Legislature(2017 - 2018)CAPITOL 106

03/06/2017 08:00 AM EDUCATION

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08:02:47 AM Start
08:03:41 AM Presentation: Commonwealth North Operating Budget Report - K-12 Funding
09:31:40 AM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Joint with House Education
+ Presentation of the Commonwealth North Operating TELECONFERENCED
Budget Report - K-12 Funding
Mark Foster, Independent Consultant
-- Testimony <Invitation Only> --
                    ALASKA STATE LEGISLATURE                                                                                  
                         JOINT MEETING                                                                                        
              SENATE EDUCATION STANDING COMMITTEE                                                                             
               HOUSE EDUCATION STANDING COMMITTEE                                                                             
                         March 6, 2017                                                                                          
                           8:02 a.m.                                                                                            
                                                                                                                                
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
SENATE EDUCATION STANDING COMMITTEE                                                                                             
                                                                                                                                
 Senator Shelley Hughes, Chair                                                                                                  
 Senator Gary Stevens                                                                                                           
 Senator Cathy Giessel                                                                                                          
 Senator John Coghill                                                                                                           
 Senator Tom Begich                                                                                                             
                                                                                                                                
HOUSE EDUCATION STANDING COMMITTEE                                                                                              
                                                                                                                                
 Representative Harriet Drummond, Chair                                                                                         
 Representative Justin Parish, Vice Chair                                                                                       
 Representative Zach Fansler                                                                                                    
 Representative Ivy Spohnholz                                                                                                   
 Representative Jennifer Johnston                                                                                               
 Representative David Talerico                                                                                                  
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
SENATE EDUCATION STANDING COMMITTEE                                                                                             
                                                                                                                                
 All members present                                                                                                            
                                                                                                                                
HOUSE EDUCATION STANDING COMMITTEE                                                                                              
                                                                                                                                
 Representative Chuck Kopp                                                                                                      
 Representative Lora Reinbold (Alternate)                                                                                       
 Representative Geran Tarr (Alternate)                                                                                          
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
PRESENTATION: COMMONWEALTH NORTH OPERATING BUDGET REPORT - K-12                                                                 
FUNDING                                                                                                                         
                                                                                                                                
     - HEARD                                                                                                                    
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                                
No previous action to record                                                                                                    
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
MARK FOSTER, Consultant                                                                                                         
Commonwealth North (CWN)                                                                                                        
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Presented information on a  Fiscal Review of                                                             
Alaska K-12 Investments.                                                                                                        
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
8:02:47 AM                                                                                                                    
CHAIR SHELLEY HUGHES  called the joint meeting of  the Senate and                                                             
House  Education  Standing  Committees  to  order  at  8:02  a.m.                                                               
Present  at the  call  to order  were  Senators Giessel,  Begich,                                                               
Coghill, Stevens,  and Chair  Hughes and  Representatives Parish,                                                               
Fansler, Johnston, Spohnholz, Talerico, and Chair Drummond.                                                                     
                                                                                                                                
^PRESENTATION: COMMONWEALTH NORTH OPERATING  BUDGET REPORT - K-12                                                               
FUNDING                                                                                                                         
PRESENTATION: COMMONWEALTH NORTH OPERATING BUDGET REPORT - K-12                                                             
                            FUNDING                                                                                         
                                                                                                                              
8:03:41 AM                                                                                                                  
CHAIR HUGHES announced  that the only order of  business would be                                                               
a  presentation  by  Commonwealth  North Operating  (CW)  on  the                                                               
operating  budget report  for K-12.  She related  that CWS  has a                                                               
long  commitment  to support  sound  fiscal  policies in  Alaska.                                                               
Today's  report is  their latest  effort toward  that commitment.                                                               
She hoped  it would  be a  valuable tool  for the  legislature to                                                               
consider as  it looks for  ways to deal  with the fiscal  gap and                                                               
the education system.                                                                                                           
                                                                                                                                
8:04:51 AM                                                                                                                    
MARK  FOSTER,  Consultant,  Commonwealth North  (CWN),  presented                                                               
information on  a Fiscal  Review of  Alaska K-12  Investments. He                                                               
shared his professional background  as the former Chief Financial                                                               
Officer  of  the  Anchorage School  District  and  the  Executive                                                               
Director of the Office of  Budget and Management. He continues to                                                               
provide consulting  services, none of  which are related  to K-12                                                               
finances.  He said  that he  would present  CWN's recommendations                                                               
regarding school consolidations.                                                                                                
                                                                                                                                
He  highlighted two  recommendations the  CWN fiscal  study group                                                               
made related to K-12:                                                                                                           
     Education   funding   needs   to  refocus   on   direct                                                                    
     instruction  that  yields measureable  improvements  in                                                                    
     student  achievement.  State  K-12  funding  should  be                                                                    
     reduced  by 1  to 3  percent per  year for  four years,                                                                    
     during which funding would have  to be reallocated from                                                                    
     administrative/operations,     other    than     direct                                                                    
     instruction,   to    maintain   funding    for   direct                                                                    
     instruction.                                                                                                               
                                                                                                                                
     Prior  to making  investments  in  UA teacher  training                                                                    
     programs,  teacher training  programs  both inside  and                                                                    
     outside Alaska  should be  evaluated to  identify those                                                                    
     that  have  produced  high quality  teachers  who  have                                                                    
     generated high student achievement results.                                                                                
                                                                                                                                
8:08:00 AM                                                                                                                    
CHAIR HUGHES asked about the  findings of the report dealing with                                                               
overall spending versus spending in the classroom.                                                                              
                                                                                                                                
MR. FOSTER noted that discussion would be covered shortly.                                                                      
                                                                                                                                
He continued with  a question CWN asked about how  to address the                                                               
cost and  the performance  of the  formula programs.  He stressed                                                               
looking  at  the  quality  of the  programs,  not  whether  their                                                               
funding should be increased or decreased.                                                                                       
                                                                                                                                
He  turned  to  two  elements  critical  to  understanding  CWN's                                                               
recommendations, descriptions of the fiscal  gap as it relates to                                                               
Alaska's  future,  and  consideration   of  the  pension  funding                                                               
challenges.                                                                                                                     
                                                                                                                                
8:09:53 AM                                                                                                                    
MR. FOSTER turned  to graphs from Alaska's Future  website on the                                                               
impact of five  permanent fund earnings bills and  the status quo                                                               
on  the deficit,  dividends, and  fund growth,  with and  without                                                               
including  pension  fund  challenges. The  analysis  by  Alaska's                                                               
Future  suggests  that  even  with  the  use  of  permanent  fund                                                               
earnings  to help  support both  government and  dividends, there                                                               
will still  be a  significant structural  deficit. He  said, with                                                               
that remaining  gap in  mind, the CWS  study group  looked across                                                               
state functions and concluded that  the essential state functions                                                               
will need  to take  modest cuts, while  other functions  may take                                                               
deeper cuts. The rational for  reducing K-12 funding by 1 percent                                                               
to 3  percent per year  for four years  came from looking  at the                                                               
overall budget outlook.                                                                                                         
                                                                                                                                
He   addressed  the   fiscal  outlook   including  pension   fund                                                               
obligations.  He reminded  the  committee  about the  underfunded                                                               
liability  related  to  the  pension.  He  showed  a  graph  that                                                               
included  Moody's  standard   pension  liability  adjustments  of                                                               
approximately   $250  million   per   year.   He  addressed   the                                                               
combination of the structural deficit and the off-book deficit.                                                                 
                                                                                                                                
8:12:20 AM                                                                                                                    
CHAIR DRUMMOND referred  to page 7 of the  presentation and noted                                                               
that  Moody's Standard  Pension Liability  Adjustments have  been                                                               
added.                                                                                                                          
                                                                                                                                
8:12:48 AM                                                                                                                    
MR. FOSTER said that was correct.                                                                                               
                                                                                                                                
8:12:57 AM                                                                                                                    
CHAIR DRUMMOND  asked if it  takes into consideration  the annual                                                               
payments the  state is  making of about  $250 million  in pension                                                               
obligations.                                                                                                                    
                                                                                                                                
MR.  FOSTER opined  that there  is  additional pension  liability                                                               
that is not  part of the pay down that  is commonly calculated by                                                               
Moody's when  trying to assess the  capacity of the state.  It is                                                               
based  on  actuarial  estimates  and  not  on  the  risk-adjusted                                                               
estimates that third parties use.                                                                                               
                                                                                                                                
CHAIR DRUMMOND  asked if  he is suggesting  the state  provide an                                                               
additional $250 million.                                                                                                        
                                                                                                                                
MR.  FOSTER  clarified  that  it   is  another  $250  million  of                                                               
liability and the question is how  to account for it. To estimate                                                               
the  overall liability  going forward,  he  would add  it to  the                                                               
consideration when thinking about the structural benefit.                                                                       
                                                                                                                                
8:14:12 AM                                                                                                                    
SENATOR  BEGICH  asked about  CWN's  philosophy  regarding the  1                                                               
percent  to  3  percent  cut  based on  whether  to  use  certain                                                               
revenues in lieu of other revenues.                                                                                             
                                                                                                                                
MR. FOSTER explained that there  was a wide variety of discussion                                                               
within  CWN's fiscal  study group.  The combination  of interests                                                               
led to the compromise number of 1 to 3 percent.                                                                                 
                                                                                                                                
SENATOR  BEGICH stated  it  is  a compromise  number  based on  a                                                               
philosophical discussion, not an evidence-based number.                                                                         
                                                                                                                                
MR. FOSTER  disagreed. He  said there  was benchmark  evidence on                                                               
both sides of the issue.                                                                                                        
                                                                                                                                
8:15:38 AM                                                                                                                    
SENATOR  STEVENS  asked  for  an  explanation  between  actuarial                                                               
versus risk adjustment.                                                                                                         
                                                                                                                                
8:16:04 AM                                                                                                                    
MR.  FOSTER drew  attention to  Moody's downgrade  of state  debt                                                               
found in an  eight-page report from July 2016  where experts made                                                               
adjustments to the  actuarial analysis to take  into account what                                                               
they  believe is  a fair  representation  of liability  including                                                               
future  cash  flow  requirements. That  number  is  significantly                                                               
different  than the  actuarial analysis.  He offered  to write  a                                                               
summary of that information.                                                                                                    
                                                                                                                                
SENATOR STEVENS agreed it would be good to have it in writing.                                                                  
                                                                                                                                
MR. FOSTER  provided an example  of the actuarial  analysis using                                                               
an 8 percent return assumption;  Moody believes in a lower return                                                               
number.                                                                                                                         
                                                                                                                                
CHAIR HUGHES requested a short brief on the topic.                                                                              
                                                                                                                                
8:17:30 AM                                                                                                                    
MR.  FOSTER turned  to a  report  from July  2015 by  Augenblick,                                                               
Palaich and  Associates (APA) consulting group  entitled, "Review                                                               
of Alaska's  School Funding Program."  One of their  findings was                                                               
the  regression  analysis   examining  the  relationship  between                                                               
instructional  expenditures  and   district  proficiency  levels,                                                               
which  showed  a  positive   relationship  between  spending  and                                                               
performance   in   both   reading   and   math.   Contrasted   to                                                               
instructional expenditure per pupil,  the analysis indicated that                                                               
there  is  no  significant relationship  between  total  district                                                               
expenditure per  pupil and district proficiency  levels. There is                                                               
a  positive response  on student  performance from  instructional                                                               
investment,  but a  negative response  by investments  other than                                                               
instruction.  This  suggests a  need  to  examine the  system  of                                                               
funding to ensure a return, not losing ground.                                                                                  
                                                                                                                                
8:19:32 AM                                                                                                                    
REPRESENTATIVE  PARISH asked  if it  is a  correlative or  causal                                                               
relationship.                                                                                                                   
                                                                                                                                
MR. FOSTER understood that the APA Study was correlative.                                                                       
                                                                                                                                
CHAIR DRUMMOND requested a copy of the study.                                                                                   
                                                                                                                                
8:21:00 AM                                                                                                                    
REPRESENTATIVE PARISH asked  if the study was  controlled for any                                                               
other factors  such as location,  rural or urban, or  spending on                                                               
connectivity.                                                                                                                   
                                                                                                                                
MR. FOSTER said APA did account for a few demographic factors.                                                                  
                                                                                                                                
8:21:44 AM                                                                                                                    
MR.  FOSTER  related that  the  Anchorage  School District  hired                                                               
consultants  to address  the question  where  to focus  financial                                                               
investment  in education.  They  did  a study  on  the number  of                                                               
teachers  versus support  staff  and found  that high  performing                                                               
districts  were  successful  due  to having  more  teachers  than                                                               
support  staff.  They found  ways  to  reduce administrative  and                                                               
support costs in  order to employ more teachers.  They also found                                                               
that many rural districts have  more support staff than teachers.                                                               
It was suggested that rural  districts might have challenges with                                                               
teacher recruitment, so they use  support staff to backfill empty                                                               
positions. The challenge  was that this did  not yield measurable                                                               
performance benefits in proficiency or growth.                                                                                  
                                                                                                                                
8:24:26 AM                                                                                                                    
SENATOR  BEGICH  inquired  if  rural  districts  are  backfilling                                                               
because they can't  get teachers and the  recommendation from CWN                                                               
is  to reduce  the amount  of money  available to  districts, how                                                               
that would measurably improve educational  outcomes.  He asked if                                                               
the  comparison   of  Alaska  with  Wyoming   includes  rural  or                                                               
successful districts.                                                                                                           
                                                                                                                                
MR. FOSTER said both are compared.                                                                                              
                                                                                                                                
SENATOR  BEGICH restated  his first  question. He  questioned the                                                               
level and depth of the analysis.                                                                                                
                                                                                                                                
MR.  FOSTER replied  that rural  districts may  have invested  in                                                               
things other than direct instruction.  The challenge is to supply                                                               
quality  instruction   and  improve  compensation   packages  for                                                               
teachers.  He   noted  the  same   phenomenon  occurs   in  urban                                                               
districts;  instead  of investing  in  teachers,  they invest  in                                                               
teacher assistants  and that doesn't  yield benefits.  It appears                                                               
to  be cost  effective, but  it is  not educationally  effective.                                                               
There is  a state fiscal challenge,  so it makes sense  to reduce                                                               
overall  levels  of  financial   support,  but  invest  available                                                               
resources in trained teachers.                                                                                                  
                                                                                                                                
8:27:13 AM                                                                                                                    
SENATOR BEGICH  asked again how a  one-to-three percent reduction                                                               
is possible when teachers cannot  be recruited to urban areas. He                                                               
requested evidence for a causal correlation.                                                                                    
                                                                                                                                
MR. FOSTER replied there is  no direct evidence that reducing the                                                               
budget will  help education. He pointed  out that a lot  of money                                                               
has been  spent without getting  results and  there is a  need to                                                               
construct  systems   to  support  measurements  of   success  and                                                               
encourage investment in areas that are getting return.                                                                          
                                                                                                                                
8:28:52 AM                                                                                                                    
REPRESENTATIVE  JOHNSTON  asked  if  he  is  suggesting  that  by                                                               
lowering the  budget, it allows  policymakers to create  a vision                                                               
that  provides great  teachers to  all of  Alaska students,  with                                                               
consideration  of  virtual education  and  support  staff in  the                                                               
classrooms to assist great virtual teachers.                                                                                    
                                                                                                                                
MR. FOSTER said that is one model.                                                                                              
                                                                                                                                
8:29:45 AM                                                                                                                    
REPRESENTATIVE SPOHNHOLZ said she  doesn't disagree with the idea                                                               
that  having more  teachers will  yield better  outcomes, but  is                                                               
confused  about the  strategy. Requiring  cuts to  the budget  to                                                               
achieve  an outcome  that does  not  have a  clear connection  to                                                               
budget cuts  is confusing. She  asked if they explored  any other                                                               
proposals,  such as  requiring a  larger percentage  of resources                                                               
being allocated to the classroom by district.                                                                                   
                                                                                                                                
8:30:41 AM                                                                                                                    
MR.  FOSTER  clarified  that  their focus  was  on  getting  more                                                               
resources for teachers.  The context was that  the overall budget                                                               
gap  appeared  to  be  significant  enough  that  even  essential                                                               
services  probably merited  reductions. That  is in  part due  to                                                               
benchmarking those  essential services  against other  states and                                                               
concluding  that even  after  adjusting for  cost,  the state  is                                                               
paying at  least as much  as other  states for education  and not                                                               
getting a return on that investment.                                                                                            
                                                                                                                                
8:31:28 AM                                                                                                                    
REPRESENTATIVE SPOHNHOLZ  did not  disagree with that  point, but                                                               
asked how  cutting the  budget, overall,  is supposed  to inspire                                                               
districts to reallocate resources to the classroom.                                                                             
                                                                                                                                
MR.  FOSTER explained  that  CWN  is not  arguing  that the  cuts                                                               
realign,  but  are  suggesting  that  the  legislature  needs  to                                                               
consider shifting  monies toward direct classroom  instruction by                                                               
quality teachers as a move toward best practices.                                                                               
                                                                                                                                
REPRESENTATIVE  SPOHNHOLZ understood  he  is  not proposing  that                                                               
budget cuts would produce this  outcome. Instead, the legislature                                                               
should focus  on re-allocating resources from  administration and                                                               
support into the classroom.                                                                                                     
                                                                                                                                
MR. FOSTER said yes.                                                                                                            
                                                                                                                                
CHAIR HUGHES  commented that not reducing  teachers, but reducing                                                               
administration  is the  bottom line.  Overall spending  per pupil                                                               
does not have  great results, but spending  for class instruction                                                               
does impact results.                                                                                                            
                                                                                                                                
8:33:26 AM                                                                                                                    
REPRESENTATIVE  PARISH  commented  that  the  evidence  does  not                                                               
suggest results, it suggests correlation.                                                                                       
                                                                                                                                
8:33:55 AM                                                                                                                    
MR. FOSTER continued with a graph  on the support staff ratio per                                                               
100  students by  school  district.  The evidence-based  resource                                                               
model  found  that  six  support   staff  per  100  students  was                                                               
justified.  Only  two districts  had  that  suggested ratio,  Mt.                                                               
Edgecumbe and Mat-Su.                                                                                                           
                                                                                                                                
8:35:35 AM                                                                                                                    
CHAIR HUGHES  asked whether support staff  includes teacher aides                                                               
and instructional aides in the classroom.                                                                                       
                                                                                                                                
MR. FOSTER said yes.                                                                                                            
                                                                                                                                
He continued with  a graph comparing on  Alaska's K-12 investment                                                               
and  performance levels  with other  states in  FY2014-FY2015. It                                                               
showed   very  little   correlation  on   spending  and   student                                                               
performance  at the  state level.  Recently, Alaska  has migrated                                                               
from  the  "middle"  of  spending  and  performance  toward  high                                                               
spending/low performance quadrant.                                                                                              
                                                                                                                                
He showed  a graph  of proficiency versus  percent of  school age                                                               
children   in  poverty   by  state   in  January   2017.  Student                                                               
performance  and percentage  of  school age  children in  poverty                                                               
continues to be  inversely correlated at the  state level. Alaska                                                               
made  modest improvements  in  student  performance, while  other                                                               
states have made more progress in that areas.                                                                                   
                                                                                                                                
8:38:20 AM                                                                                                                    
REPRESENTATIVE PARISH  referred to  the extremely  high R-squared                                                               
values.  He thought  anything that  can be  done to  reduce child                                                               
poverty  would be  a  good  investment. He  asked  if Mr.  Foster                                                               
agreed.                                                                                                                         
                                                                                                                                
MR. FOSTER said yes.                                                                                                            
                                                                                                                                
8:39:11 AM                                                                                                                    
CHAIR DRUMMOND said  the number of students in  poverty in Alaska                                                               
has  increased  from roughly  10  percent  to 13.5  percent,  yet                                                               
student proficiency has increased slightly during that time.                                                                    
                                                                                                                                
MR. FOSTER said that was correct.                                                                                               
                                                                                                                                
CHAIR DRUMMOND concluded that Alaska  has taken some steps toward                                                               
reducing the impacts of childhood poverty.                                                                                      
                                                                                                                                
MR.  FOSTER  stated that  the  evidence  suggests that  education                                                               
results have improved despite childhood poverty.                                                                                
                                                                                                                                
CHAIR DRUMMOND asked  what has been done that  has contributed to                                                               
that improvement.                                                                                                               
                                                                                                                                
MR. FOSTER said he has not done that analysis.                                                                                  
                                                                                                                                
8:40:58 AM                                                                                                                    
REPRESENTATIVE JOHNSTON  asked if student poverty  is measured by                                                               
the  free lunch  program.  She asked  when  Anchorage opened  the                                                               
program  to  all  students.  She wondered  if  the  poverty  rate                                                               
decreased when all students were able to take free lunch.                                                                       
                                                                                                                                
MR. FOSTER  reported that CWN's poverty  numbers were independent                                                               
from  the free  lunch data.  The school  district did  move to  a                                                               
school-wide assessment for student free lunch eligibility.                                                                      
                                                                                                                                
8:42:23 AM                                                                                                                    
REPRESENTATIVE JOHNSTON asked how CWN measured the poverty rate.                                                                
                                                                                                                                
MR. FOSTER  explained that they used  poverty estimates developed                                                               
by  the  Bureau of  Labor  and  cross-checked those  against  the                                                               
census.                                                                                                                         
                                                                                                                                
REPRESENTATIVE  JOHNSTON  said  the graph  shows  that  Anchorage                                                               
School District is still below the norm.                                                                                        
                                                                                                                                
MR.  FOSTER  agreed.   He  said  Alaska  has   only  made  modest                                                               
improvements in  student performance  and other states  have made                                                               
significant  improvements. Most  everyone  else  is doing  better                                                               
than Alaska is, so Alaska needs to  figure out how to get back on                                                               
track and catch up.                                                                                                             
                                                                                                                                
8:43:43 AM                                                                                                                    
CHAIR   DRUMMOND  recognized   the  presence   of  Representative                                                               
Fansler.                                                                                                                        
                                                                                                                                
8:44:24 AM                                                                                                                    
MR. FOSTER turned  to another graph that  depicts K-12 investment                                                               
levels and  performance compared to other  states after adjusting                                                               
for poverty. Several states made  significant progress in student                                                               
performance with  moderate increases  in K-12  investment levels.                                                               
Massachusetts student  performance continues to outpace  the rest                                                               
of  the states.  Alaska and  Hawaii are  outliers -  falling well                                                               
below expected  performance for their  K-12 investment  and child                                                               
poverty  levels. He  noted the  impact of  the nationwide  fiscal                                                               
downturn.  He  explained  that  Alaska  and  Hawaii  have  modest                                                               
increases in poverty  despite spending a lot  of resources; other                                                               
states show  increased performance. Alaska must  figure out where                                                               
to invest money to get a return.                                                                                                
                                                                                                                                
8:49:18 AM                                                                                                                    
REPRESENTATIVE PARISH pointed  out that this trend  looks like it                                                               
is just barely significant. He  asked how much per pupil spending                                                               
is attributable to high health care costs.                                                                                      
                                                                                                                                
8:49:50 AM                                                                                                                    
MR. FOSTER  thought it was  a significant amount and  much higher                                                               
than in  other states. Health care  costs are more than  what you                                                               
might expect in Alaska, approximately $3,000 per student.                                                                       
                                                                                                                                
8:50:29 AM                                                                                                                    
SENATOR  BEGICH  used an  analogy  of  energy inefficiency  in  a                                                               
house.   It  seems   as  though   CWN  suggests   unplugging  the                                                               
electricity   instead  of   determining  the   reasons  for   the                                                               
inefficiency and changing those factors.  He inquired how CWN can                                                               
suggest budget  cuts as  a solution  to inefficiency,  instead of                                                               
using and investing  resources to do a better  job of determining                                                               
the  cause  of it.  He  noted  APA's  study said  the  foundation                                                               
formula  was doing  well except  how it  served poverty,  special                                                               
education  kids,  and Alaska  Native  kids  in rural  Alaska.  He                                                               
questioned the relevance of  the comparison between Massachusetts                                                               
and  Alaska  given  the  vast   differences  in  size  and  rural                                                               
challenges.                                                                                                                     
                                                                                                                                
8:52:17 AM                                                                                                                    
MR. FOSTER  responded that  the comparison was  used due  to high                                                               
performance and poverty challenges  in both states. Anchorage and                                                               
Boston have similarities, such as  heavy allocations of resources                                                               
for  support  for  teachers  and   high  health  care  costs.  He                                                               
explained  their recommendation  for  cuts as  a  way to  improve                                                               
performance being  due to the whole  challenging fiscal situation                                                               
and the  need to  benchmark spending  for staffing  to understand                                                               
what the appropriate levels are  that will result in success. CWN                                                               
is  suggesting  focussing  on direct  classroom  instruction  and                                                               
teacher preparation.                                                                                                            
                                                                                                                                
8:54:41 AM                                                                                                                    
MR. FOSTER  listed CWN's recommendations and  strategies to shift                                                               
resources toward  improved performance at the  district level and                                                               
state level  implementation options and considerations.  He spoke                                                               
of a level  of fatigue districts go through  during budget cycles                                                               
and he suggested seeking benchmarks  of districts finding success                                                               
instead of looking at previous year benchmarks.                                                                                 
                                                                                                                                
8:56:21 AM                                                                                                                    
MR. FOSTER reviewed school  facility consolidation incentives. He                                                               
did  not find  evidence that  the  formula, per  se, drove  small                                                               
schools. The  size of schools  is driven by the  neighborhood and                                                               
the geography  and the  distance for  transportation. He  did not                                                               
see that the school size factor  in the top five school districts                                                               
drove small schools.                                                                                                            
                                                                                                                                
He  agreed  that   school  size  is  a   disincentive  to  school                                                               
consolidation.  He showed  a graph  of  Average Daily  Membership                                                               
(ADM) by  schools. He did a  comparison of two schools  using the                                                               
foundation   formula   and   ADM  and   concluded   that   school                                                               
consolidation  saves money.  From a  district perspective,  there                                                               
are  efficiencies  in  administrative costs  from  consolidation,                                                               
however, there are negatives in terms of finances and politics.                                                                 
                                                                                                                                
9:00:49 AM                                                                                                                    
CHAIR DRUMMOND  said she is  trying to  figure out how  two small                                                               
rural villages, each  with 200 students, that are 50  to 60 miles                                                               
apart can benefit  from consolidation. She thought  it might work                                                               
in   a  large   district.   She   recalled  presentations   about                                                               
consolidation of  services among districts that  have resulted in                                                               
savings.  She   did  not  see  consolidation   working  in  rural                                                               
districts.                                                                                                                      
                                                                                                                                
9:01:44 AM                                                                                                                    
MR.  FOSTER   thought  it  was   a  consideration   for  suburban                                                               
districts.  He cautioned  about spare  capacity in  the Anchorage                                                               
School district associated with the military base (JBER).                                                                       
                                                                                                                                
9:02:58 AM                                                                                                                    
REPRESENTATIVE PARISH was reminded of  a Russian story when there                                                               
were plagues  and many doctors,  so they executed doctors  as the                                                               
solution -  a fundamental problem  of correlation  and causation.                                                               
He shared  his experience  as support  staff and  maintained that                                                               
cutting support staff is the  wrong solution considering Alaska's                                                               
high  rates  of  childhood  sexual abuse  and  adverse  childhood                                                               
experiences.  He stressed  that  cutting support  to children  is                                                               
wrong.  He wondered  if the  study  considered adverse  childhood                                                               
experiences (ACEs).                                                                                                             
                                                                                                                                
MR.  FOSTER  related  that  he  has studied  that  issue  at  the                                                               
Anchorage-municipal level, but not at  the state level. He agreed                                                               
that  there are  high  rates  of ACEs  and  that urban  districts                                                               
nationwide  have  significant  challenges. He  offered  that  the                                                               
investments focused in this area have not been very effective.                                                                  
                                                                                                                                
9:06:04 AM                                                                                                                    
REPRESENTATIVE JOHNSTON  referred to the graph  comparing student                                                               
performance and investment levels  in states, after adjusting for                                                               
poverty. She asked  which rural western states  have made greater                                                               
improvements in student performance.                                                                                            
                                                                                                                                
9:07:15 AM                                                                                                                    
MR. FOSTER  thought Minnesota was  a better example  than Montana                                                               
due to its diverse population.                                                                                                  
                                                                                                                                
REPRESENTATIVE   JOHNSTON  asked   if  any   states  with   large                                                               
reservations have shown marked improvement.                                                                                     
                                                                                                                                
9:07:58 AM                                                                                                                    
MR. FOSTER said he did not look at that detail.                                                                                 
                                                                                                                                
9:08:17 AM                                                                                                                    
MR. FOSTER  said that concludes  his presentation and  he thanked                                                               
the  committee  for  hearing  about  the  CWN  Fiscal  Study.  He                                                               
suggested that Alaska focus investments going forward.                                                                          
                                                                                                                                
9:08:57 AM                                                                                                                    
CHAIR HUGHES said it was depressing  to look at those graphs. She                                                               
maintained  that   Alaska  needs  to  improve.   She  asked  what                                                               
recommendations Alaska should consider  to help change what we're                                                               
seeing.                                                                                                                         
                                                                                                                                
9:09:54 AM                                                                                                                    
MR.  FOSTER  responded that  the  study  group  did not  come  to                                                               
consensus   on   the   initiatives.  He   suggested   to   reduce                                                               
administrative overhead and focus  resources on the classroom. It                                                               
can be  done through intent  language and fiscal  adjustments. He                                                               
opined  that, long  term, the  formula warrants  a fresh  look in                                                               
order to  focus on teachers; attracting,  retaining, and training                                                               
the teacher pool.                                                                                                               
                                                                                                                                
9:11:25 AM                                                                                                                    
REPRESENTATIVE  PARISH  appreciated  the  suggestion  to  improve                                                               
benefits for  teachers and address  child poverty,  the strongest                                                               
predictor  of childhood  outcomes.  He asked  if the  legislature                                                               
should  focus on  reducing childhood  poverty and  mitigating its                                                               
effects.                                                                                                                        
                                                                                                                                
9:12:25 AM                                                                                                                    
MR.  FOSTER  said  yes.  Some  efforts  to  improve  poverty  are                                                               
successful,  and some  are not.  He  suggested to  be mindful  of                                                               
where to make investments.                                                                                                      
                                                                                                                                
9:12:58 AM                                                                                                                    
REPRESENTATIVE  PARISH  asked for  a  report  on the  correlation                                                               
between  high  health  costs  and  childhood  traumas  and  lower                                                               
performance, and the need for more support staff.                                                                               
                                                                                                                                
9:13:29 AM                                                                                                                    
CHAIR DRUMMOND  recalled that last  year the  legislature removed                                                               
the 70/30  split between required  expenditures in  the classroom                                                               
and all other  school district expenditures due  to rural schools                                                               
having  difficulty paying  heating bills.  She asked  whether the                                                               
CWN study  took unavoidable operational costs  into consideration                                                               
when recommending reducing administrative expenditures.                                                                         
                                                                                                                                
9:14:18 AM                                                                                                                    
MR.  FOSTER  replied  they  did  look at  the  cost  of  heating,                                                               
electricity, housing, etc.  in 2008. It appears that  the cost of                                                               
housing in  Anchorage has  risen faster than  in rural  areas. He                                                               
said  they  need  to  redo  data and  list  Mat-Su  as  the  most                                                               
expensive  place to  live. They  didn't have  sufficient data  to                                                               
include it in the report.                                                                                                       
                                                                                                                                
9:15:54 AM                                                                                                                    
CHAIR DRUMMOND  said she is talking  about the cost of  running a                                                               
school building  in rural  Alaska and  housing teachers  in rural                                                               
districts.  Urban  housing  costs   have  no  relevance  to  this                                                               
question. She restated her question.                                                                                            
                                                                                                                                
MR. FOSTER said they did not look at the 70/30 split.                                                                           
                                                                                                                                
9:16:58 AM                                                                                                                    
REPRESENTATIVE  SPOHNHOLZ   referred  to  Mr.   Parish's  earlier                                                               
question and  asked what  the CWN  study considered  as classroom                                                               
spending and if it was teachers only.                                                                                           
                                                                                                                                
MR. FOSTER replied teachers;  highly qualified professionals with                                                               
direct classroom time with students for most of their day.                                                                      
                                                                                                                                
REPRESENTATIVE SPOHNHOLZ noted  there are a lot  of support staff                                                               
in  the  classroom,  such  as  paraprofessionals.  She  said  her                                                               
daughter is  an appreciated teacher  assistant in  a kindergarten                                                               
class. She provided another example  of special education classes                                                               
where teachers have much-needed support staff.                                                                                  
                                                                                                                                
MR.  FOSTER  referenced a  PICA  Report  done in  Anchorage  that                                                               
reviewed  the evidence  whether  an investment  in support  staff                                                               
made  a  difference and  found  that  it  had minimal  effect  on                                                               
yielding better test results.  There  is merit in looking at that                                                               
resource  and  investing in  more  teachers,  not support  staff,                                                               
especially in the lower grades.                                                                                                 
                                                                                                                                
9:20:24 AM                                                                                                                    
SENATOR  BEGICH  asked  if  energy   and  maintenance  costs  are                                                               
included in non-instructional data in the study.                                                                                
                                                                                                                                
MR. FOSTER said  he did not know if APA  included those costs. He                                                               
said  he has  only  looked  at staffing  and  not  at energy  and                                                               
maintenance costs.                                                                                                              
                                                                                                                                
SENATOR  GIESSEL thanked  Mr.  Foster  for his  work  on the  CWN                                                               
Fiscal  Study Group.  She alluded  to child  poverty and  adverse                                                               
childhood events  and maintained that schools  have become social                                                               
service  providing  entities.  She thought  there  were  creative                                                               
solutions  to  that problem,  such  as  schools contracting  with                                                               
private  entities  to  provide   mental  health  counseling.  She                                                               
appreciated the emphasis  of poverty's effect on  the outcomes of                                                               
education. In Mat-Su one of  the predictors of success in schools                                                               
is whether there is a job in the home.                                                                                          
                                                                                                                                
9:23:44 AM                                                                                                                    
REPRESENTATIVE SPOHNHOLZ questioned  the re-allocation of support                                                               
staff  to lower  grades.  She  asked how  that  would affect  the                                                               
student/teacher ratios.                                                                                                         
                                                                                                                                
9:24:33 AM                                                                                                                    
MR. FOSTER  said the  comparison of  teacher salary  and benefits                                                               
versus  support  staff  salary benefits  would  equal  about  1.6                                                               
support staff to one teacher.                                                                                                   
                                                                                                                                
9:25:06 AM                                                                                                                    
SENATOR  BEGICH referenced  energy  costs per  district and  read                                                               
some of those  costs. He pointed out that  many smaller districts                                                               
have energy  costs that exceed  numbers in the  larger districts.                                                               
Finding  out  if  those  costs  are included  would  make  a  big                                                               
difference in the outcomes of the study.                                                                                        
                                                                                                                                
9:26:17 AM                                                                                                                    
CHAIR HUGHES asked Mr. Foster to find that information.                                                                         
                                                                                                                                
MR. FOSTER said he would try.                                                                                                   
                                                                                                                                
9:26:42 AM                                                                                                                    
REPRESENTATIVE FANSLER  requested information  about the  cost of                                                               
broadband/internet access to districts.                                                                                         
                                                                                                                                
9:27:29 AM                                                                                                                    
CHAIR  HUGHES  thanked  Mr.  Foster.  She  referred  to  Alaska's                                                               
academic achievement results  and said it is hard  to accept that                                                               
Alaska is  not doing a  great job.  Factors such as  poverty, the                                                               
home environment, and  parents having a job can  affect a child's                                                               
educational chances  of success.  The Education  Committees can't                                                               
change  what is  going  on  in homes,  however,  they can  create                                                               
policy to  ensure access  to great  teachers, which  can overcome                                                               
some of the  poverty implications. She opined  that the committee                                                               
can make sure  students have access to great  teachers and better                                                               
achievement.  She  encouraged  everyone to  think  about  opening                                                               
access  to better  teachers and  be willing  to shake  things up.                                                               
Alaska  is unique,  but it  is not  alone with  these challenges.                                                               
Other states have had better  academic improvement. She concluded                                                               
that she believes  that every student matters and  can succeed if                                                               
given  the opportunity.  The committees  must  work together  for                                                               
better student achievement.                                                                                                     
                                                                                                                                
9:31:40 AM                                                                                                                    
There being  no further  business to  come before  the committee,                                                               
Chair Hughes  adjourned the  Joint Education  Standing Committees                                                               
at 9:31 a.m.                                                                                                                    

Document Name Date/Time Subjects
Fiscal Review of AK K12 Investment Performance.pptx SEDC 3/6/2017 8:00:00 AM