Legislature(1993 - 1994)

03/24/1994 09:07 AM CRA

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
              SENATE COMMUNITY & REGIONAL AFFAIRS                              
                         March 24, 1994                                        
                           9:07 a.m.                                           
  MEMBERS PRESENT                                                              
 Senator Randy Phillips, Chairman                                              
 Senator Robin Taylor, Vice Chairman                                           
 Senator Loren Leman                                                           
 Senator Al Adams                                                              
  MEMBERS ABSENT                                                               
 Senator Fred Zharoff                                                          
  COMMITTEE CALENDAR                                                           
 SENATE BILL NO. 62                                                            
 "An Act relating to the public school foundation program; and                 
 providing for an effective date."                                             
  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, 2/10/94, 3/22/94.                         
  WITNESS REGISTER                                                             
 Duane Guiley, Director of School Finance                                      
 Department of Education                                                       
 801 W. 10th St., Suite 200                                                    
 Juneau, AK 99801-1894                                                         
  POSITION STATEMENT:   Offered information on                                 
                      CSSB 62(CRA)                                             
  ACTION NARRATIVE                                                             
 TAPE 94-24, SIDE A                                                            
 Number 001                                                                    
 The Senate Community & Regional Affairs Committee was called to               
 order by Chairman Randy Phillips at 9:07 a.m.  He brought  SB 62              
  (PUBLIC SCHOOL FOUNDATION PROGRAM) before the committee and asked            
 Duane Guiley to explain the differences between the original bill             
 and the proposed committee substitute.                                        
 Number 010                                                                    
 DUANE GUILEY, Director of School Finance, Department of Education,            
 directed attention to a schedule he prepared which outlines the               
 differences in the two versions of the legislation.                           
 The original version of SB 62 requires the Department of Education            
 to develop the Alaska School Price Index, which is intended to be             
 a replacement for the current Area Cost Differential within state             
 statute.  The committee substitute retains the original Area Cost             
 In the original version funding for Centralized Correspondence                
 Study is based on the elementary and secondary foundation formula.            
 The committee substitute retains the existing system, which bases             
 the revenue only on the elementary school formula.                            
 The original SB 62 suggests that funding for vocational education             
 should be based on a weighting factor multiplied by each student              
 enrolled in grades 9 - 12.  The committee substitute leaves the               
 current system unchanged, which is based on approximately .004                
 instructional units for each child who receives vocational                    
 The original SB 62 suggests limiting the number of children that              
 can be identified for funding purposes at 4.5 percent of the K-12             
 population and multiplying that number times a weighting factor               
 (.012) to be specified in regulations.  The committee substitute              
 leaves gifted and talented funding unchanged at .025 units per                
 student enrolled in gifted and talented program.                              
 The original SB 62 requires a 4 mill local tax levy or 35 percent             
 of basic need.  The committee substitute suggests that the 35                 
 percent of basic need would be increased to 50 percent of basic               
 need, thereby affecting only those very well wealthy districts in             
 the state (North Slope, Valdez and Unalaska).  The 4 mill levy                
 contribution would remain unchanged.                                          
 In the original SB 62, there is no reference to funding communities           
 in the statutes.  The committee substitute provides that funding              
 communities must have a minimum of 25 students in average daily               
 In the original SB 62, the elementary and secondary formulas remain           
 unchanged with the divisor for large schools at 13, for secondary             
 at 17, for elementary students at 17.  The committee substitute               
 provides that the elementary student divisor is reduced from 17 to            
 16, thereby awarding more money for the larger elementary schools             
 by reducing the number of students needed to generate a unit.                 
 In the original SB 62, whether or not a district was a single                 
 funding community was considered in developing the Alaska School              
 Price Index.  The committee substitute provides that a single-site            
 school district with an ADM of 900 or less shall receive between              
 6 - 12 percent additional K-12 units.                                         
 The original SB 62 changes the reporting date for the succeeding              
 year's enrollment from October 15 to November 20, thereby providing           
 the department the opportunity to enhance its projections, as well            
 as provide the opportunity for the district to first calculate                
 their current year enrollment before they are required to make                
 their projection.  The committee substitute contains the same                 
 The original SB 62 contains a holdharmless provision of three years           
 after the implementation date so that no single district would                
 experience a decrease in revenue for three consecutive fiscal years           
 after adoption.  The committee substitute does not contain a                  
 holdharmless provision and the existing holdharmless is repealed.             
 In the original SB 62 and in the committee substitute as well, a              
 district may request to use the preceding year's ADM for good                 
 cause, which includes reduction in student enrollment.                        
 In the original SB 62, the requirement for the department to review           
 each district's plan of service for gifted students is repealed.              
 The committee substitute leaves that section of law unchanged,                
 which would require the department to continue to review a gifted             
 and talented plan of service.                                                 
 Number 190                                                                    
 SENATOR ADAMS said the original bill leaves the local contribution            
 requirement unchanged, and he prefers that to changing it from 35             
 percent of basic need to 50 percent as is provided in the committee           
 substitute.  He suggested changing the allowable local effort from            
 23 percent of basic need to 24 or 25 percent of basic need rather             
 than changing the local contribution factor, and he asked what                
 impact that would have on the school districts.  DUANE GUILEY said            
 the department has testified in favor of a House bill that would              
 increase the allowable local contribution from 23 percent excess to           
 24 percent excess.  There is also another piece of legislation that           
 would increase the allowable excess from 23 percent to 25 percent.            
 The department has testified that it has concern over increasing it           
 all the way to 25 percent in that the actual disparity is not known           
 until nearly a year after the fact and it would require retroactive           
 refunds of any excess contribution, or it would eliminate the                 
 district's opportunity to receive state aid.  In the committee                
 substitute, by increasing the minimum from 35 percent to 50                   
 percent, it results in a savings to the state, whereby providing an           
 opportunity for increased allowable excess presents no opportunity            
 for savings to the state, but does provide additional revenue to              
 the districts that have that opportunity.                                     
 Number 220                                                                    
 SENATOR TAYLOR suggested leaving the local contribution requirement           
 unchanged as was done in the original bill except to the add the              
 words "whichever is greater."  He said if it is made mandatory that           
 each community must contribute 4 mills of tax or 35 percent,                  
 whichever is greater, it provides a very significant savings to the           
 Number 245                                                                    
 SENATOR ADAMS asked for an update on PL 81-874.  DUANE GUILEY                 
 answered that based on a conversation with the Governor's Office in           
 Washington, D. C., it appears that the markup on the Senate side              
 may begin sometime in late March or early April.  There is some               
 thought that the bill may be amended significantly on the Senate              
 side.  The department is hopeful that it will be amended to the               
 point that the disparity will be retained at 25 percent, providing            
 the opportunity for the state to continue to do the deduct.  He               
 said the department will keep the committee advised on the status             
 of PL 81-874.                                                                 
 Senator Adams also requested more information on the holdharmless             
 section of the bill (Section 8).                                              
 Number 266                                                                    
 SENATOR LEMAN moved that CSSB 62(CRA) version E be adopted as a               
 working document.  SENATOR ADAMS objected, stating he believes the            
 original bill should be the version amended.  SENATOR RANDY                   
 PHILLIPS stated there would be a hand vote on the motion.  Senators           
 Phillips and Leman voted "Yea" and Senators Adams and Taylor voted            
 "Nay."  The Chairman stated the motion failed.                                
 SENATOR RANDY PHILLIPS asked the committee members if they feel the           
 school foundation formula needs to be rewritten.  Senator Adams               
 answered "No" and Senators Taylor Leman and Phillips said they                
 believe it needs to be rewritten.                                             
 Number 336                                                                    
 SENATOR LEMAN commented that he agrees that everybody ought to be             
 contributing toward the cost of education and he doesn't believe it           
 is being done now and it is not be done fairly.  However, proposing           
 this and making it happen is another thing.                                   
 SENATOR ADAMS stated that he does not want to change the school               
 foundation formula at this time because the input of various school           
 districts have not been placed in this foundation change at this              
 particular time.                                                              
 Senator Adams also asked for a cost breakdown on changing the                 
 divisor for elementary student formula from 17 to 16, as well as              
 suggesting that single site language needs to be included in the              
 Number 358                                                                    
 SENATOR RANDY PHILLIPS spoke to the overcrowding conditions in the            
 Anchorage school district, stating that they have over 40 percent             
 of the student enrollment in the state, but they receive only about           
 29 percent of the funding.  He added that he would like to rewrite            
 the school foundation formula with the current funding and that is            
 what the committee substitute was all about.                                  
 Number 378                                                                    
 SENATOR RANDY PHILLIPS stated SB 62 would be back before the                  
 committee the following Tuesday, and he then adjourned the meeting            
 at 9:35 a.m.                                                                  

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