Legislature(1997 - 1998)
03/03/1998 04:40 PM Senate FIN
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
MINUTES
SENATE FINANCE COMMITTEE
3 March 1998
4:40 p.m.
TAPES
SFC-98, #60, Sides A and B
CALL TO ORDER
Senator Bert Sharp, Co-chairman, reconvened the meeting at
approximately 4:40 p.m.
PRESENT
In addition to Co-chairman Sharp, Senators Pearce, Phillips,
Donley, Torgerson and Adams were present when the meeting
was reconvened. Senator Parnell arrived shortly
thereafter.
Also Attending: Senator Robin Taylor; Senator Gary Wilken;
Senator Lyda Green; Mike Ford, Legal Services, Legislative
Affairs Agency; Richard Cross, Deputy Commissioner,
Department of Education; Karen Rehfeld, Director, Education
Support Services, Department of Education; Eddy Jeans,
Manager, School Finance Section, Education Support Services,
Department of Education; John Cyr, President, NEA-Alaska;
Ashley Reed; and aides to committee members and other
legislative members.
SUMMARY INFORMATION
SENATE BILL NO. 36
"An Act relating to transportation of public school
students; relating to school construction grants;
relating to the public school foundation program and to
local aid for education; and providing for an effective
date."
Co-chair Sharp reconvened the committee and advised that he
intended to go through the amendments numerically.
Amendment #1 was HELD at the request of Senator Phillips.
Amendment #2 was MOVED by Senator Donley with modification
to line 6, "at least". Senator Torgerson OBJECTION for
discussion. Senator Adams OPPOSES amendment. The committee
should wait for the confidential audit regarding
transportation. Senator Donley briefly responded. Senator
Torgerson asked the funding source and how much it would
cost. (pause on record)
Richard Cross, Deputy Commissioner, Department of Education
was invited to join the committee. Eddy Jeans, Manager,
School Finance Section, Education Support Services,
Department of Education, was invited to join the committee.
Senators Torgerson and Adams requested the approximate cost
for funding pupil transportation. Mr. Jeans indicated that
he did not know the funding costs. A dual system was not
being run in all districts. In response to a further
question by Senator Pearce, Mr. Jeans said it would be
better to contract out the entire system.
Senator Torgerson REMOVED his objection. The objection by
Senator Adams was MAINTAINED. Amendment #2 was ADOPTED by a
roll call vote of 6 - 1 (Sharp, Pearce, Donley, Torgerson,
Parnell, Phillips).
Amendment #3 was MOVED by Senator Torgerson. Senator Adams
OBJECTED. The department would be required to notice in
the Regional Education Attendance Area the amount that had
been allocated as a result of the local contributions. It
further required the department to publish the results of
that contribution in a newspaper of general circulation for
a period of three consecutive weeks. Senator Adams said the
particular taxation and local contribution from REAA's under
AS 14.17.410(b)(3) would render this amendment invalid. The
way the bill was written this was unconstitutional as taxes
only belonged to organized boroughs or cities. Senator
Torgerson indicated that Mr. Ford from Legal Services was
present and could testify as to the legal ground.
Senator Parnell asked if REAA's going to give the same
notice with regards to taxes being paid and being spent on
education? He felt they should also get the same notice.
He felt it was important for everyone to get the proper
notice. Senator Adams said he maintained his objection to
something that was unconstitutional.
Mike Ford, Legal Services, Legislative Affairs Agency was
invited to join the committee. He indicated that he did not
see any problem with this particular amendment. Senator
Adams asked if, according to Senator Adams, AS
14.17.410(b)(3) was unconstitutional? Mr. Ford said that
taxing powers were not being given to REAA's, only notice of
local contribution. The question under SB 36 as drafted
went to how were local contributions to be made, how was
that requirement to be imposed. If imposed indirectly,
which is present situation under SB 36 there were some
uncharted waters. Senator Torgerson asked if a new
amendment had been drafted to correct this matter and Mr.
Ford indicated that one had been drafted for Senator
Torgerson. If that amendment were adopted then they would
be out of the constitutional question.
Senator Adams MAINTAINED his objection. By a roll call vote
of 6 - 1 (Sharp, Pearce, Donley, Torgerson, Parnell,
Phillips) amendment #3 was ADOPTED.
Amendment #4 was MOVED by Senator Torgerson. Senator Adams
OBJECTED. Senator Torgerson indicated that amendment #4
would amend Title 29 and remove therefrom the prohibition
against third class boroughs forming unless they meet the
criteria established, which basically indicates they are an
REAA and meet the other qualifications as already outlined.
Senator Adams said it appeared to him they were trying to
put together a "Christmas tree" bill and forcing different
areas to accept different types of class of organization.
This should be handled under a separate piece of
legislation. Formations of government should not be in a
foundation bill. Senator Torgerson said other pieces of
legislation had been introduced but said they were trying to
fit this in because it most closely fit the regional
education areas. If a third class borough is formed the
assembly could then serve as the school board. If an REAA
is required to make a contribution they should be offered
the opportunity to be a form of government. Co-chair Sharp
said his understanding was that this amendment would revoke
the prohibition for third class boroughs being formed and
allows them the option of forming third class boroughs for
the purpose of school? Senator Torgerson indicated that was
correct. This option was not available before and it is
still not being mandated. Senator Adams MAINTAINED his
objection. By a roll call vote of 6 - 1 (Sharp, Pearce,
Donley, Torgerson, Parnell, Phillips) amendment #4 was
ADOPTED.
Amendment #5 was MOVED by Senator Torgerson. He said it did
not want to be mandated on each district they would be
required to have a superintendent and therefore the
amendment changed the word "shall" to "may". Senator Adams
OJBECTED. By a roll call vote of 6 - 1 (Sharp, Pearce,
Donley, Torgerson, Parnell, Phillips) amendment #5 was
ADOPTED.
Amendment #6 was MOVED by Senator Torgerson. Senator Adams
OBJECTED. Senator Donley MOVED to amend amendment #6, line
fourteen to delete "four" and insert "three". Senator Adams
asked if the fiscal impact of going from "four" down to
"three" was that the winners would now lose one percent of
whatever they would gain? Senator Donley responded.
WITHOUT OBJECTION amendment to amendment #6 was ADOPTED.
Senator Adams continued his OBJECTION to amendment #6. He
MOVED amendment to amendment #6, lines 15 and 16 to strike
"unorganized borough" and insert "State of Alaska". Senator
Phillips OBJECTED. By a roll call vote of 1 - 6 (Adams -
yea) (Sharp, Pearce, Donley, Torgerson, Parnell, Phillips -
nay) amendment to amendment #6 FAILED.
Senator Adams continued his OBJECTION to amendment #6.
Senator Phillips said there were areas in the State that
either did not pay or paid very little by way of their
contribution of assessed property value. Senator Adams said
that he also was a property owner in Anchorage, however, it
was not fair because not everyone in Anchorage paid a
property tax. Senator Parnell concurred with Senator
Phillips that unless all were contribution to education
those areas which were already paying taxes were
contributing for all of Alaska. Unless all contribute there
will be no equity. Senator Adams said that it was mainly
rural Alaska that paid for education because it was their
resources that were used. Anchorage was just a services and
goods area. He noted that there was Federal funding under
PL874 which provided that payment. Senator Phillips also
noted that those renters in Anchorage indirectly paid
through landlords. By a roll call vote of 4 - 3 (Donley,
Torgerson, Phillips, Parnell - yea) (Sharp, Pearce, Adams -
nay) amended amendment #6 was ADOPTED.
Amendment #7 was MOVED by Senator Torgerson. Senator Adams
OBJECTED for discussion.
(Tape #60, side A switched to side B.)
Senator Adams WITHDREW his objection and amendment #7 was
ADOPTED unanimously.
Amendments #8 and #9 were NOT OFFERED by Senator Torgerson.
Amendment #10 was HELD by Senator Phillips.
Amendment #11 was MOVED by Senator Torgerson. Senator Adams
OBJECTED. By a roll call vote of 6 - 1 (Sharp, Pearce,
Donley, Torgerson, Parnell, Phillips - yea) (Adams - nay)
amendment #11 was ADOPTED.
Amendment #12 was MOVED by Senator Torgerson. Senator Adams
OBJECTED. Senator Torgerson MOVED to amend amendment #12,
page two, line twenty to delete "four" and insert "three" as
a conforming amendment. Senator Adams MAINTAINED his
objection. By a roll call vote of 6 - 1 (Sharp, Pearce,
Donley, Torgerson, Parnell, Phillips - yea) (Adams - nay)
amendment to amendment #12 was ADOPTED.
Amendment MOVED amendment #20 as amendment to amendment #12.
Senator Adams OBJECTED. By a roll call vote of 6 - 1
(Sharp, Pearce, Donley, Torgerson, Parnell, Phillips - yea)
(Adams - nay) amendment #20 was ADOPTED.
Returning back to amendment #12, Mr. Ford requested a
conceptual amendment on page 3, line 7 to insert "in the
State". Senator Donley MOVED this conceptual amendment and
WITHOUT OBJECTION it was ADOPTED. By a roll call vote of 5
- 2 (Sharp, Donley, Torgerson, Parnell, Phillips - yea)
(Pearce, Adams - nay) amended amendment #12 was ADOPTED.
(Tape #60, Side B changed to Tape #61, Side A at 6:30 p.m.)
Amendment #13 MOVED by Senator Phillips at the request of
Senator Robin Taylor.
Senator Robin Taylor was invited to join the committee. He
said this amendment was not really a courtesy because this
had been originally in the bill and for some reason had been
left out. He explained the "hold harmless" provision in
case there was a drop in enrollment greater than ten percent
in instructional unit value. The funding for the school
district would drop off smoothly. He noted there was a
three-year transition period. He referred to the impact of
the mill closure in Ketchikan. He noted the same thing was
done in Sitka and Skagway in prior years.
Senator Gary Wilken said this provision had not been part
of the bill and was uncomfortable putting it in.
After further discussion with Senator Torgerson and Co-chair
Sharp, Senator Taylor said he would be happy to bring this
amendment back here or on the floor. Senator Torgerson said
he would like to work with Senator Taylor regarding this
measure.
WITHOUT OBJECTION Senator Phillips WITHDREW amendment #13
contingent that Senators Taylor and Torgerson would work out
any problems.
Amendment #14 was MOVED by Senator Adams. Senator Torgerson
OBJECTED. Senator Adams explained the status of
correspondence students. Senator Wilken said perhaps the
Department of Education should clarify the issue. There
followed miscellaneous discussion with reference to the
correspondence program between Senators Torgerson and
Wilken. It was noted that the correspondence program does
not have any overhead. Senator Torgerson said he MAINTAINED
his objection.
Richard Cross, Deputy Commissioner, Department of Education
was invited to join the committee. He explained the sixty-
five percent reimbursement for the Aleyeska Central School.
The current rate under the present formula for in district
correspondence programs counts them as students in the
largest funded communities so they are treated as any other
student in the district. The department had no comment and
could shed no light as to why there should be a differential
cost for the correspondence students.
Co-chair Sharp asked if there was currently a difference on
correspondence courses for communities not providing
classrooms? Mr. Cross said there had recently been a
significant increase in the number of correspondence
programs and students in the State. This need must be
addressed because the current formula is inadequate.
Version "H" of SB 36 treats in district correspondence
students different from out of district correspondence
students. The department does not understand this rationale
and Co-chair Sharp said he did not either.
Senator Torgerson asked if they supported Senator Adams'
amendment? Mr. Cross said they supported that
correspondence students should be treated the same across
the State. Senator Torgerson asked if the sixty-five
percent funding for Aleyeska was sufficient? Mr. Cross
indicated that by all accounts the Aleyeska Correspondence
program was a highly effective correspondence program in the
State and the students and parents involved speak very
highly of it.
By a roll call vote of 4 - 2 (Torgerson, Adams, Parnell,
Phillips - yea) (Sharp, Pearce - nay) (Donley - absent)
amendment #14 was ADOPTED.
(pause on record)
Amendment #15 was MOVED by Senator Adams. Senator Torgerson
OBJECTED. Senator Adams requested assistance from the
department because this amendment dealt with the bilingual
situation. Senator Phillips said this was one of the soft
areas of the bill and wanted it explored more fully. He did
note that Senator Adams could not address the fiscal note
portion of the bill and it did need to be examined.
Richard Cross, Deputy Commissioner, Department of Education
was invited to join the committee. He explained the
situation of the Lower Kuskokwim School. Certain districts
would qualify for bilingual funding. He explained the
difference in Lower Yukon School and Lower Kuskokwim School
bilingual funding being the difference in the classification
of the students. He said the classification was based on
the definition of "need"; category "A" student does not
speak English. Senator Phillips said he was concerned in
these school English was the secondary language.
Mr. Cross explained the problems with bilingual education.
Under this amendment the categories would be treated equally
and some of the problem would be eliminated. He cited the
big difference from other states was that the bilingual
education did not embrace foreign languages, rather
indigenous languages. Therefore, comparisons to for
instance California were invalid.
Senator Phillips said at this time the numbers could not be
addressed with concern to the fiscal notes. Mr. Cross said
he would have to go back and run amendment in addition to
the others passed this evening. Co-chair Sharp indicated
that most amendments would not impact the fiscal notes.
Senator Parnell felt the department should consult with the
sponsor of the amendment. Senator Adams indicated that he
would withdraw amendment #15 and asked that the department
however make their run including the amendment and give the
results to the committee. Co-chair Sharp asked the
department if this was possible and Mr. Cross said it could
be done. Co-chair Sharp concurred with the request of
Senator Adams.
WITHOUT OBJECTION Senator Adams WITHDREW amendment #15.
Amendment #16 was MOVED by Senator Adams. Senator Torgerson
OBJECTED. Senator Adams explained that it was a simple
technical amendment. By a roll call vote of 1 - 6 (Adams -
yea) (Sharp, Pearce, Donley, Torgerson, Parnell, Phillips -
nay) amendment #16 FAILED.
Amendment #17 was MOVED by Senator Torgerson. Senator Adams
OBJECTED. He maintained that the McDowell study was flawed.
By a roll call vote of 6 - 1 (Sharp, Pearce, Donley,
Torgerson, Parnell, Phillips - yea) (Adams - nay) amendment
Amendment #18 was MOVED by Senator Torgerson. Senator Adams
OBJECTED. By a roll call vote of 6 - 1 (Sharp, Pearce,
Donley, Torgerson, Parnell, Phillips - yea) (Adams - nay)
amendment #18 was ADOPTED.
(Tape #61, side A switched to side B.)
Amendment #19 was MOVED by Senator Torgerson. Senator Adams
OBJECTED - OBJECTION WITHDRAWN. Senator Torgerson explained
situation with Mt. Edgecombe School. With this amendment
they would be treated as if they were a school in a school
district and would have a slight gain in their funding.
WITHOUT OBJECTION amendment #19 was ADOPTED.
Co-chair Sharp advised that amendment #20 was already
decided in conjunction with amendment #12.
Amendment #21 was MOVED by Senator Parnell. Senator
Phillips OBJECTED. Senator Parnell voiced concern about
equitable funding within a school district. The amendment
would add a purpose section to ensure this equity. Senator
Pearce asked if "equitable" was defined somewhere in law?
Senator Parnell said no.
Senator Adams voiced support to the question by Senator
Pearce. He proposed an amendment to amendment #21, line 5,
after the word "funding" add "from the State". It should
read "...an equitable level of funding from the State to
each school within a school district." Senator Parnell
OBJECTED. An equitable level of funding would already be
achieved via this vehicle. Senator Adams felt it should be
stated more directly. By a roll call vote of 2 - 5 (Adams,
Donley - yea) (Sharp, Pearce, Torgerson, Parnell, Phillips -
nay) amendment to amendment #21 FAILED.
Following a brief discussion Senator Adams WITHDREW his
objection to amendment #21. WITHOUT OBJECTION amendment #21
was ADOPTED.
(at ease)
Senator Torgerson asked that amendment #1 be HELD. Senator
Phillips concurred.
Mr. Cross noted for the committee that transition language
changes would change the department's runs. He specifically
noted amendment #12. Senator Torgerson said assumptions
used should come from the Department of Labor. Co-chair
Sharp further said that the change in runs would be affected
by three percent. In response Senator Torgerson added that
some adjustments have been made.
Mike Ford, Legal Services, Legislative Affairs Agency was
invited to re-join the committee. Senator Torgerson queried
re REAA's and their contribution. Mr. Ford responded that
he was still working on this. Money cannot be dedicated
that was collected. It would have to be separately
accounted for. The formula would redistribute money to all
districts accordingly. The money is put into the public
school account and then redistributed to the districts.
Co-chair Sharp asked how this differs from the local
contributions of the municipalities? Mr. Ford said that was
correct because they collect their monies and they make
their contributions. However, REAA's did not collect money.
The State collected from the REAA's.
Senator Torgerson said in reality it would be the same
numbers, whether dispersed directly back to the REAA's,
which cannot be done because of the dedicated fund issue, it
would still be the same effect.
Mr. Cross explained that the dilemma in providing runs was
that the department needed to know what to do with the
approximate twelve million dollars of taxes that would be
collected from the REAA's. Their understanding that even
though there was to be an accounting as to where the money
came from it only says that the money would be appropriated
to the public school account. Senator Torgerson said it
could be directed that "...it may be appropriated back to
the REAA's and reduce their State effort by the same
amount." The end result would be that the same amount would
go into the school fund. Mr. Cross said that if the twelve
million dollars were added and then distributed that money
was being redistributed to all the districts in the State.
Therefore, the REAA's would not get the taxes back that they
have collected. They would only get whatever proportion the
foundation formula entitled them to of that amount back.
This would make a significant difference in the runs.
Co-chair Sharp indicated that he knew now the difficulty in
the department making a run not knowing what the
contribution from individual districts would be.
Mr. Jeans explained further. He said as the bill was
presently drafted it did make a deduct for the three percent
wage tax. Therefore, State aid to those districts would be
reduced by that three percent. If that money was dumped
back in it was spread across the State and did not go back
to the areas that generated the revenue. There is no
mechanism in any of the amendments or the current bill to
give that money back to the REAA's which generated that
revenue.
(at ease)
Following a brief at ease, amendment #1 was MOVED by Senator
Phillips. Senator Adams thought they were still dealing
with REAA's. Co-chair Sharp said they would return
following this amendment.
Senator Adams OBJECTED to amendment #1. By a roll call vote
of 6 - 1 (Sharp, Pearce, Donley, Torgerson, Parnell,
Phillips - yea) (Adams - nay) amendment #1 was ADOPTED.
Senator Torgerson asked about the amount of State aid to be
reduced by local effort. Mr. Ford indicated that one had to
be careful with semantics because there were two coffers of
money to be appropriated by the State.
Mr. Cross had a further question for clarification by the
committee. He referred to page fourteen, line twenty-eight
of the spreadsheet. Could they redraw REAA boundaries?
Senator Torgerson said there was no intent to create more
REAA's.
Senator Adams asked who would collect the three- percent
tax? Mr. Cross said they were asking the combined efforts
of the Departments of Revenue, Labor and Law to deal with
this.
Co-chair Sharp thanked the committee and those participating
this evening for their diligent efforts. He said they would
reconvened the committee again tomorrow morning at 10:00
a.m. and if needed would continue again in the afternoon
after the 4:30 p.m. meeting. He cautioned everyone that the
committee would create their own fiscal notes if not
provided timely by the departments.
ADJOURNMENT
Co-chair Sharp adjourned the committee until 10:00 a.m.
tomorrow.
SFC-98 -10- 3/3/98
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