to               
 wages, welfare and education.  As indicated, with the exception of            
 the $24 a month basic cut from welfare two years ago, all of the              
 other cuts that have been addressed in the last four or five years            
 have come from the remaining 25 percent of the general funds.                 
 REPRESENTATIVE DAVIS said welfare is not the place to start, it is            
 just the fact that areas that have not been addressed in the past             
 are now being placed on the table for study.  Representative Davis            
 appreciates the problems, concerns and the different degrees of               
 values that are placed on the legislature's attempts.  The HESS               
 Committee members will be considering all those.                              
 Number 1492                                                                   
 MS. SALERNO said she agreed that everyone has to take cuts.  She              
 suggested the state not think about any more cuts.  The state                 
 should think about enhancing revenues.  She said many people are              
 not afraid of the word taxes.  People are not taxed highly in this            
 state.  She said the permanent fund could be capped.  There are               
 options.  She said cuts are going to damage the state.  That day,             
 HESS Committee members had already considered HB 230, in which                
 education may be cut, and now welfare.  She asked that the HESS               
 Committee members think about what kind of state they want in the             
 CO-CHAIR BUNDE observed that the decisions are not personally hard            
 to make.  The problem lies in finding the majority of people who              
 agree on a course of action.                                                  
 Number 1543                                                                   
 REPRESENTATIVE ROBINSON asked someone to explain last year's cuts.            
 She wanted to know how much they were and other information.                  
 CO-CHAIR BUNDE said the cuts took place two years ago.                        
 CURTIS LOMAS, Program Officer, Division of Public Assistance, said            
 he did not come with a detailed analysis to speak to Representative           
 Robinson's question, but he can certainly characterize the cuts for           
 her.  The cuts occurred in October 1993 as a result of legislation            
 that was sponsored by Governor Hickel.  The legislation went                  
 through a lot of debate and the cuts originally proposed were                 
 substantially larger.                                                         
 MR. LOMAS said the benefit reduction in AFDC payments was roughly             
 4 percent.  That is the closest he can come to an estimate off the            
 top of his head.  The cuts were not the same in every category, but           
 the cuts netted out to approximately a 4 percent decrease.  The               
 benefit reductions in APA were roughly on the order of 3.5 percent.           
 Number 1600                                                                   
 CO-CHAIR BUNDE suggested that more specific details and accurate              
 numbers could be provided by Ms. Lomas later.                                 
 MR. LOMAS said the other piece of that bill was that the statutory            
 automatic Cost of Living Allowance (COLA) increases that had                  
 previously been awarded annually became subject to the budgetary              
 discretion of the legislature and have not been awarded since.                
 CO-CHAIR TOOHEY said the reduction came to about $12 to $15 every             
 CO-CHAIR BUNDE said he has heard up to $24, but he is sure that               
 depends on the inflation factor.                                              
 MR. LOMAS said typically, previous cuts amounted to about $27 for             
 an AFDC family of three.  If they had no other income, their                  
 assistance went down about $27 per month.                                     
 Number 1645                                                                   
 CO-CHAIR BUNDE asked Mr. Lomas to address the fact that the                   
 original version of HB 228 is not in compliance with federal law.             
 Therefore, there is a blank CS in the bill packets.  He said the              
 HESS Committee members are not asking Mr. Lomas to support the                
 bill, they are just asking him to speak on the need for a CS.                 
 MR. LOMAS said he discussed the problems identified with the                  
 committee staff for a few days, and the CS results from those                 
 discussions.  The staff also asked Mr. Lomas to talk with the                 
 drafter in Legislative Legal.  Two fundamental changes occurred.              
 The first is that the provision in the original bill on line 10 of            
 page 1, which referred to effective dates has been changed.                   
 MR. LOMAS said the original bill language would have had the                  
 reductions go into effect on July 1 or the effective date of the              
 legislation, whichever is earlier.  Both the Attorney General's               
 office and Legislative Legal opined that is illegal.  That is                 
 making the law go into effect before the law goes into effect.                
 That provision has been eliminated, and the changes would go into             
 effect as of the effective date of the Act.                                   
 Number 1705                                                                   
 MR. LOMAS said the other change was on line 12 of page 1 of the               
 original version of the bill.  The amount listed there is $451.00.            
 That provision came up against the 1988 federal floor.  There is a            
 provision in federal law that requires states to maintain their               
 benefit level to a family without an income at the level in effect            
 as of May 1988 or face denial of approval for a Medicaid state                
 MR. LOMAS said recently, the state of California put benefit cuts             
 into effect that are below that level.  California was then                   
 required by the federal courts to restore benefits to the previous            
 Number 1746                                                                   
 MR. LOMAS said there were some changes to AFDC benefit levels.  The           
 changes to one and two affected 1993 and the same piece of                    
 legislation that was being previously referred to.  Also, Mr. Lomas           
 made some technical changes to the standards to bring Alaska's                
 program in compliance with other federal law requirements.  The               
 federal law had been pressuring the agency for years to change the            
 way the standards were structured in two areas.                               
 MR. LOMAS said the first area was that of families that included              
 only eligible children, and no eligible adults.  Those are normally           
 families in which a child or children are living with a relative              
 who is not a parent.  Under those circumstances, the caretaker and            
 adult is not required to be needy in his or her own right.  Only              
 the children's needs are covered.                                             
 MR. LOMAS said for years, Alaska had paid one child in that                   
 situation twice as much as two children, and then incremented for             
 each additional child at a much smaller amount.  It was the same              
 increment that was used in families which included an adult for               
 each additional child.                                                        
 Number 1795                                                                   
 MR. LOMAS said the federal government had problems with Alaska                
 paying more for the first child than for each additional child.  So           
 the change in the standards in 1993 had the increment for the                 
 second child in families that had no needy adult the same as the              
 increment for each additional child in other families.  In order to           
 not violate the federal floor when making that change, the payment            
 for a family of one needy child increased.  This was because the              
 state could not reduce the payment for a family of two children               
 below the amount paid in 1988.                                                
 MR. LOMAS said as a result, the standard was changed to what can be           
 seen in the original version of the statute--to $452 for one child.           
 The increment that was put in place at that time was $102 for each            
 additional child.  This brought the total payment for two children            
 living with a non-needy relative to $554.  The federal floor is               
 $550.  That is the amount paid for two children in that situation             
 in 1988.  In effect, the original version of the bill would bring             
 the payment for two children down to $451 plus $87, which is a                
 total of $538, which is below the 1988 floor.                                 
 Number 1855                                                                   
 MR. LOMAS continued that in order to bring payment levels down to             
 the minimum allowable under the maintenance of effort provision,              
 which Mr. Lomas understood was the will of the committee, it is               
 necessary to increase the amount of payment for one child to $463             
 so the $87 increment for the second child does not violate the 1988           
 floor of $550.                                                                
 MR. LOMAS said that is the shortest way to explain those changes.             
 In effect, this is a problem that occurred back in 1993, and this             
 is a fallout from that.  The impact is relatively minor.  The                 
 overall impact of the reductions in the original version of the               
 bill on the assistance payments budget component was 7.1 percent in           
 total payments.  The impact of the CS version is 7.0 percent.                 
 Therefore, the practical impact of the changes is relatively minor.           
 MR. LOMAS said these cases that actually would receive an increase            
 of $11 a month, account for 1.5 percent of all the children on                
 Number 1950                                                                   
 REPRESENTATIVE BRICE asked what the average benefit is for AFDC and           
 APA recipients.  It needs to be made clear that there is a big                
 difference between maximum benefit being discussed here and the               
 average benefit paid out.                                                     
 MR. LOMAS said the average benefit under current law for 1996 is              
 projected at $788.  That includes all variations in family size and           
 type.  This legislation would bring that down to $733.  There will            
 be an average reduction of $55 per month.                                     
 REPRESENTATIVE BRICE said in Section 1 on page 2, lines 7 or 8, the           
 words "or a single person household that does not consist of a                
 dependent child" are being taken out.  This bill is taking these              
 words out of statute.                                                         
 MR. LOMAS said he can see how people might object to that language            
 being in there, and that might lead people to believe that is to              
 cover people who are not parents.  Mr. Lomas said the reason the              
 language is in there is because federal law requires that in very             
 specific circumstances the state has to pay AFDC benefits to an               
 individual who does not have a child who is included in the AFDC              
 case.  That is if the only child in the home meets all the                    
 requirements of being a dependent child for AFDC purposes, but                
 instead receives SSI benefits because the child is disabled.                  
 MR. LOMAS continued that in those circumstances, the AFDC grant               
 includes only the needs of the adult caretaker because the child's            
 needs are met through the SSI program.                                        
 Number 1999                                                                   
 REPRESENTATIVE BRICE said therefore, basically those children are             
 no longer eligible to receive any type of benefit by striking that            
 MR. LOMAS said as he reads the remaining language, what is left               
 sets the maximum standard for various categories of individuals.              
 It does not prohibit the department from making payments to men or            
 women whose only child receives SSI assistance.  It merely                    
 eliminates the specificity of the standard.  In practical effect,             
 in order to continue to comply with federal law, Mr. Lomas thinks             
 the state will continue to make payments to those individuals and             
 use the state's regulatory authority to do so.                                
 Number 2030                                                                   
 CO-CHAIR BUNDE moved to adopt the CS, but announced it is not the             
 Chair's intention to move the bill today.  The bill would be                  
 addressed again on Thursday.                                                  
 REPRESENTATIVE ROKEBERG said he has not read the bill in-depth, and           
 he is having trouble identifying where the APA line item is.  He              
 asked if the amount was not being specified.                                  
 CO-CHAIR BUNDE read, "to comply with federal requirements, reduce             
 the maximum state contribution..."                                            
 REPRESENTATIVE ROKEBERG asked if that was a variable amount of APA.           
 CO-CHAIR TOOHEY moved that CSHB 228 be adopted.                               
 CO-CHAIR BUNDE asked that the motion be held for just a minute, and           
 asked Mr. Lomas to address Representative Rokeberg's concerns.                
 Number 2083                                                                   
 MR. LOMAS said the language basically effects a 10 percent                    
 reduction in APA payments whether it is the maximum level or                  
 someone is receiving benefits below the maximum level because the             
 amount of benefits is calculated by subtracting the income from the           
 maximum level.                                                                
 REPRESENTATIVE ROKEBERG asked if there was a variable of factors              
 present.  In an individual case, there are going to be variations.            
 CO-CHAIR BUNDE said there is a motion before the committee to adopt           
 the CS for HB 228.   There were no objections and the CS was                  
 adopted.  He asked for further discussion.                                    
 Number 2112                                                                   
 REPRESENTATIVE BRICE asked how the need standard in the state is              
 affected by all the discussion about reduction of this benefit and            
 that benefit.  There should not be any effect on the need standard.           
 Representative Brice asked about the process necessary to increase            
 the need standard.                                                            
 MR. LOMAS said the need standard is set in regulation.  What was              
 done when the level maximums were reduced in 1993, is that the                
 needs standard was maintained at the current level.  This was                 
 largely because if the needs standard is reduced, there are going             
 to be some people receiving very small grants who lose their                  
 eligibility for a payment, and thereby lose their eligibility for             
 Medicaid coverage.                                                            
 MR. LOMAS said the legislature expressed, in 1993, a will to reduce           
 the benefit payment level without causing anyone to lose                      
 eligibility.  Based on that, the same needs standards were kept in            
 regulation.  That applies both to AFDC and APA.                               
 TAPE 95-20, SIDE A                                                            
 Number 000                                                                    
 CO-CHAIR BUNDE reminded the HESS Committee members and the audience           
 that the bill was being held until Thursday.                                  
 REPRESENTATIVE ROKEBERG asked about the bills that are coming                 
 forward on the permanent fund dividend and hold harmless issues.              
 He asked if Mr. Nordlund and Mr. Lomas will be involved in                    
 testifying on those issues.                                                   
 MR. NORDLUND said those bills affect his division.  Some of those             
 bills were actually winding their way through the legislative                 
 process before Mr. Nordlund was hired to his current position.  Mr.           
 Lomas is the primary testifier on those topics.                               
 REPRESENTATIVE ROKEBERG asked for the record if anyone had                    
 requested Mr. Lomas provide some sort of impact flow charts that              
 could be readily discernible to legislators to show the effects of            
 the various aspects of the proposed legislation on the general                
 fund.  He asked if such charts were being worked on.                          
 MR. LOMAS said there has been several requests for such charts.               
 Other bills have held up that work, but that is something his                 
 office hopes to have out in the next week or so.  Some information            
 has been developed for the Senate Finance Committee.  There are               
 additional pieces to be developed that should be available.                   
 Number 122                                                                    
 CO-CHAIR BUNDE observed that these bills are in a state of flux,              
 and perhaps addressing them in the Finance Committee might be the             
 best place so Mr. Lomas does not do work that is perhaps not                  
 REPRESENTATIVE ROKEBERG asked if those bills were going to be heard           
 before the HESS Committee.                                                    
 CO-CHAIR BUNDE said those bills are well beyond the HESS Committee.           
 CO-CHAIR TOOHEY said probably, Representative Hanley has already              
 requested such numbers.                                                       
 Number 174                                                                    
 CO-CHAIR BUNDE adjourned the meeting at 3:58 p.m.                             

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