Legislature(1997 - 1998)
03/09/1998 10:35 AM Senate FIN
| Audio | Topic |
|---|
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
MINTUES SENATE FINANCE COMMITTEE 9 March 1998 10:35 a.m. TAPES SFC-98, #70, Side A CALL TO ORDER Senator Bert Sharp, Co-chairman, convened the meeting at approximately 10:35 a.m. PRESENT In addition to Co-chairman Sharp, Senators Pearce, Phillips, Donley, Torgerson, Parnell and Adams were present when the meeting was convened. Also Attending: Senator Gary Wilken; Richard Cross, Deputy Commissioner, Department of Education; Eddy Jeans, Manager, School Finance Section, Education Support Services, Department of Education; John Cyr, President, NEA-Alaska; Carl Rose; 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-chairman Pearce convened the committee and outlined the schedule. She noted they would meet on 18 March at 10:00 a.m. prior to the Floor session at 2:00 p.m. There was no meeting scheduled for Tuesday, 17 March. She said there would be session Friday, 13 March. (pause on record) Co-chairman Sharp called the committee back to order and introduced SB 36. He said everyone should have the work draft from of the new CS "Q" version, dated 3/6/98. Also there should be a new spreadsheet from the Department of Education dated 3/9/98 including a new fiscal note and a new audit report dealing with pupil transportation from Legislative Budget and Audit. Richard Cross, Deputy Commissioner, Department of Education was invited to join the committee. He said the three runs accompanying version "Q" were explained in his cover memorandum dated 3/9/98. He noted that the values the runs generate were covered in that. Page 7, line 21 the value should be changed to $3,944; page 21, line 13 the value should be changed to $3,888; and page 21, line 12 the value should be changed to $3,855. The attached runs were supporting documents of why the changes were made. Co-chair Sharp asked if the dates would remain the same and Mr. Cross responded that was correct. He said the only other value they were asked to provide was the differential for intensive needs students. They had tried to deal in whole numbers. Co-chair Sharp asked if the fiscal note for pupil transportation amendment as included remained the same? Mr. Cross responded that it did. Co-chair Sharp asked to revisit the quality school proposal. He wanted to know what the fiscal note would be for the first year and the years thereafter as proposed in amendment was the one developed for SB 257 in the amount of $3.6 million in the first year, and similar but slightly declining amounts across the years. In response to a question by Senator Phillips, Mr. Cross indicated that the #24.1 million added to the foundation by the Governor would go to districts to cover implementation and district expenses. Co-chair Sharp said with that response it cleared up some of his misunderstanding. Mr. Cross said the lion's share of the $3.6 million was in an assessment area and some is in reporting on that assessment. That also included the cost of implementing the quality initiatives. The additional $24.1 was the cost of the foundation. The department has argued that if they are asking districts to improve and increase standards by having students that are better readers, writers and better at math, that they will provide the resources for that effort. Senator Torgerson asked if the $24.1 million would be an increase in the old unit value? Mr. Cross said that SB 257 increased the instructional unit value and that is what would generate the lion's share of the $24.1 million. He explained that some was resources for special education and to not cut districts during the transition time. He further explained SB 257 modifications to existing foundation formula were an incremental or gradual departure from it and not a complete rewrite. Senator Torgerson asked about the block funding for special education. He asked how much money it was and what the program did. Mr. Cross said that SB 257 did not block fund bilingual/bicultural education but it does special education, with the exception of intensive needs students. It used a study done by educators throughout the State several years ago with special education leadership. He said no funds were distributed for special education or gifted and talented. Senator Torgerson further referred to page 7 of 8, spreadsheet dated 3/9/98, which showed room under local cap. He said in his district that they had been tight against the cap for a number of years. At present they show they are under the cap. He asked for an explanation of how they got to that number. Mr. Cross said the language in the bill was used and by using the two mills or twenty-three percent allowable excess gave the room under the cap that they did not have before. Senator Torgerson asked if the two mills or twenty-three percent was existing statute? Mr. Cross indicated that was correct. Senator Torgerson said his district would get more State aid under the present proposal and would that allow the district to put more money in? Mr. Cross indicated that was also correct. He explained the redistribution that occurred in SB 36 allowed for greater local effort because there was greater State effort for some districts. Senator Torgerson asked about the impact of SB 36 on Federal disparity and wondered if this was still within Federal guidelines. Mr. Cross said that no disparity calculations on the full implementation of SB 36 had been run. He was not sure what the outcome of those calculations would be. Senator Torgerson told the committee that he felt a response as to the Federal disparity was an important component to the bill. It would not allow goals to be accomplished if in the process of putting together SB 36 they were out of compliance with Federal rules. He asked the Co-chair to order up a run based on the Federal disparity. Co-chair Sharp asked Mr. Cross what mechanics might be included in getting that request done. Mr. Cross said Mr. Jeans would have to answer that request. Eddy Jeans, Manager, School Finance Section, Education Support Services, Department of Education was invited to join the committee. In response to Co-chair Sharp he advised the committee that a disparity could be run based on the information contained in the spreadsheets and the committee substitute as it stands. Mr. Cross further explained that their concern with disparity before had to do with taxation and that issue significantly complicated the whole disparity issue. Now that issue has been removed from the bill the test can be applied. Mr. Jeans said he felt the run could be completed today. He would do his best to meet a 4:30 p.m. deadline. Co-chair Sharp kindly requested he do his best "one more time". Senator Adams asked that in staying with disparity this foundation formula tried to take away public school funds from districts that have predominantly native students. Mr. Cross said the department was in the process of taking a look at that assumption. It was not an issue, however, that had to do with the Federal disparity test. That was only a test to see how resources were distributed and dealt with equal protection. Senator Adams asked they also view violation of the 1964 Federal Civil Rights Act. Mr. Cross said they would do an analysis by district of the race/ethnic/social economic factors and compare them to the winners and losers. Senator Adams said in looking at the "Q" version now before the committee he would have to advise his constituents the following: (1) the three percent income tax is now out; (2) third-class borough option is out; (3) zero funding for the North Slope Borough is still out; (4) capping the category programs is still in; (5) a consolidation provision is still in; (6) 70/30 provision is still in with a waiver provision; (7) employment of chief administration is optional; and (8) section 40(a) which does not take place until there is mandatory boroughs. Mr. Cross responded that he did not think Senator Adams had forgotten anything. However, in the runs the department did, the three boroughs (Alaska Gateway, Yupiit and Kashunamiut) that were turned into six because the language in the amendment was removed were consolidated. He said the bill, as the department understood, did not consolidate any districts, however, the companion bill, section 40, might very well do that. Senator Adams asked Mr. Cross to again review the fiscal note with a $50 million add-on. Mr. Cross said they were asked to provide a run showing unadjusted ADM's and adjusted ADM's through various scenarios and looking at the existing foundation, State aide, SB 36 State aide, local contribution per unadjusted ADM and then adding $50 million into the existing foundation formula and SB 36. He noted that explanation was attached to the fiscal note. He noted that even with $50 million added into SB 36, twenty-three districts would still lose money and ten districts would lose more than ten percent. The Lower Yukon school district would still lose over $5 million. Senator Adams said that under these circumstances they were working on a "flawed" SB 36. Co-chair Sharp said the present formula was flawed because one could see that even by adding another $50 million and how distorted the distribution of that $50 million would be under the existing formula. He referred to the Fairbanks school district and with the $50 million extra they would only get $38 more per real student, whereas Tanana would get $700 more per real student. He did not think that was fair and noted that more dollars added to the existing formula the distortion just gets larger and larger. If there was going to be new dollars added it was necessary to fix the problem before more dollars were added to get more distortion. To fix a problem there was always going to be winners and losers. It cannot be guaranteed that a past distortion in a foundation formula that is based on bad data by holding the losers harmless was not fixing the problem. That was only continuing the problem. He noted that the same organization that gathered the data regarding this matter in 1985 and now has reanalyzed the data on the economic justification of all the fudge factors in a formula and they find that the formula is out of whack and there is good justification on the data that they presented to us on every element. They've allowed for small school adjustments, which a lot of the rural schools have. To say those that are losing are being screwed is a fabrication. The one's that have been had over the last ten years are the larger ones who are getting less and less per real student. One can't be held harmless on a formula that is so bad and then continue pouring more money into it. That does not fix anything. He said he was sick and tired of hearing political posturing that this bill, because it fixes inequalities on the actual costs of operating a school over all Alaska, based on new data, is punishing some and rewarding others. The application of putting $50 million as an illustration purposes to find out where that money would go is very mind-boggling of what would happen if it were actually put in the present formula. Senator Adams said one of the things if they were talking about equity and fairness with this piece of legislation, we shouldn't be robbing from one school district or taking it away from areas that have, perhaps, a low report card area. We should be trying to help those school districts and make sure all school districts are taken care of. That is where he was hoping the bill would get to. But it is not getting that way. It is hurting school districts in the North Slope Borough that pays the second highest tax, which puts forty- four percent of its money into education. Why hurt those districts that try to help each other. Lower Kuskokwim is another. We are taking twenty-five percent of their money away when we should be helping them. That's one of the things he said he would like to see if they were going to be fair and equitable. However, it was not being reached by this piece of legislation. Senator Donley said a lot of the defense or opposition to the bill begs the question as to whether the existing formula was fair. There are a lot of assertions, which somehow implies that they are arguing the existing formula is fair. This is not a fair formula. This formula was not adopted in a reasonable manner. It is unpretty history how this existing formula came to be. It is not something to be proud of as a State government. It certainly has resulted in incredible unfairness to...now we are finding out eighty- six percent or eighty-two percent of the children in Alaska. This is not something people should be defending. Frankly, he said he was incredibly disappointed it has taken us this long in political courage to step up to the plate and point out how unfair most of the children in Alaska have been treated under this formula for over a decade. Co-chair Sharp said the committee would return at 4:30 p.m. this afternoon. The new CS had been available since the weekend, however, since most were not here, he wanted to make sure everyone had a chance to follow through on the major changes they made late last week. He mentioned that the fiscal notes from the Departments of Labor and Revenue have resulted in zero fiscal notes now they have taken out some of the major tax issues and cost factors that would have influenced those two departments of State government. The drafters would still have to load in the new figures Mr. Cross has given the committee. He wanted to make sure that anything before the committee that they may consider moving out the actual numbers were in the CS. He requested any amendments be presented this afternoon. He said he did not get a chance to see any ripple effect of what was taken out as far as reference to boroughs and the taxes. He would like a little time to look at that. He indicated that after the 4:30 p.m. meeting they would get back to SB 36. Senator Phillips asked if it was the Co-chair's intent to move the bill out tonight. Co-chair Sharp indicated that it was so that it could be read across on the Senate Floor in the morning. Senator Adams indicated that one of his requests of the Department of Law was the constitutionality of the new version "Q" because it did have some areas of concern having to do with equal protection clause, the disparity clause, the Federal Civil Rights Act of 1964 and a violation of the State's Human Rights Act of AS 18.80.255. He said he knew the Co-chair had taken the matter under consideration and encouraged him to continue to do so. Senator Parnell said he was also deeply disturbed over representations made relating to rural versus urban splits. He said that Senator Adams charged that this was somehow race-based. That was a charge that was objectionable and despicable. There was certainly no motivation around the committee table that he was aware of related to either of those two things. In the bill, twenty to twenty-three rural districts benefit and seven to ten urban districts benefit, depending on how rural and urban is defined. The largest village of minorities in Alaska is Anchorage, who benefits substantially. He said he believed that of those twenty to twenty-three rural districts that minorities benefit there as well. He said he could not stomach somebody claiming that anything here is race-based or inequitably distributed based on race. He felt that would be borne out. Finally, at latest count he said eight-two percent of all Alaska's children benefit financially and directly from this piece of legislation. He said one hundred percent of Alaska's children benefit from a more equitable funding formula, because where there's discrimination against one there is discrimination against all. The current formula simply perpetuates that inequity. The goal has been achieved in the legislation by more substantial strides towards that goal of a simpler and fairer foundation formula. He said he thought this was landmark legislation. It is time that it was done. He appreciated the Co-chair's latitude. Co-chair Sharp said he apologized for his harsh attitude but said it was just a reaction to some of the things that have been said on politicians posturing themselves on this issue, who may be running for reelection. He said that really bothered him. Senator Adams in response to Senator Parnell said that if his counterpart wished to quelch his statements to the two things he said regarding Federal and civil law, then the Department of Law should be here. We should not be taking care of just eighty-two percent of the children. We should be taking care of one hundred percent. Anchorage is the largest native village around. But his child, who is a native child, would say to him that he did not want to rob another child's education money. That should be stated here. He did not think PTA's, school board members in Anchorage would say it was good to rob some other school districts so they could have a higher education in Anchorage. That is not what they are saying. Parents around the State seem to be saying they should have equity funding all over the State of Alaska. Don't rob from another school district. Senator Phillips said the current foundation formula is broken and we should have at least the political courage to look at this and that is exactly what they were attempting to do. Co-chair Sharp thanked the committee for their time. He noted they would look at the rest of the bill at 4:30 p.m. ADJOURNMENT Co-chair Sharp recessed the committee until 4:30 p.m. SFC-98 -8- 3/9/98
| Document Name | Date/Time | Subjects |
|---|