Legislature(1997 - 1998)

03/04/1998 05:30 PM Senate FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
txt
MINUTES                                                                        
SENATE FINANCE COMMITTEE                                                       
4 March 1998                                                                   
5:30 p.m.                                                                      
                                                                               
                                                                               
TAPES                                                                          
                                                                               
SFC-98, #64, Sides A and B                                                     
                                                                               
                                                                               
CALL TO ORDER                                                                  
                                                                               
Senator Bert Sharp, Co-chairman, reconvened the committee at                   
approximately 5:30 p.m.                                                        
                                                                               
                                                                               
PRESENT                                                                        
                                                                               
In addition to Co-chairman Sharp, Senators Pearce, Phillips,                   
Donley, Torgerson, Parnell and Adams were present when the                     
meeting was reconvened.                                                        
                                                                               
                                                                               
Also Attending: Senator Gary Wilken; Representative Gene                       
Therriault; Representative Con Bunde; Deborah Vogt, Deputy                     
Commissioner, Department of Revenue; 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; Dwight                    
Perkins, Special Assistant to the Commissioner, Department                     
of Labor; John Cyr, President, NEA-Alaska; Dave Tonkovich,                     
Fiscal Analyst, Division of Legislative Finance; 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.  He noted that                        
there were plenty copies of the new CS on the back table for                   
public scrutiny.  Spreadsheets were also available.  Several                   
items needed to be discussed at this meeting.  Among them                      
was the bilingual situation brought up earlier by Senator                      
Adams.  Senator Torgerson also had some topics for                             
discussion.  First topic for discussion would be the                           
bilingual issue.                                                               
                                                                               
Richard Cross, Deputy Commissioner, Department of Education                    
was invited to join the committee.                                             
                                                                               
Senator Adams asked Mr. Cross to explain the runs as regards                   
to his amendment #15 if it were to be included in the bill.                    
                                                                               
Mr. Cross explained the runs done.  He said Mr. Jeans would                    
walk the committee through them.                                               
                                                                               
Eddy Jeans, Manager, School Finance Section, Education                         
Support Services, Department of Education was invited to                       
join the committee.  He explained the department's                             
spreadsheet dated 4 March 1998.  Page one listed the "A",                      
"B", "C" categories of the bilingual program and the number                    
of students projected in each of those categories.  Criteria                   
to qualify for additional funding was that there was at                        
least fifty percent students in these categories when                          
compared to the average daily membership.  He referred to                      
column "H" on page one.  For the Lower Kuskokwim School to                     
come up with adjusted students plus special education, which                   
would have been added into the district's adjusted ADM in                      
column "T", the distribution was run based on the new                          
Statewide adjusted ADM.  Because of the increases in Lower                     
Kuskokwim and Yupiit a redistribution of funds was required,                   
shown on page two.  Lower Kuskokwim would now generate an                      
approximate additional $2.4 million over the current                           
foundation formula, as shown on page 2, column "F".  Yupiit                    
School would have an additional $318,000 over the current                      
foundation program.  In response to Senator Torgerson the                      
rest of the pages were the same calculations the committee                     
had been walked through previously.                                            
                                                                               
Senator Torgerson asked for a brief description of                             
categories "A", "B", "C" and how students move from one                        
category to another.  Were all three categories being                          
treated the same as far as per student dollar?                                 
                                                                               
Mr. Jeans said the impact of this amendment there would be                     
no difference between the monetary value received for a                        
category "A", "B" or "C" student.  An "A" student was                          
generally a student that did not speak English and there was                   
very little English spoken in the home.  A "B" student spoke                   
some English, however was not the dominant language and it                     
could nor could not be spoken at home.  A "C" student was a                    
lesser degree and there was still multiple language both in                    
the home and spoken by the student.                                            
                                                                               
Senator Torgerson asked how SB 36 treated these students.                      
Mr. Cross said SB 36, without this amendment, would block                      
funds for all special needs at twenty percent.  It basically                   
said all districts have equal needs in these categories.                       
Senator Torgerson asked, under current methods, what would                     
be the difference in the funding.  Mr. Jeans said under the                    
current foundation program it would take twenty-four                           
students to generate one instructional unit for category "A"                   
or "B".  Category "C" would take one hundred nineteen                          
students to generate one instructional unit.                                   
                                                                               
Senator Phillips asked if there were Statewide criteria to                     
determine these categories and was it set at Federal, State                    
or local levels?  Mr. Cross said in the application of the                     
Federal bilingual tests for these types of programs and                        
testing for language dominance the State of Alaska was very                    
different from California.  There are no effective dominant                    
tests for some of the indigenous language within Alaska and                    
therefore the method of testing for categories "A", "B" and                    
"C" is done district by district through a program approved                    
by the department.  There is some flexibility in the testing                   
due to the fact that some of the indigenous language tests                     
used in Alaska simply did not exist on the Federal level.                      
                                                                               
Senator Pearce asked what the schools receiving money for                      
the bilingual programs were doing.  Were they offering                         
immersion English programs?  Were they using it to teach the                   
language to the non-native?  Mr. Cross said there were                         
different approaches used in different districts.  It varied                   
from village to village depending on how the indigenous                        
language was used.  Senator Pearce asked if the funds could                    
be used to save the native languages?  Mr. Cross said this                     
was somewhat controversial in the bilingual programs.  Some                    
argue that it is a legitimate use of funds and others follow                   
the Federal guidelines strictly which says that it isn't.                      
He would suggest that it was an area that Federal rules for                    
bilingual programs, which really were designed for                             
immigrants and foreign languages, simply did not apply to                      
the situation in rural Alaska.                                                 
                                                                               
Senator Phillips asked how one of the three categories was                     
determined for an individual.  Mr. Cross explained.  He said                   
there were tests for proficiency, however it was not as                        
straightforward as in testing for Spanish or French.  The                      
determination as to what category the student will go to is                    
made in accordance with the structure as approved by the                       
Department of Education.                                                       
                                                                               
Senator Torgerson said he needed further explanation of the                    
formula.  He referred specifically to page two of the                          
spreadsheet.  Mr. Jeans explained the increased adjusted                       
ADM.  Lower Kuskokwim School district has many schools which                   
go through the size adjustment tables.  He referred to page                    
three, column  "H".  Senator Torgerson said he was dividing                    
the per student out to see what the students were actually                     
getting and to see if equitable fairness was being achieved.                   
He outlined for the committee that a student in Anchorage                      
would receive $4,023; Kenai would receive $4,202; Sitka                        
would receive $3,969; and Lower Kuskokwim would receive                        
$19,138.  Mr. Jeans said these numbers could basically be                      
correct.  Senator Torgerson said he would continue to check                    
the figures.                                                                   
                                                                               
Senator Adams said the amendment for bilingual education                       
would help not only rural Alaska but also urban Alaska,                        
since Anchorage claims eighty-two different languages.  He                     
noted for the benefit of his counterpart that the $19,138                      
for a student in Lower Kuskokwim was still cheaper than the                    
cost spent on the Alaskan Youth Corps.                                         
                                                                               
Amendment #15 was MOVED by Senator Adams.  Senator Torgerson                   
OBJECTED.  Senator Adams said this was the same bilingual                      
amendment as discussed last night.  He felt it was                             
worthwhile and that bilingual plays a great part in                            
education no matter where one is.                                              
                                                                               
Senator Phillips commented on the disparity pointed out by                     
Senator Torgerson.   There followed miscellaneous comments                     
by various committee members.  Mr. Jeans said there were                       
many adjustments occurring in the formula.  As one deals                       
with larger schools, going through the size adjustment                         
tables, they are not enjoying or possibly are enjoying the                     
size adjustment at the same level rural schools, which are                     
much smaller, are going to enjoy.  Looking at Lower                            
Kuskokwim, the size adjustment factor is 1.49, whereas                         
Anchorage has 1.0.  Each adjustment they go through                            
compounds the student count therefore generating more                          
additional dollars for that community or school district.                      
Senator Phillips advised that his aide identified the per                      
student cost figure for Lower Kuskokwim at $11,271 and                         
Senator Torgerson concurred.  But even with this correction                    
he noted the cost was approximately triple.                                    
                                                                               
(pause on record)                                                              
                                                                               
Senator Wilken with reference to amendment #15 said it was                     
not a small technical amendment but rather a big amendment.                    
It would put the State right back into the job of dealing                      
with categorical funding.  One of the goals of the bill,                       
however, was fairness and simplicity.  He noted a growth in                    
categorical funding that far exceeds the growth in students.                   
Special education had grown double; bilingual/biculture had                    
grown at four times the rate.  That is money that does not                     
go into regular programs.  SB 36 shows that the State                          
provides equal funding categorically across the State.                         
Through this bill school boards would get to decide what was                   
important and decide where they would like to spend their                      
money.  Everyone would be provided a twenty percent                            
foundation upon which they build a categorical program and                     
they can put different priorities to whatever they wish.                       
Anymore than the twenty percent they get it will have to be                    
funded locally.  If the amendment is accepted in ten years                     
they will be back with the same problem, which is inflated                     
dollars because of inflated definition.  He believed the                       
concerns of Senator Adams could be addressed otherwise                         
rather than through the formula.                                               
                                                                               
Senator Adams concurred that the local school boards should                    
have the options on how to spend money.  However, in order                     
for them to be able to spend money they need money.  There                     
is no fairness, particularly when the North Slope is getting                   
zero out of this.  Senator Wilken responds.  Education is                      
the responsibility of the State and the burden of that                         
responsibility must be spread fairly throughout the State.                     
                                                                               
Senator Adams reminded the committee that the North Slope                      
Borough has the second highest taxes even before Fairbanks.                    
There is a misconception the North Slope can support itself.                   
                                                                               
By a roll call vote of 1 - 6 (Adams - yea) (Sharp, Pearce,                     
Donley, Torgerson, Parnell, Phillips - nay) amendment #15                      
FAILED.                                                                        
                                                                               
Amendment #22 was MOVED by Senator Torgerson.  The amendment                   
would ensure no new REAA's.  Senator Adams OBJECTED.  By a                     
roll call vote of 6 - 1 (Sharp, Pearce, Donley, Torgerson,                     
Parnell, Phillips - yea) (Adams - nay) was ADOPTED.                            
                                                                               
Amendment #23 was MOVED by Senator Torgerson.  The amendment                   
would clarify that any tax collected in a specific REAA                        
would be credited toward that REAA.  Senator Adams OBJECTED.                   
By a roll call vote of 6 - 1 (Sharp, Pearce, Donley,                           
Torgerson, Parnell, Phillips - yea) (Adams - nay) was                          
ADOPTED.                                                                       
                                                                               
Amendment #24 was MOVED by Senator Adams.  Senator Sharp                       
OBJECTED.  Senator Adams explained that the amendment                          
deletes the requirement for REAA's to contribute to the cost                   
of school construction.  Presently they contribute two                         
percent.  Senator Torgerson also OBJECTED.  Senator Donley                     
felt the amendment was serious discrimination towards urban                    
areas.  He said most of the urban areas when doing school                      
construction were fortunate enough to get State assistance                     
or a bond.  They were also contributing at least thirty                        
percent locally.  Now, he would like to see that gap closed.                   
                                                                               
Senator Adams responds.  Going back three or four years,                       
those urban areas that could post bonds have received                          
approximately $203 million, whereas in areas such as REAA's                    
they have received only $7.3 million.  There is inequity                       
there as regards to school construction.                                       
                                                                               
Co-chair Sharp clarified that the amendment would insert                       
school construction and new sections regarding new school                      
construction.  Senator Donley continued to feel there were                     
serious inequities now in the system that discriminates                        
against urban areas.  The urban areas pay a tremendous                         
percentage as compared to rural areas.  The department has                     
developed a system which continues to discriminate against                     
the urban areas by not counting students in "portables" as                     
"unhoused".  He said it was very difficult to rise up on the                   
priority list of the Department of Education.  It was so bad                   
that for many years the Anchorage school district did not                      
bother to submit projects because they felt they were being                    
discriminated against the way the formula was developed.                       
They felt they would not even be considered to get any                         
construction dollars.  He said his district cared enough                       
about their children to tax themselves to construct schools.                   
                                                                               
Senator Adams said Senator Donley's district was lucky to                      
have "portable" classrooms.  Most of his constituents do not                   
have "portables" and do not have State facilities.  Most are                   
still located in old BIA schools buildings.  If REAA's had                     
the ability they would also tax themselves.  Most of their                     
dollars come from Federal funds under PL874.                                   
                                                                               
Senator Donley noted that folks in REAA's had the                              
opportunity to form themselves into boroughs in order to                       
contribute towards their local expenses themselves.  Senator                   
Adams asked that if some of the poorest districts did form a                   
borough what would they tax?                                                   
                                                                               
By a roll call vote of 1 - 6 (Adams - yea) (Sharp, Pearce,                     
Donley, Torgerson, Parnell, Phillips - nay) amendment #24                      
FAILED.                                                                        
                                                                               
(Tape #64, Side A switched to Side B.)                                         
                                                                               
Amendment #25 was MOVED by Senator Torgerson.  Senator Adams                   
OBJECTED.  Senator Torgerson explained the thrust of the                       
amendment would be to delay the starting date of the                           
employment tax for local contribution in unorganized Alaska                    
until the year 2001.  He outlined several reasons for doing                    
that.  One of the fiscal notes received from the Department                    
of Revenue outlined that it would be very difficult to                         
implement the local effort by 1 January 1999.  They                            
recommended the effective date be changed to 1 January 2000.                   
For the benefit of those watching KTOO he read the amendment                   
into the record.  Senator Adams said he opposed any tax on                     
any group, especially those in his district.  He wanted a                      
definition from the sponsor of the amendment explaining                        
employment tax.  Would it be the wages they earn?  Or                          
perhaps the check a retired person gets on a monthly basis                     
would be taxed?  Or one of the elders that receives only a                     
Permanent Fund Dividend would be taxed on that?                                
                                                                               
Senator Torgerson said those questions were already laid out                   
in the bill and he would not be changing that with the                         
amendment.                                                                     
(pause on record)                                                              
                                                                               
Co-chair Sharp indicated that some of the problems cited by                    
the Departments of Labor and Revenue in their fiscal note                      
would also be addressed.                                                       
                                                                               
Senator Parnell asked if there would be any general fund                       
costs generated?  Senator Torgerson said his main concern                      
was what the Department of Revenue was talking about with                      
regards to notification of employees as far as the fiscal                      
note was concerned.  Co-chair Sharp again reiterated a                         
significant impact on fiscal notes.    Senator Adams noted                     
that based on the fiscal note from the Department of Labor                     
new runs would have to be made.                                                
                                                                               
In response to a question by Senator Pearce, Senator                           
Torgerson said that by the year 2001 they would begin to                       
collect the tax and by the year 2002 there would be full                       
implementation.                                                                
                                                                               
By a roll call vote of 6 - 1 (Sharp, Pearce, Donley,                           
Torgerson, Parnell, Phillips - yea) (Adams - nay) was                          
ADOPTED.                                                                       
                                                                               
Senator Torgerson requested a brief at ease.  Co-chair Sharp                   
concurred but asked no one leave the room.                                     
                                                                               
(at ease)                                                                      
                                                                               
Senator Donley MOVED to RESCIND committee action in adopting                   
amendment #14.  Senator Adams OBJECTED.  Senator Torgerson                     
indicated that he originally voted for the amendment,                          
however, since has been told that under indistrict costs the                   
district provides classroom space and provides additional                      
things that Statewide correspondence was not required to                       
provide.  There is additional cost for the district versus                     
Statewide correspondence.  He said he would be supporting                      
the motion.   By a roll call vote of 6 - 1 (Sharp, Pearce,                     
Donley, Torgerson, Parnell, Phillips - yea) (Adams - nay)                      
committee action on amendment #14 was RESCINDED.                               
                                                                               
Co-chair Sharp advised that the amendment was now again                        
before the committee for consideration.  Senator Donley said                   
he objected to the main motion.  By a roll call vote of 1 -                    
6 (Adams - yea) (Sharp, Pearce, Donley, Torgerson, Parnell,                    
Phillips - nay) amendment #14 FAILED.                                          
                                                                               
Senator Torgerson requested a brief at ease.  Co-chair Sharp                   
concurred but asked no one leave the room.                                     
                                                                               
(at ease)                                                                      
                                                                               
Senator Torgerson explained a brief discussion between                         
committee members regarding boarding school students.  He                      
noted there was a problem with Galena as they were taking                      
some of the profit from the Statewide correspondence and                       
funding a boarding school operation.  He has always                            
supported boarding schools as has the Legislature over the                     
years, however they have never funded it the same as Mt.                       
Edgecombe.  He wanted to see if there was a quick fix                          
amendment.  Since that could not be accomplished this                          
evening he will have an amendment he could offer in Rules or                   
on the Floor tomorrow.  Senator Wilken and Eddy Jeans will                     
meet with him early tomorrow morning to try and work out                       
some solution.                                                                 
                                                                               
Co-chair Sharp asked if that would change the values of the                    
bill.  Senator Torgerson said possibly it could, but at this                   
time he did not understand how they would fix it.  Therefore                   
he would try to work this out.  Co-chair Sharp explained the                   
procedure he wanted to follow.  He did not want to send the                    
Department back to the drawing board with a new CS embracing                   
new values to make new runs and then it would need to be                       
changed again.  He wanted to make the changes here and send                    
the bill to the Floor by Friday.  Senator Torgerson said                       
this amendment would not require a title change and perhaps                    
it could be addressed in the House.  Co-chair Sharp said he                    
would rather legitimize the operation in Galena because it                     
was a good operation.                                                          
                                                                               
                                                                               
Co-chair Sharp outlined the schedule for tomorrow morning.                     
The oil and gas hearing was for legislators                                    

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