Legislature(1993 - 1994)
02/10/1994 09:08 AM Senate CRA
* first hearing in first committee of referral
= bill was previously heard/scheduled
= 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 2/3/94. SB 233 - See Community & Regional Affairs minutes dated 2/3/94. 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 pay. 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 adopted. 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 substitute. 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 SENATOR RANDY PHILLIPS brought SB 233 (STATE EDUCATION AID: FUNDING NG 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 substitute. 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 substitute. 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.