Legislature(1993 - 1994)

02/10/1994 09:08 AM Senate CRA

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
              SENATE COMMUNITY & REGIONAL AFFAIRS                              
                       February 10, 1994                                       
                           9:08 a.m.                                           
  MEMBERS PRESENT                                                              
 Senator Randy Phillips, Chairman                                              
 Senator Robin Taylor, Vice Chairman                                           
 Senator Al Adams                                                              
 Senator Fred Zharoff                                                          
  MEMBERS ABSENT                                                               
 Senator Loren Leman                                                           
  COMMITTEE CALENDAR                                                           
 SENATE BILL NO. 62                                                            
 "An Act relating to the public school foundation program; and                 
 providing for an effective date."                                             
 SENATE BILL NO. 232                                                           
 "An Act relating to reimbursement of bonds issued for school                  
 construction; and providing for an effective date."                           
 SENATE BILL NO. 233                                                           
 "An Act relating to state aid for education."                                 
  PREVIOUS SENATE COMMITTEE ACTION                                             
 SB  62 - See Community & Regional Affairs minutes                             
          dated 2/18/93, 4/1/93, 4/6/93 (a.m. & p.m.                           
          minutes), 4/16/93, 2/3/94.                                           
 SB 232 - See Community & Regional Affairs minutes dated                       
 SB 233 - See Community & Regional Affairs minutes dated                       
  WITNESS REGISTER                                                             
 Carol Carroll, Staff to Senator Jay Kerttula                                  
 State Capitol                                                                 
 Juneau, AK 99801-1182                                                         
  POSITION STATEMENT:   Offered information on SB 232 & SB 233                 
 Duane Guiley, Director, School Finance                                        
 Department of Education                                                       
 801 10th St, Suite 200                                                        
 Juneau, AK 99801-1894                                                         
  POSITION STATEMENT:   Offered information on SB 232, SB 233                  
                      and SB 62                                                
 Michael Murphy                                                                
 P.O. Box 1064                                                                 
 Nome, AK 99762                                                                
  POSITION STATEMENT:   Testified on SB 62                                     
 Richard Swarner                                                               
 148 N. Binkley                                                                
 Soldotna, AK 99669                                                            
  POSITION STATEMENT:   Testified on SB 233                                    
 Deborah Germano                                                               
 P.O. Box 1511                                                                 
 Homer, AK 99603                                                               
  POSITION STATEMENT:   Testified on SB 233 & SB 62                            
 Marilyn Leahy                                                                 
 P.O. Box 689                                                                  
 Valdez, AK 99686                                                              
  POSITION STATEMENT:   Testified on SB 62                                     
  ACTION NARRATIVE                                                             
 TAPE 94-12, SIDE A                                                            
 Number 001                                                                    
 The Senate Community & Regional Affairs Committee was called to               
 order by Chairman Randy Phillips at 9:08 a.m.  He brought  SB 232             
 (SCHOOL CONSTRUCTION BOND REIMBURSEMENT) before the committee as              
 the first order of business.                                                  
 Number 012                                                                    
 CAROL CARROL, staff to Senator Jay Kerttula, said at the previous             
 hearing on SB 232, the Department of Education spoke of an excess             
 capacity that is built into the system, and Senator Kerttula                  
 requests that the committee consider changing the date on page 1,             
 line 8 to December 1, 1994 so that the excess capacity could be               
 used after this year's elections.  If this were done, it would not            
 be necessary to increase the capacity that the state would have to            
 Number 060                                                                    
 SENATOR TAYLOR moved the following amendment to SB 232:                       
 AMENDMENT NO. 1                                                             
 Page 1, line 8:  Delete "July 1, 1996" and insert in its                      
                  place "December 1, 1994"                                     
 Hearing no objection, the Chairman stated Amendment No. 1 was                 
 Number 082                                                                    
 DUANE GUILEY, Director, School Finance, Department of Education,              
 explained that SB 7, which was passed last session, carried with it           
 a $250 million capital project authorization for the department               
 based upon principal amount of the project.  Of that $250 million             
 that was allocated, $133 million went to Anchorage, $67 million to            
 Fairbanks and $50 million to the remainder of the state.  The                 
 allocation was effective through July 1, 1996.                                
 Currently, there is available capacity of the $250 million                    
 allocation.  Of the $50 million that was allocated to the remainder           
 of the state, there is $14.8 million that has yet to have voter               
 approval.  There is $133 million available in Anchorage.  There is            
 $44.4 million available in Fairbanks.  So of the $250 million, the            
 amount that has actually been voted on and approved by voters to              
 date includes an amount just short of $36 million in the $50                  
 million group, and in the case of Fairbanks, $22 million has been             
 approved of the $67 million.                                                  
 Number 123                                                                    
 SENATOR TAYLOR asked what the cut-off date was for the current                
 program.  DUANE GUILEY answered that under the current program, if            
 the ballot issue fails, the bond reimbursement authorization is               
 immediately voided and the department then goes to the next project           
 on the list.  In the case of Anchorage and Fairbanks, they are                
 currently competing only against themselves until July 1, 1996, but           
 the amendment changes that to December 1, 1994.                               
 Number 155                                                                    
 SENATOR TAYLOR asked if Mr. Guiley agreed that with the adoption of           
 the amendment, the additional $90 million was not needed.  DUANE              
 GUILEY acknowledged that was correct.                                         
 Number 168                                                                    
 SENATOR TAYLOR moved the following amendment to SB 232:                       
 AMENDMENT NO. 2                                                             
 Page 1, line 7:  Delete "$340,000,000" and reinsert "$250,000,000"     "    
 Page 2, lines 1 & 2:  Delete subparagraph (D)                                 
 Hearing no objection, the Chairman stated the amendment was adopted           
 and the two amendments would be incorporated into a C&RA committee            
 Number 187                                                                    
 SENATOR RANDY PHILLIPS closed the public hearing on SB 232 and                
 stated that the bill would be rescheduled for another hearing.                
 Number 190                                                                    
 COMMUNITIES) before the committee as the next order of business.              
 CAROL CARROL, staff to Senator Kerttula, presented a brief overview           
 on SB 233, which will bring into statute what is now in regulation.           
 She directed attention to an amendment by Senator Kerttula which              
 clarifies the definition of "funding communities."                            
 Number 238                                                                    
 DUANE GUILEY, Director, School Finance, Department of Education,              
 said the proposed legislation would not only put the current                  
 definition of "funding communities" into statute, but it would also           
 grandfather all of the funding communities that exist today that              
 are an exception to the current regulatory definition.  He added              
 that the department would oppose that change, and that the                    
 department had intended to phase those funding communities out of             
 the system with the passage of the Alaska School Price Index                  
 concurrent with the change of the foundation statute.                         
 Number 260                                                                    
 SENATOR TAYLOR commented that there are regulations and the formula           
 is in statute,  and yet the state is funding $6 million worth of              
 schools that don't meet that formula.  DUANE GUILEY acknowledged              
 that was correct and that it was based on the decision of a prior             
 commissioner.  CAROL CARROL added that previous to this request by            
 Senator Kerttula, the commissioners of the Department of Education            
 had a certain amount of discretion.  Using that discretion they               
 approved funding communities in various districts, increasing the             
 amount of money that went to those districts.  Those districts                
 built that money into their educational system.  Senator Kerttula             
 believes that the commissioner should not have the discretion to be           
 able to effect the amount of money that would go to one community             
 based on his decision and by sometimes reversing the decision of              
 another commissioner.                                                         
 Number 320                                                                    
 SENATOR RANDY PHILLIPS stated testimony would be taken over the               
 teleconference network.                                                       
 MICHAEL MURPHY, a member of the Nome School Board testified from              
 Nome on SB 62 (PUBLIC SCHOOL FOUNDATION PROGRAM).  Referring to               
 page 1, lines 5 and 6, he asked if the basic need was going to be             
 based on the current School Price Index.  DUANE GUILEY responded              
 that the reference would replace the current area cost differential           
 for a new area cost differential called the Alaska School Price               
 Index and it would refer to basic need as basic need is defined in            
 statute.  In the case of the Nome School District that would                  
 exclude the single site supplement appropriation.  The department             
 has worked for over two years in an attempt to develop an Alaska              
 School Price Index, however, there was no consensus to go forward             
 with an Alaska School Price Index.  MICHAEL MURPHY commented that             
 until they can come up with an Alaska School Price Index that                 
 everyone can agree upon, he thinks it is a waste of time to try to            
 implement this legislation.                                                   
 Number 408                                                                    
 RICHARD SWARNER, testifying from Kenai on SB 233, voiced concern              
 with changing the funding communities, particularly for the Kenai             
 Peninsula Borough School District.  If the area cost differential             
 is not going to be changed, they are not interested in any of their           
 funding communities disappearing.  However, the district is                   
 interested in changing the foundation formula to address some of              
 the inequities that they believe exist.                                       
 Number 438                                                                    
 DEBORAH GERMANO, testifying from Homer on SB 233, agreed with Mr.             
 Swarner's concern that SB 233 would be harmful to their school                
 district without any area cost differential changes.                          
 Speaking to SB 62, Ms. Germano stated her concern with the section            
 relating to the gifted and talented program and the language that             
 will cut dollars in half for the program.                                     
 Number 465                                                                    
 SENATOR RANDY PHILLIPS informed Ms. Germano that there was a C&RA             
 committee substitute that would be sent to her, and he thought that           
 she would be pleased with the change to that section of SB 62.                
 Number 470                                                                    
 MARILYN LEAHY, a member of the Valdez School Board testifying from            
 Valdez, stated the school board's opposition to Section 1 of the              
 draft CSSB 62(CRA).  The Legislature is considering bills that                
 reduce the amounts of funding to the foundation formula, as well as           
 reducing the amount of monies that go to the municipalities, and              
 they don't believe it's fair to be changing the foundation formula            
 itself when all the budget levels are threatened to be reduced.               
 Number 490                                                                    
 SENATOR RANDY PHILLIPS announced that the committee would continue            
 with testimony on SB 233.                                                     
 DUANE GUILEY said the Alaska 2000 Finance Committee originally                
 recommended that no funding community exist with less than 16                 
 students.  The State Board of Education adopted a plan that would             
 require funding communities to be a minimum of 10 students by the             
 year 1999, so over a five-year phase out they are phasing out small           
 funding communities.  There were three funding communities that did           
 not exist this year because there were less than five students, and           
 that generated a savings of $754,000 in FY 95.                                
 Mr. Guiley also discussed a handout showing 20 funding communities            
 that appear to be elementary schools feeding into secondary                   
 schools.  If these funding communities are eliminated and the                 
 schools are merged into one community, the estimated reduction in             
 the foundation obligation is approximately $6.6 million dollars.              
 TAPE 94-12, SIDE B                                                            
 Number 030                                                                    
 SENATOR RANDY PHILLIPS asked Mr. Guiley if he would prepare some              
 charts relating to the current foundation formula and explain them            
 at the next hearing on the legislation, and Mr. Guiley acknowledged           
 that he would.                                                                
 The next order of business was an overview on  SB 62  (PUBLIC SCHOOL     L    
 FOUNDATION PROGRAM).                                                          
 DUANE GUILEY, Director, School Finance, Department of Education,              
 said the proposed committee substitute would make some significant            
 changes in the original version of SB 62.                                     
  Section 1 would require a new contribution level of 50 percent               
 from cities and boroughs as opposed to the 35 percent in statute.             
 It would leave the original 4 mills in tact so that only those                
 wealthy communities in the state, North Slope, Valdez and Unalaska            
 would be require to contribute 15 percent more to reach the 50                
 percent mark.                                                                 
 Number 095                                                                    
 SENATOR TAYLOR commented that unless everybody is going to be put             
 on the same level playing field as far as assessment valuation and            
 mandated payment, he doesn't think the legislation does what he is            
 testifying to.  DUANE GUILEY clarified that the current statute               
 requires a minimum of 4 mills or 35 percent.  The committee                   
 substitute would require the same 4 mills or 50 percent, so the 4             
 mills would be in effect for all communities in the state with the            
 exception of the three funding communities that currently generate            
 more than 35 percent of their budget if they assessed a 4 mill tax.           
 Mr. Guiley continued with his overview of the proposed committee              
   Section 2 would increase the minimum funding community size                 
 to 25 students.                                                               
  Section 3 would change divisor in the elementary school                      
 formula from the current 17 down to 16 thereby requiring one less             
 student to generate an instructional unit at the elementary level.            
  Section 4 would provide for single site funding in communities               
 less than 900.  It would provide a increased percentage of K-12               
 units on a decreasing scale as the community grows.  Section 5                
 retains the original requirement for the projection date change to            
 November 20 as opposed to the current October 15.  Section 6                  
 provides the 20-day count from the same year be allowed as a                  
 Number 195                                                                    
 SENATOR RANDY PHILLIPS closed the hearing on SB 62 and stated it              
 would back before the committee at a later date.                              
 There being no further business to come before the committee, the             
 meeting was adjourned at 10:11 a.m.                                           

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