Legislature(2007 - 2008)SENATE FINANCE 532

02/15/2008 09:00 AM Senate FINANCE


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09:08:12 AM Start
09:08:20 AM SB240
10:14:20 AM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ SB 240 EDUCATION FUNDING TELECONFERENCED
Heard & Held
+ HB 273 EDUCATION FUNDING TELECONFERENCED
<Pending Referral>
<Bill Hearing Postponed>
+ Bills Previously Heard/Scheduled TELECONFERENCED
                             SENATE FINANCE COMMITTEE                                                                           
                                 February 15, 2008                                                                              
                                     9:08 a.m.                                                                                  
           CALL TO ORDER                                                                                                      
                                                                                                                                
           Co-Chair Stedman called the Senate Finance  Committee meeting                                                        
           to order at 9:08:12 AM.                                                                                            
                                                                                                                                
           MEMBERS PRESENT                                                                                                    
                                                                                                                                
           Senator Lyman Hoffman, Co-Chair                                                                                      
           Senator Bert Stedman, Co-Chair                                                                                       
           Senator Charlie Huggins, Vice-Chair                                                                                  
           Senator Kim Elton                                                                                                    
           Senator Donny Olson                                                                                                  
           Senator Joe Thomas                                                                                                   
           Senator Fred Dyson                                                                                                   
                                                                                                                                
           MEMBERS ABSENT                                                                                                     
                                                                                                                                
           None                                                                                                                 
                                                                                                                                
           ALSO PRESENT                                                                                                       
                                                                                                                                
           Senator Gary Stevens;  Tim Lamkin, staff to Senator  Stevens;                                                        
           Eddy Jeans, Director, Education Support Services,  Department                                                        
           of   Education   and   Early   development;    Peggy   Cowen,                                                        
           Superintendent, Juneau Schools; Colleen Jones,  Juneau, Great                                                        
           Alaskan  Schools;   John  Alcantra,   Government   Relations,                                                        
           National Education Associations  (NEA); Carl Rose,  Executive                                                        
           Director, Alaska Association of Alaska School Boards.                                                                
                                                                                                                                
           PRESENT VIA TELECONFERENCE                                                                                         
                                                                                                                                
           Rachael Livingston, Homer; Liz Downing, Vice  President; Kiki                                                        
           Abrahamson, Homer;  Leslie Hajdukovich,  President  Fairbanks                                                        
           School Board; Woody Wilson Superintendent,  Wrangell Schools;                                                        
           Joe  Banghart,  Superintendent,  Iditorod   School  District;                                                        
           Melody Douglas, CFO Kenai Peninsula Borough  School District;                                                        
           Ladawn  Bruce,   President  of   Kenai  Peninsula   Education                                                        
           Association  (KPEA);  Anne  Kilkenny,  Matsu,  Great  Alaskan                                                        
           Schools.                                                                                                             
                                                                                                                                
           SUMMARY                                                                                                            
                                                                                                                                
           SB 240    "An Act relating to school funding, the base                                                               
                     student allocation, district cost  factors, and the                                                        
                     adjustments  for  intensive  services  and  average                                                        
                     daily membership  calculations;  and providing  for                                                        
                     an effective date."                                                                                        
                                                                                                                                
                     SB 240 was heard and HELD in Committee for further                                                         
                     consideration.                                                                                             
                                                                                                                                
                                                                                                                                
9:08:20 AM                                                                                                                    
                                                                                                                                
SENATE BILL NO. 240                                                                                                           
                                                                                                                                
     "An  Act relating  to school funding,  the base  student                                                                   
     allocation, district  cost factors, and  the adjustments                                                                   
     for  intensive  services  and average  daily  membership                                                                   
    calculations; and providing for an effective date."                                                                         
                                                                                                                                
9:08:28 AM                                                                                                                    
                                                                                                                                
SENATOR  GARY STEVENS,  gave an  overview  of the  bill.   He                                                                   
underlined   accomplishments   of   the   Joint   Legislative                                                                   
Education  Funding  Task Force  (JLEFT)  that  resulted in  a                                                                   
consensus on priority recommendations  reflected in the bill.                                                                   
He noted  that though there  are other pieces  of legislation                                                                   
that address the recommendations  of the Task Force; SB240 is                                                                   
the  most  important  piece.     He  outlined  the  4  pieces                                                                   
addressed in the bill:                                                                                                          
                                                                                                                                
     The  first   section  addresses  decreased   enrollment.                                                                   
     Districts  with  a significant  decrease  in  enrollment                                                                   
     would  have   a  3  year  "step  down"   transition  for                                                                   
     decreasing  funds;  adding  75%  of  the  difference  in                                                                   
     Average Daily  Membership (ADM) for the  first year, 50%                                                                   
     in  the second  year, and  25% in the  third year.  This                                                                   
     helps school  districts ratchet down their  budgets over                                                                   
     a reasonable period of time.                                                                                               
                                                                                                                                
     The second  issue addresses  funding for intensive  need                                                                   
     students.   He  acknowledged  that  the multiplier  used                                                                   
     over the  years at 5  times the Base Student  Allocation                                                                   
     (BSA) has been inadequate.   The multiplier is increased                                                                   
     to  9, 11,  and 13  times the  BSA over  the next  three                                                                   
     years.                                                                                                                     
                                                                                                                                
     The  third area  addresses  the "District  Cost  Factor"                                                                   
     (DCF)  which  would  establish   equitable  funding  for                                                                   
     students in  distant locations.  The bill  phases in the                                                                   
     ISER study.   In the first  year DCF is 50% of  the ISER                                                                   
     study and then the remaining  50% is spread out over the                                                                   
     next  four years  (12.5 percent  a year  for the next  4                                                                   
     years).                                                                                                                    
                                                                                                                                
     The final piece of the bill  is the increases of the BSA                                                                   
     by $100 per student in each of the next 3 years.                                                                           
                                                                                                                                
9:14:52 AM                                                                                                                    
                                                                                                                                
Senator Huggins asked about the transportation component.                                                                       
                                                                                                                                
           Senator Stevens  said though  the issue  was acknowledged  by                                                        
           the  Task   force,  it   was  not  addressed   due  to   time                                                        
           constraints.                                                                                                         
                                                                                                                                
           Senator  Stedman  notified the  Committee  that  Amendment  1                                                        
           would be taken up to address the transportation issue.                                                               
                                                                                                                                
           TIM  LAMKIN, STAFF  TO  SENATOR STEVENS,  observed  that  the                                                        
           member's packets contained Amendment 1, which  was adopted in                                                        
           the House.   As a point  of clarification,  he noted that  HB
           273, companion legislation, was currently  in the House Rules                                                        
           Committee waiting scheduling on the House floor.                                                                     
                                                                                                                                
           AT EASE:       9:17:10 AM                                                                                          
           RECONVEINE:    9:18:56 AM                                                                                          
                                                                                                                                
           Mr. Lamkin said the pupil transportation recalibrations  were                                                        
           a priority of  the Task Force but  at the time of  concluding                                                        
           business, contract negotiations  were not entirely  complete.                                                        
           The intention  of  the  Task Force  was  to wait  for  actual                                                        
           figures for calendar year 2007.  The figures  have since come                                                        
           available and are reflected in the Amendment.   The Amendment                                                        
           also proposes additional adjustments for inflation.                                                                  
                                                                                                                                
           Co-Chair  Stedman  noted  the  two  fiscal   notes:  DEED  #1                                                        
           appropriates $112,075.00  for K-12  and DEED #2  appropriates                                                        
           $161,840.00, for the Alaska Challenge Youth Academy.                                                                 
                                                                                                                                
           Senator Hoffman MOVED  to ADOPT Amendment 1. Senator  Stedman                                                        
           OBJECTED for purposes of discussion.                                                                                 
                                                                                                                                
           Co-Chair Stedman explained  that the Amendment adjusts  pupil                                                        
           transportation   costs.   Senator   Stedman    WITHDREW   his                                                        
           OBJECTION.                                                                                                           
                                                                                                                                
           Senator Huggins OBJECTED and questioned the  $500,000 loss to                                                        
           Matsu.                                                                                                               
                                                                                                                                
           EDDY JEANS, DIRECTOR, EDUCATION SUPPORT SERVICES,  DEPARTMENT                                                        
           OF  EDUCATION  AND   EARLY  DEVELOPMENT,  addressed   Senator                                                        
           Huggins concerns.  He  explained that the grant  amounts were                                                        
           recalibrated  based  on FY  07  actual  pupil  transportation                                                        
           costs.   When  contracts  were  renegotiated  in FY  06,  the                                                        
           contract costs decreased  for Matsu, which left a  surplus in                                                        
           revenues  over   expenditures  in   their  FY  07   financial                                                        
           statement.  He elaborated explaining that  the Anchorage cost                                                        
           price   index   (CPI)   was   built   into   the   contracts.                                                        
           Additionally, because  the FY 07 actual  costs were used  for                                                        
           the recalibration  for FY  09 budget,  adjustments were  made                                                        
           for inflation  for  FY 08  and  FY 09.   The  provision  also                                                        
           adjusts the pupil transportation amount by  the Anchorage CPI                                                        
           for FY 10 and  FY 11 at which  time contracts will be  at the                                                        
           end of their 5 year period.                                                                                          
                                                                                                                                
Senator Huggins  assumed that  there would  not be  a deficit                                                                   
due to the binding contract, which is in place.                                                                                 
                                                                                                                                
Mr. Jeans  said he could not  guarentee there would  not be a                                                                   
deficit  and explained  that  the grant  program  is tied  to                                                                   
student enrollment.  Funds increase  if enrollment increases,                                                                   
and  decrease if  there  is a  decrease  in  enrollment.   He                                                                   
reiterated that  the recalculation  is based on  actual costs                                                                   
for FY 2007, which is the first year of a 5-year contract.                                                                      
                                                                                                                                
Senator Huggins  asked if funding would be  adequate provided                                                                   
there are no changes in student enrollment.                                                                                     
                                                                                                                                
Mr. Jeans  responded that there  is adequate funding  as long                                                                   
as the  district did  not add routes.  If the district  added                                                                   
routes without  any change in student population,  then their                                                                   
contracts would increase with no adjustment in funding.                                                                         
                                                                                                                                
Senator Huggins clarified that  he wanted to ensure there was                                                                   
a  mechanism to  address the  transportation  issues for  new                                                                   
schools and those with increased enrollment.                                                                                    
                                                                                                                                
Senator Huggins WITHDREW his OBJECTION.                                                                                         
                                                                                                                                
There being NO OBJECTION, Amendment 1 was adopted.                                                                              
                                                                                                                                
9:25:15 AM                                                                                                                    
                                                                                                                                
RACHAEL LIVINGSTON,  HOMER, thanked  the Committee  for their                                                                   
work.  She emphasized the importance  of a higher BSA as well                                                                   
as additional transportation funding  and urged the Committee                                                                   
to pass the bill.                                                                                                               
                                                                                                                                
LIZ  DOWNING, VICE  PRESIDENT, KENAI  PENINSULA SCHOOL  BOARD                                                                   
thanked the Committee for establishing  the Joint Legislative                                                                   
Education Funding Task Force (JLEFT)  and spoke in support of                                                                   
the bill.   She specifically supported municipal  sharing and                                                                   
unfunded  liability.     She   added  her  support   for  the                                                                   
consortium for digital learning  and the creation of standing                                                                   
Committees in both the House and  Senate, for education.  She                                                                   
underlined that the  increase in BSA is imperative  and added                                                                   
that she  would like to  see a $200  increase.   She asserted                                                                   
that  even  if the  BSA  was  at  $200 the  funding  for  the                                                                   
initiatives would be underfunded by $300,000.                                                                                   
                                                                                                                                
                                            th                                                                                  
KIKI ABRAHAMSON, HOMER testified  with her 5  grade students.                                                                   
She  supported  an  increase   in  the  BSA  at  $200.    She                                                                   
underlined the  importance of the funding need,  stating that                                                                   
Charter  Schools have  been underfunded  by $200 per  student                                                                   
for 11 years.                                                                                                                   
                                                                                                                                
LESLIE   HAJDUKOVICH,  PRESIDENT   FAIRBANKS  SCHOOL   BOARD,                                                                   
testified  in supported  of the JLEFT  recommendations.   She                                                                   
specifically   noted  the  importance   of  forward   funding                                                                   
           emphasizing  that   it  allows  for   better  planning.   She                                                        
           supported an increase of the BSA to $200 per student.                                                                
                                                                                                                                
           WOODY WILSON SUPERINTENDENT,  WRANGELL SCHOOLS, testified  in                                                        
           support of the  recommendations of the  JLEFT.  He  expressed                                                        
           concern over the potential shortfall in pupil  transportation                                                        
           funding.  He explained that approximately  20% of schools are                                                        
           negotiating  pupil transportation  contracts  and the  actual                                                        
           costs are  not yet  known.   The formula  is based  on FY  07                                                        
           calculations.  He expected there would likely  be a shortfall                                                        
           and  as a  result  funds  will  need  to be  taken  from  the                                                        
           instructional budget  to support  contractual  transportation                                                        
           obligations.  He further  commented that with the  absence of                                                        
           student improvement  grants, the  increase of  $100 BSA  only                                                        
           allows for the current budget.  He maintained  that it is not                                                        
           an actual  increase in funds.   He added  that energy  costs,                                                        
           salaries and  insurance have  increased.   In conclusion,  he                                                        
           urged an increase in the BSA to $200.                                                                                
                                                                                                                                
           JOE  BANGHART,  SUPERINTENDENT   IDITOROD  SCHOOL   DISTRICT,                                                        
           addressed the Committee  from his high school classroom.   He                                                        
           thanked the  Committee for  the establishment  of JLEFT.   He                                                        
           commented on two  areas of the bill:   The step down  funding                                                        
           and the increased  BSA.   He emphasized that  the BSA is  not                                                        
           enough even at $200,  due to the high cost of energy  coupled                                                        
           with  student decline.    He  further  addressed  maintenance                                                        
           costs.  He asserted that  the increase in the BSA will  go to                                                        
           energy costs not to the classroom.                                                                                   
                                                                                                                                
           MELODY DOUGLAS, CFO KENAI PENINSULA BOROUGH  SCHOOL DISTRICT,                                                        
           commended  the  JLEFT  for  their  work  and   supported  the                                                        
           recommendations.    She encouraged  the  establishment  of  a                                                        
           special  Committee  for   education.    She  felt   the  most                                                        
           significant    action   would    be   to    effectuate    the                                                        
           recommendations in statute.                                                                                          
                                                                                                                                
           LADAWN  DRUCE,   PRESIDENT  OF   KENAI  PENINSULA   EDUCATION                                                        
           ASSOCIATION  (KPEA),  concurred with  the  comments  made  by                                                        
           Melody  Douglas   regarding  the   creation  of  a   separate                                                        
           Committee for  education and the  establishment of the  JLEFT                                                        
           recommendations in  statute.   Her final  comments urged  the                                                        
           Committee to accept the governor's recommendation  of the BSA                                                        
           at $200.                                                                                                             
                                                                                                                                
           ANNE KILKENNY,  MATSU,  GREAT  ALASKAN SCHOOLS  testified  in                                                        
           support of the JLEFT recommendations.  She  provided examples                                                        
           of funding cuts to  the Kenai School District and  the impact                                                        
           on services.   She emphasized  that a  $100 BSA increase  was                                                        
           not enough and  supported the Governor's  proposal of a  $200                                                        
           BSA increase.   She asked  the Committee  to apply the  funds                                                        
           calculated for FY  09, to FY 10.   She noted examples  of how                                                        
           this  would assist  in  serving  the students  of  the  Matsu                                                        
           district.                                                                                                            
                                                                                                                                
9:50:26 AM                                                                                                                    
                                                                                                                                
Senator  Stevens  pointed  out   that  the  proposed  funding                                                                   
results in  a $252 million increase  for K-12.   He expressed                                                                   
concern  in  attempting  to  increase  the BSA  to  $200  and                                                                   
stressed  the  degree  of  consensus   and  support  for  the                                                                   
recommendations  outlined in the  bill.   He felt if  parties                                                                   
were  adamant about  the  increase, the  entire  bill may  be                                                                   
compromised.                                                                                                                    
                                                                                                                                
PEGGY  COWEN, SUPERINTENDENT,  JUNEAU  SCHOOLS, testified  in                                                                   
support of  the bill.  She  underlined the importance  of the                                                                   
increase  for  intensive  need  students noting  that  3%  of                                                                   
Juneau's  students  make up  that  population.   She  further                                                                   
pointed  out  that  often  funds  allotted  for  the  general                                                                   
student body are  used to fund intensive student  needs.  She                                                                   
noted that currently Juneau is  at half of one percent of the                                                                   
cost differential  in statute.  The adjustment  from the ISER                                                                   
study would be 14.5 percent, which  more closely reflects the                                                                   
difference in the cost of providing  services in Juneau.  The                                                                   
Juneau Board  of Education  supports an  increase of  $100 in                                                                   
BSA along  with the  JLEFT recommendations.   She echoed  Mr.                                                                   
Wilson's comments  regarding the timing and  funding of pupil                                                                   
transportation  negotiations.     Though  she  supported  the                                                                   
recalibration  of  transportation  funds she  maintained  the                                                                   
amount  would  not offset  costs.    She concluded  that  all                                                                   
planning and expectations were  based on the assumptions that                                                                   
the approach  to PERS  and TERS would  be made permanent  and                                                                   
urged the Committee's support.                                                                                                  
                                                                                                                                
COLLEEN JONES,  JUNEAU, GREAT  ALASKAN SCHOOLS, testified  in                                                                   
support   of  the   bill  and   acknowledged  two   important                                                                   
recommendations  from  the JLEFT:    The increased  costs  of                                                                   
providing education in Alaska's  unique geographic regions of                                                                   
the state  with the  recommended phase  out factors;  and the                                                                   
phase in of  increased funding for intensive  needs students.                                                                   
She noted the provision moves  funding toward actual costs of                                                                   
serving  high need  students.   She continued  to stress  the                                                                   
importance  of  forward  funding of  education  for  planning                                                                   
purposes. She  urged the Committee to consider  an additional                                                                   
increase  in the  BSA, or  outside the  formula, in  learning                                                                   
grant  opportunities.    She  reiterated  previous  speaker's                                                                   
comments regarding high energy  costs and added that costs of                                                                   
materials are rising faster than inflation.                                                                                     
                                                                                                                                
JOHN  ALCANTRA,  GOVERNMENT  RELATIONS,   NATIONAL  EDUCATION                                                                   
ASSOCIATIONS  (NEA), applauded the  efforts of the  Committee                                                                   
and   JFELT.  He   acknowledged  the   delicate  balance   of                                                                   
negotiations  and  consensus  regarding  the  recommendations                                                                   
outlined  in the bill.   He  read from  Fiscal Note  #1: "The                                                                   
Legislature funded 50 percent  of ISER in FY 2008 outside the                                                                   
formula  for   approximately  $50  million  and   the  School                                                                   
Improvement Grant for approximately  $20 million.  If the $70                                                                   
provided  in FY  08  is taken  into consideration,  then  the                                                                   
           actual increase  in FY  09 over  FY 08  is approximately  $42                                                        
           million  dollars".  He   elaborated  saying  that   the  real                                                        
           increase in new money for FY 09 is $42 million.   He asserted                                                        
           that  if the  BSA  is  increased  to $200  it  would  provide                                                        
           another  $22  million  for  K-12,  increasing  new  money  to                                                        
           approximately  $64  million.   He  acknowledged  comments  by                                                        
           Senator  Stevens regarding  the  $252 million  increase,  but                                                        
           maintained that $70 million should be subtracted  out of that                                                        
           number.    He  noted  the  significance  of  the  Legislature                                                        
           dealing with educational funding early in the session.                                                               
                                                                                                                                
           10:03:37 AM                                                                                                        
                                                                                                                                
           CARL ROSE, EXECUTIVE  DIRECTOR, ALASKA ASSOCIATION  OF ALASKA                                                        
           SCHOOL BOARDS, testified  in support of the bill and  said he                                                        
           was honored  to have  served on  JLEFT.  He  noted the  three                                                        
           major  education issues  left  on  the table  from  the  last                                                        
           Legislative session: foundation formula, unfunded  liability,                                                        
           and  revenue   sharing.   He  acknowledged   that  the   AASB                                                        
           understands that SB 240  is part of a larger picture.   There                                                        
           was a one  time temporary  fix in 2007.   He underlined  that                                                        
           the only statutory  reference for public K-12 education  with                                                        
           regarding  foundation  formula is  FY  07.   He  said  it  is                                                        
           critically important  to  incorporate the  entire package  in                                                        
           statute.                                                                                                             
                                                                                                                                
           In  closing  Mr.  Rose  emphasized  that  AASB  supports  the                                                        
           package contained  in SB  240.  The  organization supports  a                                                        
           $200 increase  to the  Base Student Allocation  and a  three-                                                        
           year phase-in for  the District Cost  Factor, but not  at the                                                        
           expense of  the package.   He maintained that  SB 240 is  the                                                        
           most important bill  of the session addressing the  education                                                        
           of Alaska's children.                                                                                                
                                                                                                                                
           10:07:39 AM                                                                                                        
                                                                                                                                
           EDDY JEANS, DIRECTOR, EDUCATION SUPPORT SERVICES,  DEPARTMENT                                                        
           OF EDUCATION AND EARLY  DEVELOPMENT, supported the  bill with                                                        
           one modification  to the bill:  an increase  of the BSA  from                                                        
           $100 to $200, for three years.                                                                                       
                                                                                                                                
           Senator Stedman  acknowledged  the legislation  would not  be                                                        
           the "silver  bullet"  to solve  all  problems, but  felt  the                                                        
           legislation would be a forward step.                                                                                 
                                                                                                                                
           SB  240  was  heard   and  HELD  in  Committee   for  further                                                        
           consideration.                                                                                                       
                                                                                                                                
           AT EASE        10:14:02 AM                                                                                         
           RECONVENED:    10:14:20 AM                                                                                         
                                                                                                                                
           ADJOURNMENT                                                                                                        
                                                                                                                                
The meeting was adjourned at 10:14 AM                                                                                           
                                                                                                                                
                                                                                                                                

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