Legislature(1997 - 1998)
03/09/1998 05:35 PM Senate FIN
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* first hearing in first committee of referral
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+ teleconferenced
= bill was previously heard/scheduled
MINUTES
SENATE FINANCE COMMITTEE
9 March 1998
5:35 p.m.
TAPES
SFC-98, #72, Side A
CALL TO ORDER
Senator Bert Sharp, Co-chairman, reconvened the meeting at
approximately 5:35 p.m.
PRESENT
In addition to Co-chairman Sharp, Senators Phillips,
Torgerson, Parnell and Adams were present when the meeting
was reconvened. Senators Pearce and Donley arrived shortly
thereafter.
Also Attending: 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; Al
Weinberg; 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 advised the committee that a draft CS for SB
36 was again before them. He noted that the new draft CS
needed to be adopted as a working document. Senator
Phillips said the new penciled in corrections were on page
seven, line 21, delete $4,012 and insert $3,944; page
twenty-one, line 12, delete $3,866 and insert $3,855; and
line 13, delete $3,918 and insert $3,888. Co-chair Sharp
concurred. Senator Phillips MOVED CSSB 36(FIN) "Q" as
working draft. Senator Adams OBJECTED. By a roll call vote
of 5 - 1 (Sharp, Donley, Torgerson, Parnell, Phillips - yea)
(Adams - nay) (Pearce - absent) CSSB 36(FIN) "Q" was ADOPTED
as working document.
Amendment #27 was MOVED by Senator Torgerson. Senator Adams
OBJECTED. (pause on record) Senator Torgerson said section
thirty-three of version "Q" had quite a few repealers in it;
on of which was section 14.17.031(b) which allows for a
phase-in if a secondary or elementary school loses
instructional units of more than ten percent in one fiscal
year. Amendment #27 reworded it to "ADM" instead of
"instructional units". It allows the section to be subject
to appropriation so the districts would be able to come back
and request additional funding.
Senator Donley asked if it would apply in case of a loss due
to a boundary change? Senator Torgerson indicated it did
not. Senator Donley asked if the maximum of three years was
correct and Senator Torgerson indicated it was. Senator
Donley noted that it was a seventy-five percent hold
harmless of the difference the first year rather than a one
hundred percent hold harmless. Senator Torgerson concurred.
Senator Donley asked if this would be an automatic part of
the formula, but rather something they would have to apply
for? Senator Torgerson agreed that was the intent of the
amendment. He referred Senator Donley to lines five and six
of the amendment. Senator Donley said he liked the idea
districts would have to apply for the additional funding.
He said he would like to see the amendment more specific.
He suggested "...the school district may, subject to
appropriation, use the last fiscal year before the decline
as the base fiscal year."
Co-chair Sharp clarified the amendment would just reinstate
what was existing law before it was repealed. Senator
Torgerson concurred. Senator Parnell said the "base year"
needed to be clarified, what it was and whether there was
any impact on the runs already given. Would this be
retroactive? He said the "base year" would be the first
year of implementation and then each succeeding year
thereafter, if there was an economic loss causing a loss of
ADM then it would kick in. He did not want any communities
thinking they could look retroactively at this. Senator
Torgerson said it was not the intent of this amendment to be
retroactive.
Senator Adams said he would like to hear from the Department
of Law on this matter. If it did actually help the
economically stressed areas in the State he wanted their
opinion and if it would work.
Senator Donley questioned about the "base year" and "school
decrease by ten percent or more" which would trigger the
statute. He asked how a series of years with decrease would
be dealt with. Senator Torgerson said until he found the
definition of "base year" he could not answer that. He
explained that if the State fiscal year was a moving target
then so was the transition target. Senator Parnell said
perhaps they should wait on the amendment until they got
further clarification, which could be done on the Senate
Floor. Senator Donley said as long as they were working on
this matter then he would also like to address the issue of
a school district just shutting down or a total shut down of
a community.
Senator Torgerson WITHDREW amendment #27 WITHOUT OBJECTION.
Amendment #28 was MOVED by Senator Torgerson. Senator Adams
OBJECTED. Senator Torgerson said this amendment would add
intent language under the purposes section. "...and give
the people of the unorganized borough the maximum
opportunity to organize the municipality and provide as much
flexibility as possible in choosing the method of making a
local contribution to schools." Senator Adams said the only
complaint he had about the amendment was that it does not
fit with the lines stated and does not therefore read well.
He said the bill as it was did not provide an equitable
level of funding. He maintained his objection.
Senator Donley said the argument begs the question of
whether the existing formula was equitable. In response,
Senator Adams referred to the spreadsheet. He noted there
were still twenty-three school districts that do not even
get a part of the noted $50 million. There continued brief
miscellaneous discussion between Senators Adams and Donley.
Senator Donley further noted that it just went to show that
the existing system was broken and throwing more money into
the system was not going to solve the problem. It must be
reformed how the money is allocated before the educational
needs of the children of Alaska can be truly addressed.
Senator Adams responded that the McDowell Study did not have
actual facts. There were eleven disclaimers contained in it
and it was not a factual report.
Senator Donley defended the McDowell Study. He felt that it
had been professionally done and that the committee spent a
lot of time reviewing it. It was a very important study and
one that should have been done many years ago. He thanked
the chairman of Legislative Budget and Audit for his hard
work in putting the bill together this year. It was
actually looking at real costs rather than the existing
scheme of things, which was incredibly flawed. He said the
study was based on real facts, real analysis, and real costs
of schools and education. Senator Adams noted that it did
not bear the true cost of teacher salaries. It capped at
different times the true cost of utilities throughout
Alaska. He agreed the study was professionally done,
however it was factually wrong.
Senator Phillips said they followed figures supplied by the
school districts to the Department of Education, which
McDowell retrieved from the Department of Education and then
reconfirmed with the school districts. These were the
actual dollars and cents supplied by the school districts
themselves. If anything is flawed or there is any criticism
it would have to be as to how the school districts reported
their figures.
Co-chair Sharp asked if there was any further discussion
regarding amendment #28 and there being none a roll call
vote was called. By a vote of 6 - 1 (Sharp, Pearce, Donley,
Torgerson, Parnell, Phillips - yea) (Adams - nay) it was
ADOPTED.
Senator Torgerson advised the committee that he had
requested the Legislative counsel provide an opinion on
whether or not the bill meets the Constitutional
requirements. Also he requested counsel to add to the
opinion if they were in violation of the Civil Rights Act of
1964. He referred to the memo received from counsel and
noted specifically that the bill was not in violation of any
constitutional issues and also not in violation of the Civil
Rights Act.
Senator Adams said there was two sides to every issue. He
noted the opinion was done by Mr. Mike Ford for whom he had
the highest respect. However, the Senator continued to
maintain that it was not a constitutional bill and felt the
Equal Protection Law was still in violation. He further
maintained the State Human Rights Act was in violation under
AS 18.80.255 and also the Federal Civil Rights Act of 1964.
He apologized if he insulted anyone during the morning
session when he said basically money was being taken away
from the Native students to bring it in to the white urban.
He was not attacking this from a racist point of view,
however, if anyone did have a little racist value he forgave
them for that.
Co-chair Sharp also pointed out the disparity print out
provided by the department. He noted the disparity was at
approximately nineteen percent, less than the statutory
maximum.
Eddy Jeans, Manager, School Finance Section, Education
Support Services, Department of Education was invited to
join the committee. In referring to the disparity run test
based on 1998 school operating budgets, he noted the same
methodology was used as in the current disparity tests. He
pointed out that under CSSB 36 "Q" there was an additional
local contribution that can be made by many school districts
that have been illustrated in their handouts. He noted page
seven of eight under column "H", entitled "required local
effort". Within column "H" no school district in the State
would be contributing at their maximum local effort based on
their 1998 budgets. There were a number that were
contributing at the cap level. The disparity level under
the current level came in at about twenty-three percent.
Senator Torgerson noted they would be somewhere between
nineteen and twenty-three percent, however still below the
twenty-five percent mandated by the Feds. Mr. Jeans
concurred.
Senator Adams asked about the decrease in the amount of
money a school district would get according to some of the
runs. He asked what would happen, as in Lower Kuskokwim, to
their qualified teachers, with the lack of funding. Would
there have to be teachers laid off? Mr. Jeans indicated
that such a run had not been produced.
Senator Torgerson MOVED CSSB 36(FIN) "Q" version as amended
with individual recommendations and accompanying fiscal
notes. Senator Adams OBJECTED. He said when the committee
began working on this bill he thought they would be working
on something that would be equitable, simple and fair.
However, this is not what he saw. As in when all the money
was taken away from the North Slope. Cap categories that
affect areas that have bilingual programs. A limit set of
70/30 for administration. He referred to the kicker section
forty, that makes mandatory boroughs, which he felt was
wrong. He noted again for the committee that the North
Slope paid the second highest tax rate; following Anchorage
who was first, the North Slope does pay its share of taxes.
The highest property tax is paid in Barrow. They put in $28
million for education, which was forty-four percent of their
budget. The balance was spent for health, municipal
services, police, fire, search and rescue planning. This
was a school district that now receives the second to the
last in State funding. They have only two and a half
percent of the students in the State of Alaska. The $11.6
million they received was equal to 1.7 percent of the
funding. He continued to maintain that constitutionally the
State had to contribute for everybody, not just give the
North Slope nothing. He was happy the third class borough
option was taken out, but in referring to section forty,
that hurt school districts around the State of Alaska. As
an REAA they were only subject to two percent for school
construction. If a borough was set up then they would have
to put in ten percent and they cannot afford that. He
referred to SB 337 which was introduced today and said there
would be a large fiscal note placed on it because assessment
needed to be done. He felt section forty tried to force
government on people. Even with no public comments with
reference to this subject, he felt they were acting as
little dictators by placing that on the people without their
input. The capping of category programs was not necessary,
because the educational needs in different sections of the
State was much different. He said bilingual education was
one of the greatest assets they had. It helped save culture
and heritage. Every school district needed to be funded.
It was wrong to rob one school district for another. The
committee should listen to parents, PTA and school boards
across the State. They do not like this particular bill.
By leaving out some of the school districts, fairness and
equity were also left out. Even though they committee had
good debates, he said this formula did not work. He said
there was a better solution to this bill, which would be to
take the cigarette tax and use that funding. He advised the
committee that what they had before them was an
unconstitutional bill and it would be challenged and there
would be lawsuits. The bill was not fair and did not have
equity. He said the bill was flawed and there was a better
method in dealing with it. All school districts should be
held harmless and work on the school districts that actually
need help. This bill is not the way to solve the problem.
Co-chair Sharp thanked Senator Adams. He asked a roll call
vote be taken and by a vote of 6 - 1 (Sharp, Pearce, Donley,
Torgerson, Parnell, Phillips - yea) (Adams - nay) CSSB
36(FIN) "Q" was REPORTED OUT with individual recommendations
and accompanying fiscal notes.
In closing, Co-chair Pearce reminded the committee that
there was a Revenue Summit at 9:00 a.m. She said it would
be chaired by Senate President Mike Miller and House Speaker
Gail Phillips.
ADJOURNMENT
Co-chair Sharp adjourned the committee at approximately 6:15
p.m.
SFC-98 -6- 3/9/98
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