Legislature(1999 - 2000)

04/24/1999 10:09 AM HES

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
txt
         HOUSE HEALTH, EDUCATION AND SOCIAL                                                                                     
            SERVICES STANDING COMMITTEE                                                                                         
                   April 24, 1999                                                                                               
                     10:09 a.m.                                                                                                 
                                                                                                                                
                                                                                                                                
MEMBERS PRESENT                                                                                                                 
                                                                                                                                
Representative Fred Dyson, Co-Chair                                                                                             
Representative John Coghill, Co-Chair                                                                                           
Representative Jim Whitaker                                                                                                     
Representative Joe Green                                                                                                        
Representative Carl Morgan                                                                                                      
Representative Tom Brice                                                                                                        
                                                                                                                                
MEMBERS ABSENT                                                                                                                  
                                                                                                                                
Representative Allen Kemplen                                                                                                    
                                                                                                                                
COMMITTEE CALENDAR                                                                                                              
                                                                                                                                
HOUSE BILL NO. 191                                                                                                              
"An Act relating to charter schools; and providing for an effective                                                             
date."                                                                                                                          
                                                                                                                                
     - HEARD AND HELD                                                                                                           
                                                                                                                                
HOUSE BILL NO. 195                                                                                                              
"An Act relating to school construction grants and to municipal                                                                 
school construction debt reimbursement."                                                                                        
                                                                                                                                
     - HEARD AND HELD                                                                                                           
                                                                                                                                
HOUSE BILL NO. 115                                                                                                              
"An Act relating to the University of Alaska; and providing for an                                                              
effective date."                                                                                                                
                                                                                                                                
     - FAILED TO MOVE HB 115 OUT OF COMMITTEE                                                                                   
                                                                                                                                
HOUSE BILL NO. 15                                                                                                               
"An Act relating to disclosure of information about certain                                                                     
children; and amending Rule 22, Alaska Child in Need of Aid Rules."                                                             
                                                                                                                                
     - SCHEDULED BUT NOT HEARD                                                                                                  
                                                                                                                                
(* First public hearing)                                                                                                        
                                                                                                                                
PREVIOUS ACTION                                                                                                                 
                                                                                                                                
BILL: HB 191                                                                                                                    
SHORT TITLE: CHARTER SCHOOLS                                                                                                    
SPONSOR(S): REPRESENTATIVES(S) DYSON, Kohring                                                                                   
                                                                                                                                
Jrn-Date    Jrn-Page           Action                                                                                           
 4/13/99       794     (H)  READ THE FIRST TIME - REFERRAL(S)                                                                   
 4/13/99       794     (H)  HES, FIN                                                                                            
 4/20/99               (H)  HES AT  3:00 PM CAPITOL 106                                                                         
 4/20/99               (H)  HEARD AND HELD                                                                                      
 4/24/99               (H)  HES AT 10:00 AM CAPITOL 106                                                                         
                                                                                                                                
BILL: HB 195                                                                                                                    
SHORT TITLE: SCHOOL GRANT/DEBT REIMBURSEMENT                                                                                    
SPONSOR(S): REPRESENTATIVES(S) DYSON                                                                                            
                                                                                                                                
Jrn-Date    Jrn-Page           Action                                                                                           
 4/13/99       795     (H)  READ THE FIRST TIME - REFERRAL(S)                                                                   
 4/13/99       795     (H)  HES, FIN                                                                                            
 4/20/99               (H)  HES AT  3:00 PM CAPITOL 106                                                                         
 4/20/99               (H)  HEARD AND HELD                                                                                      
 4/24/99               (H)  HES AT 10:00 AM CAPITOL 106                                                                         
                                                                                                                                
BILL: HB 115                                                                                                                    
SHORT TITLE: USE OF UNIVERSITY OF ALASKA APPROPRIATION                                                                          
SPONSOR(S): REPRESENTATIVES(S) BUNDE                                                                                            
                                                                                                                                
Jrn-Date    Jrn-Page           Action                                                                                           
 2/24/99       301     (H)  READ THE FIRST TIME - REFERRAL(S)                                                                   
 2/24/99       302     (H)  HES, FINANCE                                                                                        
 4/20/99               (H)  HES AT  3:00 PM CAPITOL 106                                                                         
 4/20/99               (H)  HEARD AND HELD                                                                                      
 4/24/99               (H)  HES AT 10:00 AM CAPITOL 106                                                                         
                                                                                                                                
WITNESS REGISTER                                                                                                                
                                                                                                                                
ACTION NARRATIVE                                                                                                                
                                                                                                                                
WES KELLER, Researcher                                                                                                          
   for Representative Fred Dyson                                                                                                
Alaska State Legislature                                                                                                        
Capitol Building, Room 104                                                                                                      
Juneau, Alaska  99801                                                                                                           
Telephone:  (907) 465-3759                                                                                                      
POSITION STATEMENT:  Presented sponsor statement for HB 191.                                                                    
                                                                                                                                
CAROL COMEAU, Assistant Superintendent for Instruction                                                                          
Anchorage School District                                                                                                       
P.O. Box 196619                                                                                                                 
Anchorage, Alaska  99519                                                                                                        
Telephone:  (907) 269-2290                                                                                                      
POSITION STATEMENT:  Testified on HB 191.                                                                                       
                                                                                                                                
GLEN BIEGEL, Member                                                                                                             
Board of Alaskans for Educational Choice                                                                                        
Board of Alaska Charter School Association                                                                                      
Academic Policy Committee for                                                                                                   
   Aquarian Charter School                                                                                                      
P.O. Box 202280                                                                                                                 
Anchorage, Alaska  99520                                                                                                        
Telephone:  (907) 346-6244                                                                                                      
POSITION STATEMENT:  Testified on HB 191.                                                                                       
                                                                                                                                
GREG MILLER, Chair                                                                                                              
Advisory Policy Committee                                                                                                       
Aquarian Charter School                                                                                                         
2311 Albion Circle                                                                                                              
Anchorage, Alaska  99515                                                                                                        
Telephone:  (907) 344-9672                                                                                                      
POSITION STATEMENT:  Testified on HB 191.                                                                                       
                                                                                                                                
BARBARA GERARD, Principal                                                                                                       
Academy Charter School                                                                                                          
258 South Bailey                                                                                                                
Palmer, Alaska  99645                                                                                                           
Telephone:  (907) 745-3369                                                                                                      
POSITION STATEMENT:  Testified in support of HB 191.                                                                            
                                                                                                                                
JACK MILLER, Chair                                                                                                              
Academic Policy Committee                                                                                                       
Family Partnership Charter School                                                                                               
2448 Brook Drive                                                                                                                
Anchorage, Alaska  99517                                                                                                        
Telephone:  (907) 243-0849                                                                                                      
POSITION STATEMENT:  Testified in support of HB 191.                                                                            
                                                                                                                                
ROBERT HALL, Board Member                                                                                                       
Midnight Sun Family Learning Center                                                                                             
P.O. Box 871906                                                                                                                 
Wasilla, Alaska  99687                                                                                                          
Telephone:  (907) 373-6555                                                                                                      
POSITION STATEMENT:  Testified on HB 191.                                                                                       
                                                                                                                                
EDDY JEANS, Manager                                                                                                             
School Finance Section                                                                                                          
Education Support Services                                                                                                      
Department of Education (DOE)                                                                                                   
801 West Tenth Street, Suite 200                                                                                                
Juneau, Alaska  99801                                                                                                           
Telephone:  (907) 465-2891                                                                                                      
POSITION STATEMENT:  Testified on HB 191.                                                                                       
                                                                                                                                
BRUCE CAMPBELL, Legislative Assistant                                                                                           
   to Senator Randy Phillips                                                                                                    
Alaska State Legislature                                                                                                        
Capitol Building, Room 103                                                                                                      
Juneau, Alaska  99801                                                                                                           
Telephone:  (907) 465-2661                                                                                                      
POSITION STATEMENT:  Presented HB 195.                                                                                          
                                                                                                                                
LARRY WIGET, Executive Director                                                                                                 
Public Affairs                                                                                                                  
Anchorage School District                                                                                                       
4600 DeBarr Road                                                                                                                
Anchorage, Alaska  99519                                                                                                        
Telephone:  (907) 269-2255                                                                                                      
POSITION STATEMENT:  Testified on HB 195.                                                                                       
                                                                                                                                
DEE HUBBARD, Member                                                                                                             
Bond Reimbursement and Grant Review Committee                                                                                   
4251 Pinnacle Circle                                                                                                            
Anchorage, Alaska  99504                                                                                                        
Telephone:  (907) 337-6370                                                                                                      
POSITION STATEMENT:  Testified on HB 195.                                                                                       
                                                                                                                                
MIKE MORGAN, Manager                                                                                                            
Facilities Section                                                                                                              
Education Support Services                                                                                                      
Department of Education (DOE)                                                                                                   
801 West Tenth Street, Suite 200                                                                                                
Juneau, Alaska  99801                                                                                                           
Telephone:  (907) 465-1858                                                                                                      
POSITION STATEMENT:  Answered questions on HB 195.                                                                              
                                                                                                                                
REPRESENTATIVE CON BUNDE                                                                                                        
Alaska State Legislature                                                                                                        
Capitol Building, Room 501                                                                                                      
Juneau, Alaska  99801                                                                                                           
Telephone:  (907) 465-4843                                                                                                      
POSITION STATEMENT:  Testified as sponsor of HB 115.                                                                            
                                                                                                                                
WENDY REDMAN, Vice President                                                                                                    
Statewide University Relations                                                                                                  
University of Alaska                                                                                                            
P.O. Box 755200                                                                                                                 
Fairbanks, Alaska  99775                                                                                                        
Telephone:  (907) 474-7582                                                                                                      
POSITION STATEMENT:  Testified on HB 115.                                                                                       
                                                                                                                                
ACTION NARRATIVE                                                                                                                
                                                                                                                                
TAPE 99-43, SIDE A                                                                                                              
Number 0001                                                                                                                     
                                                                                                                                
CO-CHAIRMAN COGHILL called the House Health, Education and Social                                                               
Services Standing Committee meeting to order at 10:09 a.m.  Members                                                             
present at the call to order were Representatives Dyson, Coghill,                                                               
Whitaker, Morgan and Brice.  Representative Green joined the                                                                    
meeting at 10:24 a.m.                                                                                                           
                                                                                                                                
HB 191 - CHARTER SCHOOLS                                                                                                        
                                                                                                                                
Number 0099                                                                                                                     
                                                                                                                                
CO-CHAIRMAN COGHILL announced the first order of business as House                                                              
Bill No. 191, "An Act relating to charter schools; and providing                                                                
for an effective date."                                                                                                         
                                                                                                                                
Number 0124                                                                                                                     
                                                                                                                                
WES KELLER, Researcher for Representative Fred Dyson, presented the                                                             
sponsor statement for HB 191.  In 1995, the Alaska State                                                                        
Legislature passed CSSB 88(FIN) authorizing Alaskan charter                                                                     
schools.  The Center for Education Reform has pretty well                                                                       
established that Alaska charter school law is viewed as being                                                                   
relatively weak, and the liaison in the Department of Education                                                                 
(DOE) has been in contact with the charter school people and has                                                                
asked them what could be done to make the bill stronger.                                                                        
                                                                                                                                
MR. KELLER referred the committee to the position statement in                                                                  
their packets.  The DOE has several recommendations that they took                                                              
into account.  The first recommendation is to lift the current cap                                                              
on the number of charter schools in Alaska, and Section 1 takes                                                                 
care of that.  Their second recommendation is to ensure that                                                                    
educational programs are based on state standards, and Section 2                                                                
takes care of that, so the charter schools could not be exempt from                                                             
taking the exit exam required in other public schools.  The third                                                               
recommendation is to establish fund raising guidelines for charter                                                              
schools that are established as nonprofit under 26 U.S.C. 501                                                                   
(c)(3), and Section 4 takes care of that.  They also recommended                                                                
that they remove the sunset provision of 2005, and that is done in                                                              
Section 8.                                                                                                                      
                                                                                                                                
MR. KELLER informed the committee that the DOE also recommended                                                                 
that an appeals body be created at the local level for the charter                                                              
schools, and this bill has not done that.  Part of the reason is                                                                
that they feel that the local school boards have that power now to                                                              
establish an advisory committee, and they didn't want to add                                                                    
another level of bureaucracy.  The next thing the DOE recommended                                                               
is to grant start-up funds for funding charter schools, and they                                                                
did not respond directly that way; they responded to the concern                                                                
about getting more money to the schools.  The next recommendation                                                               
is to clarify that charter schools receive local revenues in excess                                                             
of required local contribution, as well as state determined basic                                                               
need, and they did that in Section 4.                                                                                           
                                                                                                                                
MR. KELLER noted that Section 7 requires that charter school be                                                                 
counted as separate schools for the purpose of calculating funding                                                              
for school districts.  The DOE counts charter schools as                                                                        
alternative schools when applying AS 14.17.905, which basically                                                                 
says that alternative schools will be counted as part of the school                                                             
and district with the highest ADM [average daily membership], so                                                                
charter schools are counted currently with the largest school with                                                              
the highest ADM.  The problem is that alternative schools reside in                                                             
a public school facility, and a charter school is in its own                                                                    
facility.  It seems like more money ought to be going to the                                                                    
charter schools because they have to provide the facilities.                                                                    
                                                                                                                                
MR. KELLER acknowledged that HB 191 allows the district to charge                                                               
rent if the charter school resides in a school district facility.                                                               
This is the section that produced the $3.5 million fiscal note from                                                             
the DOE.  In addition to what the DOE has recommended, this bill                                                                
does two things.  One is addressed in Section 5, which requires the                                                             
districts to assign itemized costs of services provided to the                                                                  
charter school and allows the charter school to opt out of any                                                                  
service that it doesn't want that is not required by law.                                                                       
                                                                                                                                
Number 0495                                                                                                                     
                                                                                                                                
MR. KELLER said that it requires an itemized list of the cost on a                                                              
per student basis.  The intent of HB 191 in Section 5 is to show                                                                
exactly what the charter school is purchasing from the district.                                                                
Section 3 requires that the itemized cost be reflected in the                                                                   
contract with the charter schools.  The second thing HB 191 does in                                                             
Section 6, is it allows for the contracts of the charter schools to                                                             
be longer than five years.  There were problems with long-term rent                                                             
arrangements with only five year contracts, and this extends it up                                                              
to ten years.  He read a support letter from a charter school                                                                   
student which read:                                                                                                             
                                                                                                                                
     To the Capital,                                                                                                            
     I am a 1st grader at the Academy Charter School in                                                                         
     Palmer.  My favorite [subject] is science and art.  My                                                                     
     favorite food is pizza, ice cream, and candy.  My name is                                                                  
     Danielle May Pempek.  I am a happy kid.  Can you give us                                                                   
     some money so we can have some more Academy Charter                                                                        
     Schools.  My favorite teachers are Miss Cottle, Mrs.                                                                       
     Booth, Mrs. Schmidit, and Mrs. Gerard.                                                                                     
                                                                                                                                
     Love, Danielle Mary Pempek                                                                                                 
                                                                                                                                
CO-CHAIRMAN COGHILL asked who provides the itemized list in Section                                                             
3.                                                                                                                              
                                                                                                                                
MR. KELLER referred him to Section 5 to answer part of that.  He                                                                
understands that it is a negotiated contract between the charter                                                                
school and the school board.  The local school districts shall                                                                  
itemize each service provided by the school district to the charter                                                             
school.  There is a school budget provided by the district, and the                                                             
school budget is roughly $4,000 per student.  The student generates                                                             
quite a bit more than that and the difference between what the                                                                  
student generates and what is in the school budget is often defined                                                             
as educational services, which includes items like special                                                                      
education, transportation, audio-visual support and teacher                                                                     
inservice.  This bill is trying to itemize those things so the                                                                  
charter school know exactly what they are "purchasing."                                                                         
                                                                                                                                
CO-CHAIRMAN DYSON commented that it is the perception of some of                                                                
the charter schools that they are getting $3,035 per student to run                                                             
their school, and the district is getting between $7,000 and                                                                    
$8,000, and the charter schools maintain that they are not getting                                                              
their fair share.  The intention of this section is to get an                                                                   
accounting of that to make it fair.                                                                                             
                                                                                                                                
Number 0868                                                                                                                     
                                                                                                                                
CAROL COMEAU, Assistant Superintendent for Instruction, Anchorage                                                               
School District, testified via teleconference from Anchorage saying                                                             
one of her jobs is the liaison with the charter schools in                                                                      
Anchorage.  She wanted to ask some questions and then will provide                                                              
to the committee their written response later.  She noted that they                                                             
do not have any problem administratively with lifting the cap on                                                                
the number of charter schools or relieving them of the geographic                                                               
distribution.  Anchorage currently has four charter schools, and                                                                
they are allotted ten.  They would welcome additional applications,                                                             
but they wouldn't want to preclude others in the state from being                                                               
able to apply for charter school status if their allocation would                                                               
hinder that.  They support that the charter schools will be                                                                     
required to be tested, as all the other students are, and wondered                                                              
if that includes the benchmark testing as well as the state mandate                                                             
on the CAT [California Achievement Test] and the exit exams.                                                                    
                                                                                                                                
CO-CHAIRMAN DYSON answered that they didn't address that and asked                                                              
what she would prefer.                                                                                                          
                                                                                                                                
Number 0947                                                                                                                     
                                                                                                                                
MS. COMEAU prefers that any required state testing would be                                                                     
required of the charter schools, so they could include those into                                                               
their profile performance that they issue every fall to the public,                                                             
and the charter schools, and they are to include that in their                                                                  
report back to the school board.                                                                                                
                                                                                                                                
MS. COMEAU requested more clarification on Sections 3 and 5 as to                                                               
what would that mean.  She wondered if they would be required to                                                                
itemize, literally in a log everyday, when they respond to                                                                      
questions or provide information to each charter school.  She                                                                   
doesn't know how they would anticipate that ahead of time before                                                                
negotiating a contract.  She wanted more information on their                                                                   
intent on the school district's part.                                                                                           
                                                                                                                                
CO-CHAIRMAN DYSON said their intent is that there be an accounting                                                              
trail of the overhead and administrative costs that the school                                                                  
district has to devote to the administration and support of the                                                                 
charter schools.  It might be better to do that retroactively.  He                                                              
is open to their coaching on making that clear and convenient.                                                                  
                                                                                                                                
Number 1067                                                                                                                     
                                                                                                                                
MS. COMEAU noted that the current law requires that they subtract                                                               
from the overall allocation, the indirect cost rate which includes                                                              
all of her services, budget department purchasing, chief financial                                                              
officer, human resources, which would be all of their hiring                                                                    
procedures, assessment evaluation services, technology and public                                                               
affairs, and others which they do not charge the charter schools                                                                
other than the [4.31] percent in the indirect cost rate for the                                                                 
district.  The charter schools don't have to pay for any of their                                                               
services.  They do require them to pay for things set by law which                                                              
include special education.  The state law requires that all                                                                     
students are able to apply to a charter school.  Some of the                                                                    
charter schools have chosen not to provide the services, but they                                                               
wanted the district to provide the services so they have worked out                                                             
a charge back cost on that.  That has mixed success because there                                                               
seems to be less ownership of identification and IEP [individual                                                                
educational plan] services on the part of the charter schools who                                                               
are not delivering the services themselves.                                                                                     
                                                                                                                                
MS. COMEAU stated that they have two charter schools delivering the                                                             
services, and the others are getting the services from the                                                                      
district.  That is where they are struggling with this language                                                                 
because they believe if they start to cost out all of the time they                                                             
are spending with the charter schools, it will be significantly                                                                 
more than what the charter schools are being charged now.  The                                                                  
indirect cost rate of 4.31 percent is set by the state.  She                                                                    
believes that when they take the charter schools' total budgets and                                                             
reduce it by the indirect cost rate, she estimates it is going to                                                               
cost them less than it would be under this legislation.  They will                                                              
wrestle with the itemization and costing things out for students                                                                
and submit a written response.                                                                                                  
                                                                                                                                
Number 1212                                                                                                                     
                                                                                                                                
MS. COMEAU said they currently allow the charter schools to raise                                                               
funds as long as they identify the resources, and that is built                                                                 
into their budget.  She doesn't believe that HB 191 will do any                                                                 
disservice to the fund raising aspect.  She asked what they mean by                                                             
"must reflect state, local and other funding for that school                                                                    
district."  It seems to her that that may be tied to Section 5                                                                  
where they list transportation, special education and intensive                                                                 
services that come to the district based on the whole district's                                                                
needs.  She wondered if the intent was to allocate transportation                                                               
funding to the charter schools, even though their policies do not                                                               
provide transportation to any of their alternative schools.                                                                     
                                                                                                                                
CO-CHAIRMAN DYSON said what they are trying to accomplish there is                                                              
just an open accounting so that the charter schools see clearly                                                                 
what administrative and overhead costs are being deducted from the                                                              
total per-student allocation.  They never intended that anything                                                                
here would preclude them from excluding charges like                                                                            
transportation.                                                                                                                 
                                                                                                                                
Number 1330                                                                                                                     
                                                                                                                                
MS. COMEAU commented that she can assume from that that the list of                                                             
services are currently provided under the indirect cost rate, the                                                               
4.31 percent, which they take right off the top.  She wondered if                                                               
they would then be itemizing how much time each of them in those                                                                
departments is spending, and that would be given to the charter                                                                 
schools.                                                                                                                        
                                                                                                                                
CO-CHAIRMAN DYSON indicated that the record of whatever they charge                                                             
to the charter schools would be a part of the accounting record                                                                 
that they would have access to.  But the district doesn't have to                                                               
charge them a pro-rata share of their time if they choose not to.                                                               
                                                                                                                                
Number 1370                                                                                                                     
                                                                                                                                
MS. COMEAU asked Co-Chairman Dyson to explain the opt out.  If                                                                  
their district policy requires that the charter schools follow the                                                              
district's purchasing procedures, and they want to opt out of that,                                                             
she wondered what the position is with this legislation on that.                                                                
                                                                                                                                
CO-CHAIRMAN DYSON said that is one of the questions they are                                                                    
interested in her response on.  The problem of any school, or any                                                               
subset of the school district, doing purchasing and contracting is                                                              
backing them up; it is necessary to have some controls on that.                                                                 
What they are interested in is if there a way for the charter                                                                   
school to do purchasing under the district or state regulations and                                                             
do it themselves, as opposed to using the district's purchasing                                                                 
department.                                                                                                                     
                                                                                                                                
MS. COMEAU asked if he was asking the district to respond to what                                                               
they think the pluses and minuses would be of the services and                                                                  
which ones they could support and which ones they think could be                                                                
problematic.                                                                                                                    
                                                                                                                                
CO-CHAIRMAN DYSON said that is exactly right.                                                                                   
                                                                                                                                
Number 1440                                                                                                                     
                                                                                                                                
MS. COMEAU said they recognize the constraints that the current SB
36 restriction on charter schools under 200 places on the charter                                                               
schools, and it seems to be forcing, in their estimation, the                                                                   
charter schools to have to increase their enrollment over 200                                                                   
students in order to access the funding.  They are supportive of                                                                
the charter schools who would like to remain smaller but not be                                                                 
penalized by having to attach themselves to the largest school in                                                               
the district.  They tried to get that changed on SB 36 last spring                                                              
and were not successful, but they support that.  If a charter                                                                   
school wants to stay at 150 students, because they believe that is                                                              
the size that best meets their mission and space, the district                                                                  
agrees they shouldn't be penalized in the funding because of that.                                                              
                                                                                                                                
CO-CHAIRMAN DYSON appreciates her comments.  Because the charter                                                                
schools are very separate, physically and administratively, it                                                                  
seems to him, from a management and fairness perspective, that they                                                             
really are disadvantaged by being lumped with the largest school in                                                             
the district, which must by scale factor, be more efficient.                                                                    
                                                                                                                                
MS. COMEAU agreed that has been their position.  As long as the                                                                 
charter schools are housed in a separate facility, they do not want                                                             
them penalized for a smaller enrollment.  They believe there is a                                                               
benefit in some of the charter schools to start smaller and grow as                                                             
they feel comfortable and are more successful.  Her experience is                                                               
that they are more successful to start that way than to start large                                                             
for an artificial reason, just because a number is in the                                                                       
legislation, rather than what is the best program for the student.                                                              
                                                                                                                                
Number 1600                                                                                                                     
                                                                                                                                
GLEN BIEGEL, Member, Board of Alaskans for Educational Choice,                                                                  
Board of Alaska Charter School Association, Academic Policy                                                                     
Committee for Aquarian Charter School, testified via teleconference                                                             
from Anchorage.  He would like to respond to some things that Ms.                                                               
Comeau mentioned.  One of the illustrations perfectly defines the                                                               
problem that charter schools are having in their attempt to provide                                                             
choice for parents. He read from his written testimony which                                                                    
states:                                                                                                                         
                                                                                                                                
     It is a legitimate and most sacred function of government                                                                  
     to provide for the equal treatment among the unequal.                                                                      
     The manifestation of this as it is best known is the                                                                       
     court system that arbitrates fairly among people who are                                                                   
     manifestly unequal by position, wealth, circumstances et                                                                   
     cetera.  In the world of charter schools, we are tasked                                                                    
     with bargaining with districts for the funding to allow                                                                    
     us to present to the public an equal and fair                                                                              
     presentation of school alternatives.  What we are asking                                                                   
     for is protection from the word game.  The word game is                                                                    
     really just a front for the discrimination game.                                                                           
                                                                                                                                
     The statements of the district I would like to center on                                                                   
     are these:  We in essence get local and state funding.                                                                     
     There happens to be $38 million we are not participating                                                                   
     in, this is called discretionary funds or discriminatory                                                                   
     funds.  We receive a fair allocation of funds as would be                                                                  
     demonstrated if you read the general fund revenues                                                                         
     segment and the adopted financial plan of the school                                                                       
     district.  I will take issue with that in a moment.  The                                                                   
     district will treat all other public school students as                                                                    
     having a priority for housing.  I believe that they are                                                                    
     funded at about 65 percent of other students.                                                                              
                                                                                                                                
     The question is what is the function of the legislature                                                                    
     in guaranteeing and allowing charter schools to make an                                                                    
     equitable position for parents to choose, as our                                                                           
     constitution guarantees?  There is no getting around the                                                                   
     fact that the expenditures ... for charter school                                                                          
     students are $3,900 per child.  The expenditures for the                                                                   
     Anchorage School District are $7,500 per child. ...  We                                                                    
     get $3,900 to spend; they get $7,500 to spend.                                                                             
                                                                                                                                
MR. BIEGEL commented that it is a question for the legislature.  Is                                                             
that equitable?  The charter schools do not have the ability to                                                                 
impact that $3,900 on their own.  They are asking for the ability                                                               
to guarantee that charter schools have the ability to provide                                                                   
parents with an equitable choice.  They can't provide it with                                                                   
$3,900.  And it may be very difficult to allow for the presentation                                                             
of that money to charter schools and the language in the bill as it                                                             
is currently written may not provide for that.                                                                                  
                                                                                                                                
MR. BIEGEL noted that Carol Comeau is well-versed in how funding is                                                             
allocated by the state, and by various sources of funding.  It is                                                               
very difficult to pry all that apart to say that the money is                                                                   
allocated by per student on this basis.  They have an allocation by                                                             
student in their plan here, and it shows that charter school                                                                    
students actually receive more money per child than every other                                                                 
school in this district.  The average amount of money that every                                                                
other student in this district receives is $3,600.  Charter school                                                              
students receive $3,900.  But the expenditure discrepancy cannot be                                                             
reconciled by that statement.  It is just simply not true.  They do                                                             
not participate in 100 percent of local and state funding.  It                                                                  
cannot be reconciled.  They are asking in HB 191 to have the                                                                    
opportunity to be treated fairly in a funding way.                                                                              
                                                                                                                                
Number 1829                                                                                                                     
                                                                                                                                
MR. BIEGEL indicated that they were denied housing, a primary and                                                               
necessary element of educating children.  Some people in this room                                                              
who represent charter schools, are going to show that they just                                                                 
simply won't be able to stay open unless they have a place to teach                                                             
their children.  The charter school movement is willing to work out                                                             
how much less money they can do it for.  They can't do it for 55                                                                
percent and no housing.  They can't do it; they have tried.  They                                                               
are required to expend money in every way that the school district                                                              
expends money.  They are required to abide by all the same                                                                      
contracts with all the different unions, all their building codes                                                               
much match the school district.                                                                                                 
                                                                                                                                
MR. BIEGEL agrees that HB 191 holds the essence of the solution to                                                              
this problem.  They have some suggestions by charter school people                                                              
about how to fix that problem, but he is not sure that it is dealt                                                              
with adequately in the bill as it exists.  Merely specifying what                                                               
money they are not receiving isn't going to be enough.  It is not                                                               
going to be enough to say that the charter schools only gets $3,900                                                             
to expend per child, whereas the Anchorage School District gets                                                                 
$7,500 to expend per child, are these reasons.  Enumerating the                                                                 
reasons isn't going to be enough.                                                                                               
                                                                                                                                
MR. BIEGEL continued with his written testimony which states:                                                                   
                                                                                                                                
     The real tragedy is that all the effort, all the thought,                                                                  
     hope and the trust, will have been misplaced and                                                                           
     unretrievable in the grave it has been cast into.  There                                                                   
     is only so much constructive energy to make the public                                                                     
     school system more responsive and more effective.  The                                                                     
     legislature acted in good faith and trusted the districts                                                                  
     to realize the dream of limited competition, but still                                                                     
     equal competition.  I have heard it said that by some,                                                                     
     that the cry for equal treatment that there is a cry for                                                                   
     equal treatment and consideration for all.  History has                                                                    
     shown that equality is reserved only to the equal.  We                                                                     
     will not be able to present an equitable choice unless we                                                                  
     can secure the blessings of equality that our                                                                              
     Constitution guarantees by its clause regarding equal                                                                      
     access to education.                                                                                                       
                                                                                                                                
Number 1967                                                                                                                     
                                                                                                                                
GREG MILLER, Chair, Advisory Policy Committee, Aquarian Charter                                                                 
School testified via teleconference from Anchorage.  He has two                                                                 
children at Aquarian Charter School in Anchorage, and he has been                                                               
involved the past two years.  There are 110 students in that school                                                             
housed in seven portables.  They don't have a library, gym,                                                                     
cafeteria, or any busing, and food isn't provided; yet they have                                                                
made it and are here to stay.  He wrote various letters last year                                                               
regarding this issue:  The breakdown of revenues, state versus                                                                  
local revenues and how they are being allocated.  He stopped that                                                               
endeavor about halfway through last year because he couldn't figure                                                             
out the revenue side.  He told himself he wouldn't approach them                                                                
again until he did have it figured out, and he believes he does                                                                 
now.  The irony of it is that he agrees with both Ms. Comeau and                                                                
Mr. Biegel.  This bill is a tremendous effort to fix some of the                                                                
weak points in the existing statute.                                                                                            
                                                                                                                                
MR. MILLER referred to Section 4(a) which is a revenue versus cost                                                              
issue in his mind.  The cost allocation has never been a problem                                                                
with charter schools.  He agrees the school district shouldn't be                                                               
burdened with more work for an itemized list.  The revenue side of                                                              
the existing statute is wholly inadequate, and HB 191 takes a very                                                              
good stab at trying to clarify that.  But he suggested that it                                                                  
doesn't quite get there because of some of the language.  He thinks                                                             
they need to take away any possible ambiguity within Sec. 4(a).                                                                 
Representative Dyson mentioned that what he is trying to do in this                                                             
section is to make the allocation of revenues and funds fair and                                                                
clear with an open accounting.                                                                                                  
                                                                                                                                
Number 2107                                                                                                                     
                                                                                                                                
MR. MILLER suggested equal funding.  The school district has always                                                             
said that the charter schools do get equal funding, and that isn't                                                              
correct.  They do get an equal share of the state monies, but they                                                              
do not get an equal share of the local funding.  There is about $92                                                             
million locally in the Anchorage School District that goes into the                                                             
local funding side of it, and they get approximately 60 percent of                                                              
that, if he understands the numbers correctly.  That comes down to                                                              
$36 to $38 million that Glen Biegel mentioned.  Those funds are                                                                 
allocated by the school district per its discretion.  He                                                                        
recommended that the language in the bill eliminate that discretion                                                             
so it is equal.                                                                                                                 
                                                                                                                                
MR. MILLER suggested a formula for equal funding:  Take the total                                                               
amount of money in from all sources; divide that by the number of                                                               
full-time equivalent students, and that gives the cost per student.                                                             
Multiply that by the number of students in the charter school, and                                                              
that is the revenue side.  Alter the cost side, whether it be the                                                               
4.31 percent or an itemization of the costs, but the revenue side                                                               
can be just that clear.  That will then require the school district                                                             
to say what the charter schools are being charged for or not, and                                                               
they can opt in or opt out.  He applauded Carol Comeau and the                                                                  
Anchorage School District for their efforts.                                                                                    
                                                                                                                                
Number 2242                                                                                                                     
                                                                                                                                
CO-CHAIRMAN DYSON commented that if they are going to get anything                                                              
done this session, they must do it well and quickly.                                                                            
                                                                                                                                
TAPE 99-43, SIDE B                                                                                                              
                                                                                                                                
Number 2280                                                                                                                     
                                                                                                                                
BARBARA GERARD, Principal, Academy Charter School, testified via                                                                
teleconference from the Matanuska-Susitna (Mat-Su) Legislative                                                                  
Information Office (LIO).  She read her testimony which states:                                                                 
                                                                                                                                
     I am one of the founders of Academy Charter School.  I                                                                     
     currently have a first grader in this school, and I am                                                                     
     also the current Principal of Academy Charter.  I reside                                                                   
     in Palmer.  I have spent the last three years totally                                                                      
     immersed in the formation and implementation of this                                                                       
     school.  Our school has been extremely successful.  Our                                                                    
     success has been largely due to the incredible parent                                                                      
     dedication and commitment in both time, money and                                                                          
     supplies and whatever else it has taken, including                                                                         
     physically building a school out of a field last year.                                                                     
                                                                                                                                
     I am hoping you will help us by protecting us and getting                                                                  
     a stronger law which delineates equity in funding.                                                                         
     Currently our school is receiving $5,800 per student.                                                                      
     Next year, due to the harm of HB 36, we are barely going                                                                   
     to be able to scrape by.  We are hoping that with the                                                                      
     Representative Dyson's bill that we will be able to                                                                        
     receive somewhat of an equity, an equal portion, and not                                                                   
     lose that $1,000 per student.  It is critical.  Our                                                                        
     students have not lessened in value from last year to                                                                      
     this year, but yet we will receive less.  I am hoping you                                                                  
     will support both [HB] 191 and [HB] 197 and enable us to                                                                   
     truly provide, and continue to provide, choice in                                                                          
     education, and guarantee its quality, its rigor and its                                                                    
     content.                                                                                                                   
                                                                                                                                
     Charter Schools are true catalysts for school reform.  We                                                                  
     have seen schools all over the district that have been                                                                     
     positively stimulated by the challenge the charter                                                                         
     schools have placed them in.  To stop the status quo and                                                                   
     get busy and find some new innovative ways and which they                                                                  
     can function within their own building and provide great                                                                   
     education.  Please, I can't say it enough, help us,                                                                        
     provide us with some strength in that law.  I read                                                                         
     Representative Dyson's bill and I was excited.  It says                                                                    
     many of the things that need to be said and will help                                                                      
     some of those gray areas become black and white.                                                                           
     ...Thank you Representative Dyson for putting forth this                                                                   
     bill and for all of you hearing it.  Thank you.                                                                            
                                                                                                                                
Number 2175                                                                                                                     
                                                                                                                                
CO-CHAIRMAN DYSON asked Ms. Gerard if it was the defining of                                                                    
charter schools as alternative schools in HB 36 which caused them                                                               
to lose $1,000 per student.                                                                                                     
                                                                                                                                
Number 2166                                                                                                                     
                                                                                                                                
MS. GERARD answered it basically classified their school with the                                                               
largest neighboring school.  Then through the district wizardry of                                                              
funding determination, it was determined that they would drop from                                                              
$5,800 to $4,817.  They haven't figured out that rationale.  No one                                                             
seems to know what the formula is.                                                                                              
                                                                                                                                
Number 2124                                                                                                                     
                                                                                                                                
JACK MILLER, Chair, Academic Policy Committee, Family Partnership                                                               
Charter School, testified via teleconference from Anchorage.  He                                                                
has a son enrolled in their high school program, and he has been                                                                
involved with the charter schools for the past two years.  He                                                                   
reiterated that the challenge for the charter schools is to get                                                                 
equal funding, so they can provide housing and the other                                                                        
educational services that the children need.  They cannot do that                                                               
with the funding that they have now.                                                                                            
                                                                                                                                
MR. MILLER said he believes that the only way to solve the housing                                                              
problem is for the legislature to enact a bill like HB 191.  It has                                                             
to come from the state as a mandate to all the local school                                                                     
districts that they provide equal funding, so that the charter                                                                  
schools can obtain housing and provide the educational programs and                                                             
services the children need.  The intent of the original                                                                         
legislation, and the whole charter school movement across the                                                                   
country, is to provide a good, honest, solid educational                                                                        
alternative for parents whose children don't fit well into the                                                                  
local school district's programs.  Without the equal funding, they                                                              
can do it better for less, but they can't do it for so much less                                                                
that they barely scrape by.  The children need more money, and the                                                              
legislature is the only one who can provide that.  He supports HB
191 and the basic challenge to get them equal funding, so they can                                                              
continue with the charter school movement in the state.                                                                         
                                                                                                                                
Number 2027                                                                                                                     
                                                                                                                                
ROBERT HALL, Board Member, Midnight Sun Family Learning Center,                                                                 
testified from the Mat-Su LIO.  They have 90 students, four                                                                     
teachers and staff, and the charter school experience has been                                                                  
exciting and challenging.  The workload has been far greater than                                                               
expected, and they are still very excited about it.  He reported                                                                
that they have received more support from the Mat-Su School                                                                     
District than they expected.  The district has been very supportive                                                             
and nurturing.  However, there has been a great void of                                                                         
understanding of the relationship between a charter school and the                                                              
district.  It has changed each year; not in an adversarial way, but                                                             
just because of new personnel.  The funding formula isn't really a                                                              
formula, it is just something that they make up every year.  The                                                                
idea of giving the local school board direction on how much of a                                                                
local share they are entitled to is good.  The charter schools do                                                               
not want the overall bureaucracy charged to them because the                                                                    
fundamental idea of a charter school is that they can do things                                                                 
differently.                                                                                                                    
                                                                                                                                
MR. HALL commented that the idea of housing is difficult, and no                                                                
one has really addressed the capital side:  He wondered if a                                                                    
charter school wanted to be bonded, would the state step in, what                                                               
would the process be, and what would be the role in support at the                                                              
local level.  Most school facilities are not paid for out of                                                                    
operating funds; many charter schools are.  There is a great need                                                               
for HB 191.  There are a lot of little things to be worked out;                                                                 
clarifying the role and relationship between the charter schools                                                                
and the districts in the state that will fill a big void, and it                                                                
will lead to stronger and better charter schools, which offer a                                                                 
more appropriate alternative for students and parents.                                                                          
                                                                                                                                
Number 1896                                                                                                                     
                                                                                                                                
EDDY JEANS, Manager, School Finance Section, Education Support                                                                  
Services, Department of Education (DOE),came forward to testify and                                                             
clarified several issues.  The DOE's position is that charter                                                                   
schools are a part of the public school system, so they will be                                                                 
required to do the testing at the different grade levels as the                                                                 
other schools are.  He discussed indirect rates versus itemizing                                                                
administrative costs.  Now they calculate what the charter schools'                                                             
entitlement is, and then the school district is permitted to deduct                                                             
from that an amount up to their state-approved indirect cost rate.                                                              
Indirect cost rate is for the administrative overhead:  purchasing,                                                             
accounting, payroll, computer systems and so forth.  An itemized                                                                
list with a dollar amount will create a burden on the school                                                                    
district.  It may be better for them to list out what services they                                                             
are providing in that indirect cost rate, as opposed to trying to                                                               
account for every time they work with a charter school and                                                                      
assigning a dollar value to that.                                                                                               
                                                                                                                                
MR. JEANS indicated that it is his understanding that charter                                                                   
schools do not know what services they are receiving for that                                                                   
indirect cost rate.  In calculating charter school entitlement, the                                                             
DOE has calculated a minimum that the school district has to                                                                    
provide to the charter school.  They went to the foundation program                                                             
and ran through a formula called basic need.  From basic need they                                                              
subtract the four mill required local effort, impact aid, and that                                                              
is how they arrived at state aid.  To apply the charter school law,                                                             
they calculated basic need for that charter school, and that will                                                               
be the minimum that the school district has to provide to the                                                                   
charter school.  That includes the four mill required local effort.                                                             
It does not include the excess local contribution over and above                                                                
the four mills, and this is what the charter school people are                                                                  
complaining about.  The DOE has left that optional local                                                                        
contribution up to the municipalities to decide whether or not they                                                             
will provide that to the charter schools.                                                                                       
                                                                                                                                
MR. JEANS commented that the DOE would be looking for clarification                                                             
and direction on Section 4.  The foundation program provides                                                                    
operational funds; it does not provide the federal categorical                                                                  
funds.  Those are accounted for outside of the school district                                                                  
operating funds:  federal grants for special education, vocational                                                              
education, bilingual education, and so forth.  Most of those                                                                    
programs generate money based on students' needs identified through                                                             
an application process.  He assumes that if the charter school                                                                  
children are being identified through these programs, then that                                                                 
money should go there.                                                                                                          
                                                                                                                                
MR. JEANS said the entire district budget includes special revenue                                                              
funds.  His opinion is that it is not appropriate to take the                                                                   
district's entire budget, divide that by the number of students,                                                                
and say that this is what the allocation should be for the charter                                                              
school because they are including costs that the charter school is                                                              
not going to incur.  The DOE has focused on the school operating                                                                
fund and the foundation program for calculating entitlement.  They                                                              
focused on the four mills, not the local excess contribution.                                                                   
                                                                                                                                
Number 1620                                                                                                                     
                                                                                                                                
REPRESENTATIVE BRICE noted that one of the biggest issues that he                                                               
is aware of deals with the capital cost of developing a charter                                                                 
school.  He wondered how the state, under HB 191, would look at                                                                 
costs that certain charter schools might incur by building their                                                                
own and bonding, or getting a loan and incurring certain capital                                                                
costs, or would they look at incorporating charter schools within                                                               
the current school construction programs.                                                                                       
                                                                                                                                
Number 1560                                                                                                                     
                                                                                                                                
MR. JEANS said that schools cannot bond; the municipalities bond,                                                               
and that has to be approved by the local voters.  They could use                                                                
existing capital requests for charter schools if they meet the same                                                             
criteria as any other school within that district, and that                                                                     
district can demonstrate the need for the additional space.  There                                                              
is a mixed bag of charter schools in this state.  Some are being                                                                
housed in school facilities, some are renting space, and some have                                                              
long-term leases.                                                                                                               
                                                                                                                                
REPRESENTATIVE BRICE asked if there isn't a certain amount of logic                                                             
to ensuring that local school districts are responsible for that                                                                
cost that is incurred by the charter school.  From what Mr. Jeans                                                               
said, he gathered that those costs aren't necessarily reflected in                                                              
the base rate that the state provides to charter schools, and HB
191 would require that the school districts look at those costs as                                                              
well and provide funding for those costs.                                                                                       
                                                                                                                                
Number 1450                                                                                                                     
                                                                                                                                
MR. JEANS said the foundation program provides funding for the                                                                  
academic and operations of the school district, which would include                                                             
leasing of buildings.  That would be part of the maintenance of the                                                             
school district, and he believes that part is already covered.  In                                                              
terms of long-term capital costs, he believes that the charter                                                                  
schools can, through the school district, apply for, and get on the                                                             
capital request list if they can demonstrate the needs, just like                                                               
any other school in the state.                                                                                                  
                                                                                                                                
CO-CHAIRMAN DYSON asked Mr. Jeans if it would follow that the                                                                   
districts not charge the charter schools a pro rata share of what                                                               
it costs them to operate facilities across the district, if indeed                                                              
the charter schools are paying their own facility operations and                                                                
maintenance costs.                                                                                                              
                                                                                                                                
MR. JEANS indicated that if the charter schools pay rent for a                                                                  
facility, the school district is taking that out of their                                                                       
allocation and appropriately should be.                                                                                         
                                                                                                                                
Number 1325                                                                                                                     
                                                                                                                                
MR. JEANS explained that the foundation formula has a 20 percent                                                                
allocation for special needs.  This has been an issue raised by                                                                 
charter schools whether they are entitled to that funding or not.                                                               
The DOE's position has been if they are providing the services                                                                  
on-site, then they are entitled to that funding.  If the school                                                                 
district is sending staff over to provide those services, then that                                                             
money should be retained by the school district.  The DOE has left                                                              
it up to the charter school and the school districts to negotiate                                                               
that.                                                                                                                           
                                                                                                                                
MR. JEANS referred them to the fiscal note.  There are 17 charter                                                               
schools in the state now.  All except for The Family Partnership                                                                
Charter School in Anchorage, they fall under the alternative                                                                    
schools classification as the DOE defined in regulation.  This                                                                  
means that they have to be serving over 200 students to get the                                                                 
benefit of going through the school-size-adjustment table as an                                                                 
independent school.  If they have under 200 students, they are                                                                  
lumped in with the largest school in the district, and it does                                                                  
reduce the amount of funding, quite substantially, by being grouped                                                             
in with the larger schools.  In the school-size-adjustment table,                                                               
for schools over 750 the adjustment is .84.  That means that every                                                              
charter school student is funded at 84 percent of the base student                                                              
allotment which is $3,940.  Each time they go through the formula,                                                              
they get a base allocation.  Base allocation is about $150,000.                                                                 
Taking each one of these schools and moving them from the .84                                                                   
adjustment, putting them through the formula based on the number of                                                             
students that they are serving, is what generated the $3.5 million                                                              
fiscal note.                                                                                                                    
                                                                                                                                
CO-CHAIRMAN DYSON asked Mr. Jeans what the multiplier would be if                                                               
the school was at 150 students.                                                                                                 
                                                                                                                                
Number 1140                                                                                                                     
                                                                                                                                
MR. JEANS said if they had 150 students, the multiplier would be                                                                
1.27.  If they had 151 students the multiplier would be 1.08.   If                                                              
they had 150 students, the adjustment subtracts 75 students and the                                                             
remaining 75 would be multiplied at 1.27; add that to the 122.85 to                                                             
get the school size adjustment for that charter school.                                                                         
                                                                                                                                
CO-CHAIRMAN DYSON said there are about 1,200 students in charter                                                                
schools.  He figured that the difference in moving from the .84 to                                                              
the 1.27 is about $3,000 more per student.                                                                                      
                                                                                                                                
MR. JEANS explained the school size adjustment table is there to                                                                
provide additional resources because the smaller the school, the                                                                
less efficient it is to operate, so they are going to have higher                                                               
fixed costs on a per-student basis.  They have taken the students                                                               
here and put them through a formula, as if they are all housed in                                                               
independent facilities with very high fixed costs, low                                                                          
pupil-teacher ratios and on and on.                                                                                             
                                                                                                                                
Number 0963                                                                                                                     
                                                                                                                                
REPRESENTATIVE BRICE asked when the policy changed and moved                                                                    
charter schools from regular schools to alternative schools.  He                                                                
asked if alternative schools were defined in statute or regulation.                                                             
                                                                                                                                
Number 0896                                                                                                                     
                                                                                                                                
MR. JEANS told Representative Brice that the definition of schools,                                                             
or facilities constituting schools, made it into SB 36 last year                                                                
when the bill was in House Finance.  Up until that time, the DOE                                                                
ran every school regardless of size through the formula.  It wasn't                                                             
until they got to the House Finance Committee that this criteria                                                                
was established.                                                                                                                
                                                                                                                                
Number 0788                                                                                                                     
                                                                                                                                
MR. JEANS said the definition for alternative schools is in                                                                     
regulations adopted by the State Board of Education in November                                                                 
1998.                                                                                                                           
                                                                                                                                
REPRESENTATIVE BRICE asked when SB 36 went into effect.                                                                         
                                                                                                                                
MR. JEANS answered July 1.                                                                                                      
                                                                                                                                
REPRESENTATIVE BRICE asked how the state divided up the money in                                                                
the current year's budget, with the understanding that alternative                                                              
schools included charter schools, obviously without a definition.                                                               
                                                                                                                                
MR. JEANS said the regulation process takes a very long time.  The                                                              
DOE issued a numbered memorandum to school districts stating that                                                               
these were the regulations that they were taking to the state board                                                             
for consideration; and until the board acted on those regulations,                                                              
this is the way they were going to apply the rules.  The board did                                                              
adopt those regulations.                                                                                                        
                                                                                                                                
Number 0707                                                                                                                     
                                                                                                                                
CO-CHAIRMAN DYSON asked if it is legal for the legislature to tell                                                              
local school districts what to do with the local contribution.                                                                  
                                                                                                                                
MR. JEANS said that is a very good question.  Right now under SB
36, they are telling districts what to do with their local                                                                      
contribution with the 70 percent minimum expenditure requirement.                                                               
They are telling them what to do with their local money as well as                                                              
their federal money.                                                                                                            
                                                                                                                                
CO-CHAIRMAN DYSON said until somebody takes them to court they will                                                             
not know.                                                                                                                       
                                                                                                                                
Number 0614                                                                                                                     
                                                                                                                                
CO-CHAIRMAN DYSON asked Ms. Comeau how they account for paying for                                                              
building operation and maintenance.                                                                                             
                                                                                                                                
Number 0562                                                                                                                     
                                                                                                                                
MS. COMEAU answered they do not charge the charter schools for the                                                              
district-wide costs.  Their policy charges a pro rata share for the                                                             
custodial services for the space the charter schools use in the                                                                 
district's facilities.  The other charter schools pay the full cost                                                             
of their upkeep and maintenance through their leased or rental                                                                  
agreement.  It varies with each charter school, but they are not                                                                
charged for district-wide costs.                                                                                                
                                                                                                                                
Number 0486                                                                                                                     
                                                                                                                                
MR. JEANS raised a couple of other issues for their consideration.                                                              
The DOE does have a concern with changing charter schools so that                                                               
they are not classified as alternative schools, especially with                                                                 
lifting the cap on the charter schools.  The DOE may see                                                                        
alternative schools in districts, like alternative high schools and                                                             
other such programs, apply for charter school status so that they                                                               
can then go through the school-size-adjustment table.  If they                                                                  
start having these little pockets of schools popping up all over                                                                
under the umbrella of charter school, they could have some                                                                      
extremely high costs for the educational programs.                                                                              
                                                                                                                                
CO-CHAIRMAN DYSON asked how they could fix that and asked Mr. Jeans                                                             
for any suggestions.                                                                                                            
                                                                                                                                
MR. JEANS said they may be able to come up with some ideas for                                                                  
fixing that.                                                                                                                    
                                                                                                                                
CO-CHAIRMAN DYSON said they are eager to do it right and well and                                                               
not have some unintended, negative effects.                                                                                     
                                                                                                                                
Number 0330                                                                                                                     
                                                                                                                                
MR. JEANS mentioned charter schools that are providing distance                                                                 
delivery or programs similar to "correspondence" programs.    Right                                                             
now they have the Delta-Greeley Cyber School, which is a distance                                                               
delivery program, and the DOE has classified that charter school,                                                               
for funding purposes, as a correspondence school.  He asked if                                                                  
there was a way to clarify what the intent was for these types of                                                               
programs.  The foundation program has two pots of money:  One for                                                               
the school-size-adjustment to cover facilities, fixed costs and                                                                 
such, and one for the correspondence allocation which is a flat 80                                                              
percent allocation per student; that is an issue for them.                                                                      
                                                                                                                                
Number 0244                                                                                                                     
                                                                                                                                
REPRESENTATIVE MORGAN wondered how the DOE deals with the two small                                                             
boarding schools in Galena with 75 students and Takotna with 25                                                                 
students.  He doesn't want to jeopardize them.                                                                                  
                                                                                                                                
MR. JEANS said those two schools are classified as alternative                                                                  
schools because they are serving less than 200 students.  Under the                                                             
charter school law now, charter schools that have boarding programs                                                             
cannot get state funds for their residential component of that                                                                  
charter school.  That has been an issue for those communities, but                                                              
the law prohibits it, so the DOE can't help out for the funding on                                                              
the residential component of that program.                                                                                      
                                                                                                                                
CO-CHAIRMAN DYSON asked Mr. Jeans how they could fix that.                                                                      
                                                                                                                                
Number 0160                                                                                                                     
                                                                                                                                
MR. JEANS answered they would need to remove the prohibition in the                                                             
statute.                                                                                                                        
                                                                                                                                
Number 0127                                                                                                                     
                                                                                                                                
CO-CHAIRMAN COGHILL noted that the fiscal note on that small change                                                             
would change the chances of getting something through this year.                                                                
                                                                                                                                
REPRESENTATIVE BRICE asked what was the purpose of having that                                                                  
addition outside the fiscal impacts.                                                                                            
                                                                                                                                
MR. JEANS said he doesn't know why that was placed in there.  It                                                                
was placed in there about the same time Galena was getting their                                                                
charter school approved as a boarding school.                                                                                   
                                                                                                                                
Number 0051                                                                                                                     
                                                                                                                                
REPRESENTATIVE MORGAN said the schools in Takotna and Galena are                                                                
the last line for these students.  These are hard-to-place                                                                      
students, and these two schools have zero tolerance.                                                                            
                                                                                                                                
TAPE 99-44, SIDE A                                                                                                              
                                                                                                                                
Number 0019                                                                                                                     
                                                                                                                                
CO-CHAIRMAN COGHILL suggested that they make some amendments and                                                                
bring HB 191 back for discussion on Tuesday.  [HB 191 was held                                                                  
over.]                                                                                                                          
                                                                                                                                
Number 0131                                                                                                                     
                                                                                                                                
CO-CHAIRMAN DYSON made a motion to adopt an unnumbered bill on the                                                              
Medical Marijuana as a committee bill.  There was no objection, so                                                              
it will be introduced as a committee bill.                                                                                      
                                                                                                                                
HB 195 - SCHOOL GRANT/DEBT REIMBURSEMENT                                                                                        
                                                                                                                                
Number 0174                                                                                                                     
                                                                                                                                
CO-CHAIRMAN COGHILL announced the next order of business as House                                                               
Bill No. 195, "An Act relating to school construction grants and to                                                             
municipal school construction debt reimbursement."                                                                              
                                                                                                                                
Number 0218                                                                                                                     
                                                                                                                                
BRUCE CAMPBELL, Legislative Assistant to Senator Randy Phillips,                                                                
came forward to present the sponsor statement for HB 195.  This is                                                              
a companion bill to SB 95 which is supported by the Anchorage                                                                   
school board, the Anchorage caucus and the Fairbanks school board.                                                              
Senate Bill 95 recognizes the grades 6 to 8 middle school concept.                                                              
Currently, the statutes deal with junior high, grades 7, 8, and 9,                                                              
but they don't have a middle school concept in the statute process;                                                             
it makes it difficult to address middle schools in determining the                                                              
school size and calculations for construction.  Anchorage junior                                                                
highs have been converted to the middle school concept.  In                                                                     
downtown Fairbanks, there are still junior highs, grades 7 through                                                              
9, but North Pole has a middle school of grades 6, 7 and 8.  This                                                               
change seeks to expand the DOE regulations in a manner that                                                                     
conforms with the middle school concept, and it gives school boards                                                             
flexibility in determining how they house their students.  The core                                                             
of the bill is on page 3 where they have added the middle school                                                                
concept in lines 20 through 23.                                                                                                 
                                                                                                                                
MR. CAMPBELL told the committee that currently sixth graders are                                                                
calculated as if they were in elementary schools, even though they                                                              
are in a middle school.  Elementary schools have smaller size                                                                   
requirements than middle schools.                                                                                               
                                                                                                                                
Number 0417                                                                                                                     
                                                                                                                                
REPRESENTATIVE BRICE asked how this will affect existing schools                                                                
that have the sixth graders in elementary schools.                                                                              
                                                                                                                                
MR. CAMPBELL said there would be no change.                                                                                     
                                                                                                                                
CO-CHAIRMAN DYSON believes this is not going to have any                                                                        
detrimental affect of schools and students now, but it will allow                                                               
districts to plan and build for the middle school concept and be                                                                
able to treat the students according to the facility they are in,                                                               
not the academic progression.  He asked if this change will get                                                                 
more operational funding for the student for the district.                                                                      
                                                                                                                                
MR. CAMPBELL answered no, it is strictly the capital side.                                                                      
                                                                                                                                
Number 0752                                                                                                                     
                                                                                                                                
LARRY WIGET, Executive Director, Public Affairs, Anchorage School                                                               
District, came forward to testify.  Their goal is allow them to be                                                              
able to count students who are in a middle school program have the                                                              
square footage counted as a secondary school student to meet the                                                                
program needs of that student.  Sixth graders that are housed in                                                                
elementary school programs will be counted as elementary students.                                                              
They believe this will allow them the flexibility in the design in                                                              
putting up new middle school, if the school board decides they want                                                             
a sixth grade combination in a middle school program.  This will                                                                
allow them to put the square footage in.  They are looking for                                                                  
flexibility in the design of new facilities and being able to count                                                             
the sixth graders in a middle school program as secondary students                                                              
as they should be.                                                                                                              
                                                                                                                                
Number 0914                                                                                                                     
                                                                                                                                
DEE HUBBARD, Member, Bond Reimbursement and Grant Review Committee,                                                             
testified via teleconference from Anchorage.  She is also a                                                                     
volunteer.  She sees two concerns.  One deals with the wording in                                                               
both Sections 1 and 2  which talks about a specific building.  She                                                              
pointed out that there are schools in this state that house grades                                                              
K-8 and K-12.  The way this language is written, because the K-8 is                                                             
housed in an elementary school, these sixth grade students, if they                                                             
were receiving a secondary program education, would not be counted                                                              
to allow the increase in square footage from 106 to 150 square                                                                  
feet.  She suggested that instead of talking about the physical                                                                 
structure of where they are housed, they should talk about the                                                                  
level of education that they are getting.  That would remove the                                                                
barriers for schools with other configurations that aren't covered                                                              
in this legislation.                                                                                                            
                                                                                                                                
MS. HUBBARD said the other concern involves a lot of paperwork.  If                                                             
the bill does not take care of the K-8 and K-12 schools, the school                                                             
districts will be keeping two sets of books, and that causes a                                                                  
consternation problem.  She admitted to being the culprit of this                                                               
bill.  In 1994, she noticed the anomaly in the statute and went to                                                              
the school board and suggested they do something about the sixth                                                                
graders in middle schools.                                                                                                      
                                                                                                                                
Number 1166                                                                                                                     
                                                                                                                                
MIKE MORGAN, Manager, Facilities Section, Education Support                                                                     
Services, DOE, came forward to testify.  He explained that the bill                                                             
started out in a directed fashion looking at middle schools.  Last                                                              
year the DOE provided a definition for middle schools that really                                                               
gave districts the maximum flexibility to put any grade                                                                         
configuration they wanted to together, and they didn't expand it                                                                
beyond the middle school concept, because that is where the sponsor                                                             
started out.  They can certainly look at language changes that will                                                             
accommodate the other K-8 or K-12 facilities.                                                                                   
                                                                                                                                
REPRESENTATIVE GREEN asked if Mr. Morgan saw any problem with the                                                               
change to include K-8 and K-12.                                                                                                 
                                                                                                                                
MR. MORGAN didn't believe it will cause any problems, but it would                                                              
cost more.                                                                                                                      
                                                                                                                                
Number 1279                                                                                                                     
                                                                                                                                
REPRESENTATIVE GREEN asked if they don't make the change, would                                                                 
there be a chance they would be hammered for preferentially                                                                     
selecting these students over those students.                                                                                   
                                                                                                                                
MR. MORGAN agreed that this does provide disproportionate funding                                                               
to a very small element because primarily middle schools right now                                                              
occur in large urban areas.  The smaller districts have gone to                                                                 
unified facilities rather than splitting the facilities up so they                                                              
could qualify for additional funding.                                                                                           
                                                                                                                                
CO-CHAIRMAN COGHILL asked if the word "shall" on page 3, line 20,                                                               
was a prohibition to those districts who choose not to put sixth                                                                
graders in middle school.                                                                                                       
                                                                                                                                
Number 1346                                                                                                                     
                                                                                                                                
MR. MORGAN commented that what is often misunderstood about the                                                                 
DOE's current space guideline regulations is that they are not                                                                  
recommendations; they are a maximum that is going to be available                                                               
for funding.  There is a range of space allocation per facilities                                                               
but the DOE doesn't tell the district how to use their total space                                                              
allocation.  The way the districts combine their students is up to                                                              
the districts.  The DOE is only saying there is a maximum they will                                                             
fund up to.  The districts don't have to choose to build to that                                                                
maximum.  That is what the space guidelines are doing.  There could                                                             
be a ripple effect if districts decided to move the sixth graders                                                               
out of K-6 schools into secondary schools to qualify for more                                                                   
space; the K-6 schools could have excess space and then the high                                                                
schools would be overcrowded, and that is the most expensive space                                                              
to build.                                                                                                                       
                                                                                                                                
CO-CHAIRMAN DYSON asked Mr. Campbell if these questions have come                                                               
up in the Senate.                                                                                                               
                                                                                                                                
Number 1485                                                                                                                     
                                                                                                                                
MR. CAMPBELL answered that some have come up, and the general                                                                   
discussion is that it is not the intent, other than to allow                                                                    
flexibility.  He has not heard the intent of increasing the dollars                                                             
available for construction.  Once the DOE makes the allocation, the                                                             
school district can pick and choose and try to get more flexibility                                                             
in their options.                                                                                                               
                                                                                                                                
Number 1512                                                                                                                     
                                                                                                                                
CO-CHAIRMAN DYSON made a motion to move HB 195 from the committee                                                               
with individual recommendations and attached fiscal notes.                                                                      
                                                                                                                                
Number 1523                                                                                                                     
                                                                                                                                
REPRESENTATIVE BRICE objected because of concerns in his school                                                                 
district.                                                                                                                       
                                                                                                                                
CO-CHAIRMAN DYSON asked if they waited to move it out on Tuesday                                                                
would that give him enough time to work on it.                                                                                  
                                                                                                                                
Number 1546                                                                                                                     
                                                                                                                                
REPRESENTATIVE BRICE said yes, and if not he will try to deal with                                                              
it in the Finance Committee.                                                                                                    
                                                                                                                                
Number 1570                                                                                                                     
                                                                                                                                
CO-CHAIRMAN DYSON announced they would hold HB 195 until Tuesday.                                                               
[HB 195 was heard and held.]                                                                                                    
                                                                                                                                
HB 115 - USE OF UNIVERSITY OF ALASKA APPROPRIATION                                                                              
                                                                                                                                
Number 1578                                                                                                                     
                                                                                                                                
CO-CHAIRMAN COGHILL announced the next order of business as House                                                               
Bill No. 115, "An Act relating to the University of Alaska; and                                                                 
providing for an effective date."                                                                                               
                                                                                                                                
Number 1621                                                                                                                     
                                                                                                                                
REPRESENTATIVE CON BUNDE, Alaska State Legislature, sponsor, came                                                               
forward to present HB 115.  He indicated that the essence of SB 36,                                                             
which was passed last year on the foundation formula for funding                                                                
public schools, is that they need to allocate the educational                                                                   
resources effectively and fairly.  He believes that once the monies                                                             
are allocated fairly, that will beget more money.  It is unlikely                                                               
that there would be additional funds put into a system that was                                                                 
unfair in the view of the majority of the residents of the state.                                                               
House Bill 115 asks that the state investment in the university                                                                 
system be distributed equitably, and that it be distributed based,                                                              
much like SB 36, on student population.  Many other states do this.                                                             
House Bill 115 also provides for additional funding for the                                                                     
university on page 2, section 2 (1) allocate for each campus 2                                                                  
percent inflation factor.  The university has been concerned for a                                                              
number of years that they have not been adequately funded based on                                                              
an inflation factor.  He used a chart of student-teacher ratios to                                                              
show why he believes the funds are not fairly allocated:                                                                        
                                                                                                                                
                    Faculty   Full Time Equivalent     Head Count                                                               
                                   (FTE)                                                                                        
University of Alaska                                                                                                            
  Anchorage            321           7,127                13,559                                                                
Teacher/Student Ratio:             22 to 1             42 to 1                                                                  
                                                                                                                                
University of Alaska                                                                                                            
  Fairbanks            376           3,181                 5,110                                                                
Teacher/Student Ratio:              8 to 1             13 to 1                                                                  
                                                                                                                                
University of Alaska                                                                                                            
  Southeast             54           1,037                 2,604                                                                
Teacher/Student Ratio:             19 to 1             48 to                                                                    
                                                                                                                                
Number 1844                                                                                                                     
                                                                                                                                
REPRESENTATIVE BUNDE said this bill encourages the allocation of                                                                
the university's investment on a per student basis.  He believes                                                                
this will encourage greater funding for the university because                                                                  
people are more supportive when they feel their monies are being                                                                
used fairly and equitably.  He would like to see the university                                                                 
have the opportunity to grow in total funds and have increases for                                                              
inflation.                                                                                                                      
                                                                                                                                
CO-CHAIRMAN DYSON commented that most inflation provisions are tied                                                             
into something like the wholesale price index.  He asked what was                                                               
Representative Bunde's thinking on making it a flat 2 percent as                                                                
opposed to tied to some national standard on inflation.                                                                         
                                                                                                                                
Number 2064                                                                                                                     
                                                                                                                                
REPRESENTATIVE BUNDE commented that the normal growth of government                                                             
is 1.5 to 2 percent so that is why he factored it in there.  The                                                                
other is the safety valve.  It may not be possible for the state to                                                             
inflation-proof the university at 10 or 12 percent.  This                                                                       
anticipates the growth in other state services and the philosophy                                                               
that something is better than nothing.                                                                                          
                                                                                                                                
Number 2113                                                                                                                     
                                                                                                                                
REPRESENTATIVE BRICE clarified that HB 115 has very little to do                                                                
with SB 36, in that SB 36 was a funding formula, and HB 115 is an                                                               
allocation formula.  The 2 percent on page 2, lines 13-15 does not                                                              
mean there will be a 2 percent increase in the university's budget.                                                             
There is nothing in HB 115 that requires the legislature, or even                                                               
suggests to the legislature, that the allocation that they make to                                                              
the university increase which is unlike a foundation formula that                                                               
generates an expected funding level.  This does not generate an                                                                 
expected funding level.  It creates a division table that divides                                                               
the appropriation the legislature makes to the university, and then                                                             
tells the university how to make that allocation.  They are not                                                                 
talking about incorporating a 2 percent increase in the university                                                              
budget.  They would be requiring 2 percent in the allocation which                                                              
would become null and void if the legislature has to cut the                                                                    
university's budget.                                                                                                            
                                                                                                                                
REPRESENTATIVE BUNDE said that the university could certainly use                                                               
this, if HB 115 became law, to say they must fund them because they                                                             
have asked that they provide this increase.  None of this funding                                                               
is sacrosanct; they could all be changed by a future legislature if                                                             
that were necessary.                                                                                                            
                                                                                                                                
Number 2254                                                                                                                     
                                                                                                                                
WENDY REDMAN, Vice President, Statewide University Relations,                                                                   
University of Alaska, came forward to testify.  She supports the                                                                
spirit that has initiated this legislation.  It has been borne of                                                               
some deep frustration on the part of Representative Bunde about a                                                               
difficult funding situation, particularly in Anchorage.  The decade                                                             
of the 90s should have belonged to UAA [University of Alaska                                                                    
Anchorage].  It is a booming campus, their enrollments have been                                                                
going up, and they have not gotten any kind of increases except a                                                               
$2 million increase in 1993.  The UAA has been flat during a time                                                               
of incredible growth.  It has been extremely frustrating.  However,                                                             
the answer is not to try to take money from other campuses to                                                                   
enhance Anchorage; they need new money for Anchorage, and they have                                                             
enough data to support that.                                                                                                    
                                                                                                                                
MS. REDMAN referred to an article in their packet on formulas by                                                                
Mary McKeown which concludes that states are abandoning the use of                                                              
formulas at this time.  Ms. McKeown says formulas will never solve                                                              
the resource allocation problems in higher education.  Formulas                                                                 
cannot recognize the full range of objective and subjective                                                                     
differences among institutions, nor can they anticipate changes in                                                              
the missions of institutions, such as those changes that will come                                                              
about with the advent of virtual universities.  Ms. Redman said                                                                 
formulas have played an important role in many states in building                                                               
up the base budgets, particularly in those states where the                                                                     
individual campuses are not part of a system.                                                                                   
                                                                                                                                
TAPE 99-44, SIDE B                                                                                                              
                                                                                                                                
Number 2359                                                                                                                     
                                                                                                                                
MS. REDMAN continued saying that formulas in many of those states                                                               
have been helpful in bringing an equity to the base of those                                                                    
budgets.  However, formulas are not very helpful when the budgets                                                               
are flat or declining.  Most states are beginning to move off of                                                                
the formulas that are derived from the numbers of students and                                                                  
moving to more accountability and productivity types of formulas.                                                               
That is the direction the University of Alaska is looking at                                                                    
internally.  The formula that is included in Representative Bunde's                                                             
bill is actually a formula similar to one in use in Idaho, which is                                                             
a valid formula.  Representative Bunde and his staff have worked                                                                
hard to try to accommodate the concerns that they have expressed                                                                
over the years about the differences in discipline which are very                                                               
real.  This formula does not work in Alaska because of the very                                                                 
different types of institutions and the location of institutions.                                                               
For example, UAA's annual physical plant expenditure is about $6                                                                
million per year, and UAF's annual physical plant expenditure is                                                                
about $19 million per year.  It is not just in the square footage,                                                              
although there is more square footage in Fairbanks, but the weather                                                             
makes a tremendous difference in how those campuses are run and how                                                             
much it costs to do things.  The cost differential in Fairbanks is                                                              
significant.                                                                                                                    
                                                                                                                                
MS. REDMAN explained it is important to look at the type and                                                                    
mission of the institution.  At UAF, 50 percent of their faculty                                                                
are research faculty who do not teach classes; they do have                                                                     
academic rank so they show up in the data as faculty, but they are                                                              
not funded with general funds.  They are not hired to teach; they                                                               
are hired to do research and generate money.  If you look at UAF,                                                               
which is designated as a research 1 institution, about 65 percent                                                               
of their faculty are full time.  Anchorage is designated as a                                                                   
comprehensive master's institution, an urban institution, and their                                                             
full-time faculty right now are about 35 percent.  They would like                                                              
to get them up to 45 percent which would be more appropriate for                                                                
their type of institution.  As they do that, the costs are going to                                                             
rise.  More full-time faculty, the higher that cost per student.                                                                
Right now UAA's cost per student are artificially low because of                                                                
the high number of adjunct faculty there, but that is not the best                                                              
situation for the student.                                                                                                      
                                                                                                                                
MS. REDMAN indicated that because of the differences in the types                                                               
of institutions, about 70 percent of UAF's students are full-time,                                                              
and in the FY 1998 academic year, close to 50 percent of their                                                                  
credits were at the upper division level.  About 35 percent of                                                                  
UAA's students are full time, and about 30 percent of their credits                                                             
are the upper division level.  They have different profiles.                                                                    
Anchorage is changing more than Fairbanks; Fairbanks has been very                                                              
stable over time.  Anchorage is moving from the community college                                                               
model and is beginning to add many more full-time students to their                                                             
institution, and that is the largest growing element in Anchorage.                                                              
Those numbers begin to shift as they turn out more baccalaureate                                                                
majors, and they want to encourage that.  It is important to                                                                    
understand that it is not as simple as taking the total budget, or                                                              
even the total instructional budget, and dividing it by the number                                                              
of students.  Representative Bunde's bill makes a stab at trying to                                                             
differentiate between that based on the disciplines.                                                                            
                                                                                                                                
MS. REDMAN suggested that it doesn't really get into the other two                                                              
elements which are the type of institution and the level of                                                                     
enrollment.  Those are two important things to look at in a                                                                     
formula.  Anchorage is able to generate large classes because of                                                                
their large population.  The whole issue of the impact of the size                                                              
also comes into play when they look at instructional models.                                                                    
                                                                                                                                
Number 2159                                                                                                                     
                                                                                                                                
MS. REDMAN mentioned that last year the university formed a                                                                     
committee that was chaired by the Anchorage chancellor Gorsuch, and                                                             
they worked all last summer on looking at formulas for the                                                                      
allocation of the instructional resources.  They spent many hours                                                               
going over detailed data trying to find where the differences are,                                                              
and if there are major differences between the campuses once they                                                               
strip away the things that are unique.  For instance, UAF has a                                                                 
huge public service responsibility because of the Cooperative                                                                   
Extension Service, the Marine Advisory Program, things that UAA                                                                 
does not have.  The University of Alaska Anchorage is not the                                                                   
land-grant institution, and it doesn't have those responsibilities.                                                             
Anchorage has other responsibilities that UAF doesn't have.  It has                                                             
a much greater part-time and adult population; a much larger                                                                    
traditional community college type population that brings a lot of                                                              
other issues.  They tried to separate the differences out and the                                                               
committee found that there are some differences in some key program                                                             
areas.  They were very small compared to what people were expecting                                                             
to see, but they were significant in some areas.                                                                                
                                                                                                                                
MS. REDMAN noted that those are the areas they are attempting to                                                                
address now.  The areas where they saw the big differences were in                                                              
programs that are in the core curriculum:  English, speech and                                                                  
history where they saw that UAF had many more faculty FTE per                                                                   
student than they had in Anchorage.  They then compared them with                                                               
the national averages.  It is not that Fairbanks is over where they                                                             
should be; but that Anchorage is so far under where they need to                                                                
be.  It is not in anybody's best interest to now make UAF under                                                                 
where they should be to increase Anchorage.  They are trying to                                                                 
shift the resources as they become available so as UAF and UAA have                                                             
faculty vacancies, they are trying to gather those in a way that                                                                
they can allocate them out.  Unfortunately, they haven't been able                                                              
to hire back many of the faculty vacancies, so they are trying to                                                               
focus the hiring on the areas that are the most underserved.                                                                    
                                                                                                                                
MS. REDMAN said this bill follows the national formula which is                                                                 
applied to new money.  It is not that the legislature is attempting                                                             
to go in and re-allocate the existing base but trying to direct the                                                             
appropriation of new monies into the priority areas.  She likes the                                                             
fact that there is real money attached to this bill.  On the other                                                              
hand, she believes that it really is the Board of Regents                                                                       
responsibility to try to make these decisions.  There is no way                                                                 
that this particular formula can cover the kinds of issues they                                                                 
need to cover.  This formula only measures where they are today; it                                                             
doesn't provide any model to aspire to which is part of what the                                                                
legislature is trying to do with new monies:  to help a campus                                                                  
build toward something that it can be.  The legislature will see in                                                             
this year's budget request new program initiatives in Anchorage                                                                 
because they are building the new logistics program and the new                                                                 
health care programs.  Those are things that they couldn't                                                                      
calculate into a formula like this because there is nothing there                                                               
now.  She understands the motive, and appreciates the frustration                                                               
that led to this, but she believes that the Board of Regents are in                                                             
a better position to try to determine where new resources should go                                                             
in the university.  They are the only ones who have the time and                                                                
the responsibility to be looking at the needs of the whole state                                                                
within the higher education system context.                                                                                     
                                                                                                                                
Number 1920                                                                                                                     
                                                                                                                                
CO-CHAIRMAN DYSON agreed that the argument of the UAF faculty                                                                   
devoted to research is a valid one.  He wondered how close do they                                                              
come to paying for themselves.                                                                                                  
                                                                                                                                
MS. REDMAN said the faculty that they hire to do research must pay                                                              
for all of themselves.  There are research faculty, who must cover                                                              
their own salary, and instructional faculty.  Instructional faculty                                                             
can buy out of some instruction by bringing in research money so                                                                
they can get let off of a teaching load to do research.                                                                         
                                                                                                                                
Number 1877                                                                                                                     
                                                                                                                                
CO-CHAIRMAN DYSON asked if non-teaching staff and facilities are                                                                
included in the research budget at UAF.                                                                                         
                                                                                                                                
MS. REDMAN replied yes plus:  They spend about $12 million a year                                                               
in state money that is supportive of research, which about three                                                                
quarters of that is in Fairbanks, and about one quarter is in                                                                   
Anchorage.  The state return is $4.50 for every dollar that goes                                                                
in.  Research is generating, not only the full cost of the                                                                      
research, but they get research overhead in direct cost recovery,                                                               
which is calculated by the federal government, and that provides                                                                
additional income to heat the buildings and do the accounting and                                                               
so on.                                                                                                                          
                                                                                                                                
CO-CHAIRMAN DYSON inferred that the research programs in Fairbanks                                                              
are actually subsidizing the educational program.                                                                               
                                                                                                                                
Number 1816                                                                                                                     
                                                                                                                                
MS. REDMAN answered it is about a quarter out of every four dollars                                                             
that they calculated to be a subsidy.  It is a good deal, and it is                                                             
why they are trying to push more research in Anchorage.  Research                                                               
does provide a subsidy on the facilities side.                                                                                  
                                                                                                                                
CO-CHAIRMAN DYSON commented that she may have suggested that if                                                                 
there is no new money, there is going to be no addressing of the                                                                
inequities of the present allocations of the university's financial                                                             
resources.                                                                                                                      
                                                                                                                                
Number 1750                                                                                                                     
                                                                                                                                
MS. REDMAN denied that was her intent.  Even with no new resources,                                                             
they are attempting to deal with that issue.  They just make                                                                    
smaller steps when they are dealing with reductions instead of                                                                  
increases.  The ability to make changes is much less.                                                                           
                                                                                                                                
CO-CHAIRMAN COGHILL asked if the properties throughout the state                                                                
that the university is managing for income is worked  through the                                                               
UAF campus or is it done in the different campuses.                                                                             
                                                                                                                                
Number 1711                                                                                                                     
                                                                                                                                
MS. REDMAN said that is done centrally, but it doesn't show up in                                                               
the UAF budget; it shows up in a statewide administration budget.                                                               
They do not use any general fund money to manage their land; it is                                                              
all income from the lands themselves.                                                                                           
                                                                                                                                
CO-CHAIRMAN DYSON mentioned that U.S. Senator Murkowski is trying                                                               
to get unallocated federal lands allocated to the university.  He                                                               
asked Ms. Redman if they thought it likely to happen, if it did,                                                                
will it be easy and practical for the university to convert those                                                               
lands to income producing property or some kind of investment                                                                   
account, and how quickly it could happen.                                                                                       
                                                                                                                                
Number 1648                                                                                                                     
                                                                                                                                
MS. REDMAN indicated that she gives it about a fifty-fifty chance                                                               
of getting through Congress.  She believes that they could make                                                                 
money, and there are some possibilities that actually have some                                                                 
potential money.  It would be well into the future.  Land is just                                                               
not going to solve a problem in this decade.  It could take 10 to                                                               
20 years at best.                                                                                                               
                                                                                                                                
CO-CHAIRMAN COGHILL asked if there is a problem in the formula                                                                  
trying to make an even distribution given that certain schools are                                                              
going to have different pieces of that.                                                                                         
                                                                                                                                
Number 1545                                                                                                                     
                                                                                                                                
MS. REDMAN said the difficulty is not necessarily a problem; it is                                                              
only half the picture.  They need to add to the formula the whole                                                               
issue of the type of institution it is, the size of the institution                                                             
and the mission.  If they took the community colleges and put them                                                              
up one-on-one against the university, the community colleges would                                                              
get all the money.  They are extremely efficient because they                                                                   
operate primarily with adjunct faculty, offer only lower division                                                               
classes and have huge classes that generate a lot of income.  That                                                              
is why they just can't look at them that way.  This formula                                                                     
attempts to get at part of that, but it doesn't get at the mission                                                              
issue, which is the more subjective analysis that they have to go                                                               
through.                                                                                                                        
                                                                                                                                
The Committee took an at-ease from 12:50 p.m. to 12:59 p.m.                                                                     
                                                                                                                                
Number 1445                                                                                                                     
                                                                                                                                
REPRESENTATIVE BUNDE commented that in his 25 years working there,                                                              
there has never been year when the university had enough money or                                                               
too much money.  He began there when there wasn't a campus in                                                                   
Anchorage, and they couldn't get one because the legislature gave                                                               
the money to the regents, and the regents in their wisdom chose not                                                             
to build a campus in Anchorage, knowing full well when they did,                                                                
there was going to be a demand for funds there, and Fairbanks would                                                             
have competition.  For years the state put money into the regent's                                                              
hands, and Anchorage said it is only fair, give us our turn.  As                                                                
Ms. Redman said, the 90s was UAA's decade, and they didn't get it,                                                              
because the current system allocates money in part on political                                                                 
considerations.  The notion that they would put more money into a                                                               
system that distributed the money in what some people might think                                                               
an unfair fashion is a little bit politically naive.  The majority                                                              
in the legislature is from Anchorage.  He asks that the university                                                              
ask themselves if they expect the legislature to support the                                                                    
university, they would work diligently to assure them, that the                                                                 
money would be distributed in a fair and equitable fashion.  The                                                                
university has been promised those things before, and they haven't                                                              
occurred.  Maybe there is hope for the future, and behavior will                                                                
change.                                                                                                                         
                                                                                                                                
Number 1282                                                                                                                     
                                                                                                                                
CO-CHAIRMAN DYSON made a motion to move HB 115 out of committee                                                                 
with individual recommendations and attached fiscal note.                                                                       
                                                                                                                                
Number 1261                                                                                                                     
                                                                                                                                
REPRESENTATIVE BRICE objected.                                                                                                  
                                                                                                                                
Number 1256                                                                                                                     
                                                                                                                                
REPRESENTATIVE WHITAKER commented that his commitment is not to UAF                                                             
but rather to excellence.  "If the resources are simply not there                                                               
to provide for excellence throughout the system, then let's focus                                                               
and provide excellence where we can, and then try to raise the                                                                  
level throughout to a level of excellence.  By lowering the level                                                               
throughout, I think we do not serve ourselves well.  The other                                                                  
major concern that I have with regard to this legislation is that                                                               
we are now putting ourselves in the position of dictating to the                                                                
regents how to spend the money that we allocate.  I think that is                                                               
problematic.  It alludes to micro-management, and that is not our                                                               
charge.  Our charge is to set policy.  Our policy should be to                                                                  
demand excellence throughout, and then be willing to fund at a                                                                  
level that will allow for the achievement of that excellence.  For                                                              
those reasons, and not for the notion that this is UAF as opposed                                                               
to UAA, I simply cannot vote for this."                                                                                         
                                                                                                                                
Number 1160                                                                                                                     
                                                                                                                                
REPRESENTATIVE BRICE echoed that his commitment is to excellence as                                                             
well.  "My blood oath is to the UA system, not to UAF.  During my                                                               
tenure in this body, I have voted consistently for Anchorage                                                                    
dormitories and other programs that helped UAA.  I think that UAA                                                               
is a very important part just as is UAF and UAS [University of                                                                  
Alaska Southeast] is a very important part.  I think that is my                                                                 
problem with [HB] 115, it is a step towards what I would like to                                                                
see which would be a foundation formula approach to funding the                                                                 
university."  He would like the legislature to show the university                                                              
the same commitment and faith shown to public K-12 education in                                                                 
establishing a funding level and fund it as the needs grow.   He                                                                
would love to see a foundation formula for the funding, not                                                                     
necessarily the allocation. They need to address the needs of a                                                                 
certain area of the state.  He believes they need to look at how                                                                
they do that, and the foundation formula is a way to doing that,                                                                
not an allocation formula.                                                                                                      
                                                                                                                                
REPRESENTATIVE GREEN commented that if they continued with that                                                                 
line of reasoning then they would still be in Sitka rather than in                                                              
Juneau.  Through the wisdom of the people in that age, they moved                                                               
from that area to this area and of course there are a lot of people                                                             
who think it should move again.  He pointed out that they have the                                                              
university on one end and the capital on the other end, but the                                                                 
growth of this state has been in southcentral.  If they are saying                                                              
that that is a fine situation, but they want to keep the                                                                        
institutions on the extremities and let the people in the middle to                                                             
what they want, he believes that works against the entire premise                                                               
that they are trying to do what they can for the best of the                                                                    
majority of the people of the state.  To reject this is not in the                                                              
best interest of all the people in the state.  It may be to                                                                     
maintain an excellent university in one part of the state, but does                                                             
it adequately serve the majority of the people in another part of                                                               
the state.  "I have to do what I think is the best for the majority                                                             
of the people so I have to support the recommendation to move it."                                                              
                                                                                                                                
Number 952                                                                                                                      
                                                                                                                                
REPRESENTATIVE WHITAKER said if they are to serve the majority of                                                               
the people, for them to "parochialize" that is a disservice to                                                                  
maintain excellence in a geographic area is really irrelevant to                                                                
the access to that excellence.  It is there for all.  Now if they                                                               
want to create an excellent community college in Anchorage, he will                                                             
stand on the table and clap his hands.  He agrees that Anchorage                                                                
should have the finest community college in the state of Alaska.                                                                
                                                                                                                                
Number 0905                                                                                                                     
                                                                                                                                
CO-CHAIRMAN COGHILL commented that he is resistant to the idea of                                                               
formulating without being able to get an understanding of the                                                                   
mission beyond the core curriculum that was lined out in the last                                                               
part of this.   He is a little torn because he likes the concept of                                                             
equity, but he also understands in the university system that they                                                              
have built in Alaska has created diversity that defies a formula at                                                             
this point.  He is going to have to think on how that can fit into                                                              
this particular concept.                                                                                                        
                                                                                                                                
Number 0817                                                                                                                     
                                                                                                                                
A roll call vote was taken.  Representatives Green and Dyson voted                                                              
in favor of moving the bill.  Representatives Whitaker, Morgan,                                                                 
Brice and Coghill voted against it.  Representative Kemplen was                                                                 
absent.  Therefore, HB 115 failed to move from the House Health,                                                                
Education and Social Services Standing Committee by a vote of 4-2.                                                              
                                                                                                                                
Number 0831                                                                                                                     
                                                                                                                                
CO-CHAIRMAN COGHILL recommended that they bring it up for                                                                       
reconsideration.  He is open to any thoughts the sponsor might have                                                             
on the recommendations for the diversity of the university.                                                                     
                                                                                                                                
ADJOURNMENT                                                                                                                     
                                                                                                                                
Number 0797                                                                                                                     
                                                                                                                                
There being no further business before the committee, the House                                                                 
Health, Education and Social Services Standing Committee meeting                                                                
was adjourned at 1:13 p.m.                                                                                                      

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