Legislature(2011 - 2012)SENATE FINANCE 532
02/08/2012 09:00 AM Senate FINANCE
| Audio | Topic |
|---|---|
| Start | |
| SB187 | |
| SB171 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | SB 187 | TELECONFERENCED | |
| + | SB 171 | TELECONFERENCED | |
| + | TELECONFERENCED |
SENATE FINANCE COMMITTEE
February 8, 2012
9:02 a.m.
9:02:40 AM
CALL TO ORDER
Co-Chair Stedman called the Senate Finance Committee
meeting to order at 9:02 a.m.
MEMBERS PRESENT
Senator Lyman Hoffman, Co-Chair
Senator Bert Stedman, Co-Chair
Senator Lesil McGuire, Vice-Chair
Senator Johnny Ellis
Senator Dennis Egan
Senator Donny Olson
Senator Joe Thomas
MEMBERS ABSENT
None
ALSO PRESENT
Senator Cathy Giessel; Representative Mike Hawker; Tim
Grussendorf, Staff, Senator Lyman Hoffman; David Teal,
Director, Legislative Finance Division; Michelle Strickler,
Self; Monica Witter, Juneau Education Association; Jenny
Malecha, Self; Max Mertz, Juneau Chamber Commerce; Marc
Choate, Juneau School Board; Carl Rose, Executive Director,
Association of Alaska School Boards; Molly Hillis, Self;
Andi Story, Juneau School Board; Amy Lujan, Executive
Director, Alaska Association of School Business Officials;
John Alcantra, Government Relations Director, National
Education Association (NEA) -Alaska; Mary Hakala,
Coordinator, Science Technology Engineering Math
Initiative; Adam Berkey, Self
PRESENT VIA TELECONFERENCE
Peggy Cowan, Barrow, Superintendent, North Slope School
District; Melissa Borton, President, Kodiak Island Board of
Education; Chad Stiteler, Chief Financial Officer,
Anchorage School District; Richard Rios, Acting Director
for Career and Technical Education, Anchorage School
District; Andre Layral, Executive Director, Alaska
Association of Secondary School Principals; Adam Mokelke,
President, Alaska Association of Secondary School
Principals; Karie Boyd, Superintendent, Yukon Koyukuk
School District; Steve Bradshaw, Sitka School District;
Lisa Bush, Sitka; Charlie Wilber, Sitka; Pete Lewis,
Superintendent, Fairbanks North Star Borough School
District; Kristina Brophy, President, Fairbanks North Star
Borough School District Board of Education; Cindy
Jorgensen, Fairbanks; Anne Kilkenny, Mat-Su; Jill Showman,
President, Mat-Su Education Association; Rob Thomason,
Petersburg, Superintendent, Petersburg City School District
SUMMARY
SB 171 INCREASE BASE STUDENT ALLOCATION
SB 171 was HEARD and HELD in committee for
further consideration.
SB 187 PENSION RESERVE FUND
SB 187 was HEARD and HELD in committee for
further consideration.
SENATE BILL NO. 187
"An Act creating the pension reserve fund; changing the
manner in which employer contributions to the Public
Employees' Retirement System of Alaska are calculated;
repealing a requirement that the state make certain
contributions, in addition to employer contributions,
to pay the past service liabilities of the Public
Employees' Retirement System of Alaska; preventing
certain transfers to the Public Employees' Retirement
System of Alaska from causing reductions in damage
awards for wrongful or negligent conduct of third
parties; adding to the duties of the Alaska Retirement
Management Board; and providing for an effective date.
9:04:03 AM
TIM GRUSSENDORF, STAFF, SENATOR LYMAN HOFFMAN, stated that
the main purpose of the bill was to establish a plan to
eliminate the unfunded liability in the Public Employees
Retirement System (PERS), without paying hundreds of
millions of dollars in annual state assistance to the trust
fund. He explained that in FY08 the state took action to
address the concerns of other political subdivisions of the
state-managed PERS system. He noted that 60 percent of the
unfunded liability was for state employees, but the other 40
percent was political subdivisions. He continued that in FY
08 a shared cost system had been adopted as a solution to
the subdivision concerns; setting the employer contribution
rates at 22 percent of payroll, and shifting the cost and
excess of the percentage to the state. He relayed that the
actions had not reduced the total cost of PERS, but had
provided state financial assistance to the political
subdivisions. He listed the events that had put the state in
the position of having to make escalated annual
contributions to the trust fund in order to keep the fund
assets in-line with the accrued liabilities:
· the stock market crash
· the rising cost of healthcare
· the extended life expectancy of the covered population
· the lowering of the future investment expectations of
the fund by the Alaska Retirement Benefit Board
Mr. Grussendorf stated that the combination of events had
put the state assistance costs, the costs above 22 percent,
at an escalating, unsustainable rate. He explained that
state assistance to the PERS system had grown from $108
million in FY 10; to $165 million in FY11, $242 million in
FY12, and $307 million in FY13. He reiterated that the cost
of state assistance was projected to escalate; reaching a
peak of $533 million annually before turning downward near
FY30. He illuminated that the legislation would create a
separate reserve account that would supplement the PERS
trust fund as needed to insure that the unfunded liability
ratio was maintained at no less than 50 percent. He said
that a $2 billion infusion of funds was projected to save
the state $7.3 billion in annual payments over a 20 year
period. He furthered that the plan would bring the PERS
trust fund back on track and would allow the state to
recover its original $2 billion investment.
9:08:09 AM
Mr. Grussendorf cited the sectional analysis (copy on file).
He explained that Section 1 prevented money transfers from
the proposed pension reserve fund, to the PERS system, from
causing reductions in potential damage awards for wrongful
or negligent conduct of third parties. He furthered that
Section 2 added management of a proposed pension reserve
fund to the primary mission of the Alaska Retirement
Management Board (ARMB).
9:08:39 AM
Mr. Grussendorf continued that Section 3 added duties
related to the management of the proposed pension reserve
fund to the existing duties of the ARMB, which included
making annual comparisons of the value of the assets of the
PERS system and the value of the combined assets of the
proposed pension reserve fund and the total liabilities of
the PERS system. He explained that Section 4 established a
pension reserve fund, allowed appropriations to the fund,
and required money appropriated to the fund be spent on the
past service liability of PERS or returned to the general
fund.
9:09:06 AM
Mr. Grussendorf elaborated that Section 5 allowed the ARMB
to determine the percentage rate that employer contributions
to the PERS system were based on. He furthered that Section
6 added the requirement that; notwithstanding subsection
(i), proposed in section 7 of the bill, the annual employer
contribution rate may not be less than the rate sufficient
to cover payment of employer contributions required for both
the defined contribution plan of the PERS system and for the
teachers' and public employees' health reimbursement
arrangement plan trust fund, as required by the defined
benefit plan of the PERS system.
9:09:45 AM
Mr. Grussendorf discussed Section 7, which required that the
rate used to calculate employer contributions under Section
5 of the bill may not exceed 22 percent when the assets of
PERS and the pension reserve fund, combined, are equal to or
greater than 60 percent of the total of that system's
liabilities.
9:10:08 AM
Mr. Grussendorf explained that Section 8 eliminated a
reference to AS 39.35.280, in connection to retiree medical
benefits, because AS 39.35.280 would be repealed by section
9 of the bill.
9:10:19 AM
Mr. Grussendorf concluded that Section 9 repealed AS
39.25.280, a law that required the state to annually
contribute money to the past service liability of the PERS
system in addition to the contributions the state made to
the system as an employer. He added that Section 10 would
establish an effective date of June 30, 2012.
9:10:55 AM
Senator Olson asked how the state acquiring $7.2 billion
three years after the initial $2 billion deposit into the
fund had been calculated.
Mr. Grussendorf deferred the question to the director of
legislative finance. He added that modeling had been done by
Buck Consultants that would be presented to the committee.
9:11:38 AM
DAVID TEAL, DIRECTOR, LEGISLATIVE FINANCE DIVISION,
introduced the slide, "Cost of State Assistance to PERS --
with and without a $2 Billion Deposit." He stated that the
annual cost depicted on the graph appeared as a small and
fairly flat line because the annual costs were in the $100's
of millions, while the scale of the graph was in billions.
He stated that as the $100's of millions in contributions
accumulated, the graph reflected the total cost as it grew
over time. He relayed that through FY12 the state had
contributed approximately $1 billion to the PERS trust. The
graph illustrated that a one-time FY13 contribution of $2
billion would allow the state to avoid $2 billion in annual
contributions by FY18, while maintaining an employer
contribution rate no higher than 22 percent. He shared that
the content of the graph had been determined by using a
model produced by the actuarial company Buck Consultants. He
added that the company was working on modifications to the
model that would allow the state to work with the trigger
mechanisms built into the legislation.
9:14:26 AM
Co-Chair Hoffman asked if the calculation of $5.3 billion
included the repayment of $2 billion.
Mr. Teal replied in the negative. He clarified for the
committee that the bill allowed for recovery of money in the
long-term. He said that because of the large unfunded
liability the state currently faced, too much money was
being contributed to a closed system. He added that normal
actuarial methods would cause over contribution to the fund.
He explained that the bill backed away from that model and
allowed the state to recover the $2 billion in later years.
9:15:52 AM
Mr. Teal discussed the slide, "Projected Reserve Balances."
The graph illustrated that the reserve balances would drop
by $2 billion with the deposit, but because the state was
not making annual contributions the reserve balance would
recover and end up being higher than it would if annual
payments were to continue to be made. He observed that the
balance would drop down given the numbers for projected oil
revenue and expenditures.
9:16:50 AM
Mr. Teal turned to the chart, "PERS Actuarial Projection --
with $2 billion Deposit to a Reserve Fund in FY13 (Buck
Model)."
9:17:34 AM
AT EASE
9:17:35 AM
RECONVENED
9:18:00 AM
Mr. Teal relayed that the chart showed the assets and
liabilities of the fund. He stated that the goal was to
match assets to liabilities. He explained that liabilities
continued to increase in an open system; because the state
had closed the system, as the last person under defined
benefits retired, the curve would turn downward. He asserted
that the concept embodied in the legislation was that the
state did not need to follow standard actuarial methods,
which would have the state chase the ever extending
liability curve, and instead join the curve as it declined.
He detailed that the bill would put $2 billion into the
reserve fund, which raised the funding ratio. He explained
that the funding ratio was the ratio of assets to
liabilities. He said that a 100 percent funded system meant
that the assets and liabilities were equal, and the lower
the number, the worse off the system. He stated that the
current PERS funding liability was at 62 percent, the
deposit would push it up towards 70 percent where it would
hover and decrease back to 65 percent before it began to
recover and went up to full funding. He noted that according
to the graph where assets and liability were equal the state
was at 100 percent funded. He highlighted that the chart
illustrated the rate at which employers paid. He remarked
that the rate was currently capped at 22 percent, and would
remain at 22 percent until the funding ratio began to climb.
He said that when the ratio began to climb the rate would
fall towards the normal cost of the system and the state
would begin to recover excess money from the fund. He
likened the legislation to a very long-term loan to the
retirement system.
9:20:41 AM
Mr. Teal offered that the logical progression was simply
that the bill established a reserve fund because money
contributed directly to the PERS trust fund could never be
withdrawn. He said that putting the money into a reserve
fund would keep it from being locked-up.
9:21:11 AM
Mr. Teal explained that the bill would establish transfer
mechanisms. The first mechanism would be a 50 percent
trigger that would ensure that money would move from the
reserve account to the trust fund proper in order to
maintain a 50 percent funding ratio. He admitted that the 50
percent number was arbitrary and that some could consider it
too low, but that the model worked fine at 50 percent. He
stated that the second transfer mechanism, at 95 percent,
would allow the state to recover the loans. Once the fund
was healthy enough to have a funding ratio of 95 percent,
money would begin to flow back to the general fund. He
relayed that the third trigger, at 60 percent, included the
trust fund plus the reserve account and divided by
liability. He communicated that the trigger was designed to
prevent future legislatures from raiding the fund.
9:24:11 AM
Co-Chair Hoffman referred to the chart, "Cost of State
Assistance to PERS -- with and without a $2 Billion
Deposit." He wondered if the 40 percent liability would be
directly attributed to municipalities.
Mr. Teal responded that the ratio of 60:40 was the current
standing. He said it could be argued that the state should
not bear the responsibility to put up the entire $2 billion
to keep rates at 22 percent, and that municipalities should
put up their 40 percent. Under that scenario the state would
contribute $1.2 billion and the municipalities would have to
come up with $800 million. He did not believe that
municipalities would be able to come up with the funds. He
furthered that it was a bonus to municipalities that they
did not have to produce a share of the unfunded liability;
however, they were continuing to pay a portion of the
unfunded liability because they continued to pay the 22
percent rate, half of which was a contribution to past
service costs. He stressed that the state was not absorbing
the entire amount, but a large portion.
9:26:18 AM
Co-Chair Stedman stated that the committee would delve into
further detail upon the next hearing of the legislation.
9:26:34 AM
Senator Ellis thanked Mr. Teal for working with his office
on the legislation, particularly on the reserve fund
concept.
9:27:09 AM
Senator Thomas asked whether conclusions and recommendations
from the ARMB were reflected in the bill.
Mr. Teal responded that the board had examined the option
presented in the bill. He did not believe that the board
supported, nor understood, the legislation. He thought that
the board should be questioned directly. He noted that the
board had reviewed a number of options, and that those
options would be before the committee in the coming weeks.
9:27:45 AM
Co-Chair Stedman added that the board would be before the
committee in the future.
9:28:21 AM
SB 187 was HEARD and HELD in committee for further
consideration.
Co-Chair Stedman observed the fiscal note: NEW FN (DOR).
SENATE BILL NO. 171
"An Act increasing the base student allocation used for
public school funding; and providing for an effective
date."
9:29:24 AM
SENATOR JOE THOMAS, FAIRBANKS, testified that SB 171 would
provide stable, modest increases to the base student
allocation (BSA) over a 3 year period. The increases would
be as followed: FY13, $125 per student; FY14, $130 per
student; FY 15, $135 per student. He stated that the bill
would give districts the ability to craft a responsible and
conservative budget. The 3 year plan of modest increases,
lower than the inflation rate, provided districts financial
parameters for more accurate financial planning. He shared
that the legislature had recently passed a similar 3 year
plan, which had enabled school districts to count on
reliable funding through BSA increases. He stressed that BSA
increases were necessary for the education of Alaska's
children and that the cost of education increased yearly
along with all other costs included in the state budget. He
noted that many districts were reporting large deficits for
2013, even with the increases provided by SB 171. He said
that without the increase schools would have to make major
cuts in staff and services, or municipalities would have to
raise property taxes. He urged committee support for the
legislation.
9:31:14 AM
Co-Chair Stedman discussed the fiscal notes: FN1 (DEED) and
FN2 (DEED). He pointed out to the committee that the fiscal
notes would be restated, as problems had been identified;
the BSA increases were cumulative, which was not reflected
in the note. He added that the costs beyond FY15 should be
reflected in the note.
Co-Chair Stedman OPENED public testimony.
PEGGY COWAN, BARROW, SUPERINTENDENT, North Slope SCHOOL
DISTRICT (via teleconference), spoke in strong support of SB
171. She stated that by adding to the BSA, the senate would
be taking a leadership position in understanding that
additional funding was the fuel that fed Alaska's schools.
She added that the ongoing budget pressures faced by the
North Slope School District each year included: energy,
fuel, utilities, benefits, and healthcare. She shared that
due to the loss of the National Preserve Petroleum Reserve
Act Grant programs, infrastructure, and positions had been
cut. She stressed that the district would face a $3.2
million budget gap in 2013. She relayed that, despite being
generous in the past, the borough was facing declining
population and property values, which would hinder future
financial aid to the district. She said that the increase
proposed in the bill would result in $600,000 for the
district, which would help to avoid the full amount of staff
and program cuts, and leave a remainder of $2.5 million.
9:36:01 AM
MELISSA BORTON, PRESIDENT, KODIAK ISLAND BOARD OF EDUCATION
(via teleconference), testified in support of SB 171. She
stated that Kodiak was facing a $3.5 million shortfall for
the 2013; the equivalent of 36 teaching positions, or 9
percent of the current staff. Additionally, art and sports
programs would suffer. She stressed that one-time funding
did not help to meet district needs. She stated that failure
to increase the BSA would lead to lay-offs, larger class
sizes, and the elimination of many needed programs. She said
that the bill would give the districts the ability to plan
in advance for the education of students, and help maintain
some financial security over time. She opined that in
reality it would take a $320 BSA increase to enable
districts to keep up with expected costs.
9:37:48 AM
CHAD STITELER, CHIEF FINANCIAL OFFICER, ANCHORAGE SCHOOL
DISTRICT (via teleconference), expressed support of SB 171.
He shared that increases to the BSA were critical for the
effective financial planning for school districts. He
explained that in order to set the local mill rate for
property taxes, the assembly required the district to
provide the budget in March for approval. He said that the
budget that would be presented assumed no increase to the
BSA, and included a $10 million drop in state revenue,
largely recognizing the one-time funds provided in 2012. He
testified that both local and federal funding was expected
to increase, but the cost of maintaining existing programs
exceeded the increases. He explained that the current
district budget included cuts of nearly $23 million in
services in order to balance. The cuts included contractual
obligations and anticipated inflation increases of
approximately $15 million; less than a 3 percent increase.
The increase was relatively low because the district had
adopted a value based budget process that linked the
districts values with the available resources. The process
insured that when cuts were made the most effective programs
were retained. While the budget process was a multi-year
process, the district had been engaged in educational
program evaluation and use of performance measurements. He
said that using the data to identify efficiencies had helped
guide the district when cutting services and redistributing
funds to the most needed areas. He stressed that multi-year
funding, with inflationary increases to the BSA, was
imperative.
9:41:06 AM
RICHARD RIOS, ACTING DIRECTOR FOR CAREER AND TECHNICAL
EDUCATION, ANCHORAGE SCHOOL DISTRICT (via teleconference),
testified in strong support of SB 171. He stated that every
district had critical need and that it made no sense to
require them to purchase class room machinery, when there
was no heat in the schools or teachers to instruct students.
He requested that the committee research removing the
limitations of SB 84 (passed in 2011) to expand its
inclusion to middle schools. He noted that President Obama
had identified the national need for better technical skills
and training in more jobs. He stressed that technical
education began much earlier than high school; middle
schools needed assistance for technical programs as well.
9:43:35 AM
ANDRE LAYRAL, EXECUTIVE DIRECTOR, ALASKA ASSOCIATION OF
SECONDARY SCHOOL PRINCIPALS, FAIRBANKS (via teleconference),
spoke in support of SB 171. He testified that the
association supported the bill because the regular increases
in the BSA would help districts and schools adequately plan
year-to-year without the disruption caused by funding
uncertainty each spring. He stressed that the increases were
necessary in order to accommodate for persistent
inflationary pressures faced by school districts in the
areas of instruction, payroll, healthcare, transportation,
and energy costs.
9:45:09 AM
ADAM MOKELKE, PRESIDENT, ALASKA ASSOCIATION OF SECONDARY
SCHOOL PRINCIPALS, WASILLA (via teleconference), testified
in strong support of SB 171. He reiterated previous
testimony that the BSA increase would allow for planning and
budgeting without the uncertainty currently faced by school
districts. He noted that his district was facing a 2 year
deficit due to the lack of a BSA increase for 2011. He
shared that the superintendent in the Mat-Su noted a 6
percent increase in operating costs for 2012. He contended
that flat funding actually hurt education because flat
funding did not allow schools to keep up with inflation.
9:46:38 AM
KARIE BOYD, SUPERINTENDENT, YUKON KOYUKUK SCHOOL DISTRICT
(via teleconference), spoke in support of SB 171. She shared
that the district consisted of 9 village schools ranging in
enrollment from 12 to 80; all villages were fly-in except
for 2. She added that the Raven Correspondence School
serviced approximately 100 students. She highlighted that in
2011 the district had been removed from intervention status
after 5 years. She attributed the improvement to strong
professional development focus and very low teacher turn
over. She stressed that having a steady growth in the BSA
set in statue had allowed the district to offer competitive
wages and benefits necessary for retaining teachers. She
contended that in order for her districts to educate
students who would be eligible for the Alaska Performance
Scholarship course offerings would need to be increased,
which would require more teachers. She opined that
maintenance issues were an economic burden in the district
and that schools had already taken measures to cut music,
library, and art programs. She concluded that currently the
district face a deficit of $600,000.
9:50:18 AM
STEVE BRADSHAW, SITKA SCHOOL DISTRICT (via teleconference),
testified in support of SB 171. He said that from the school
districts perspective, the approximately $80 per student
that was given last year for energy relief meant that the
$125 dollar BSA proposed in the bill for FY13 would result
in a $45 dollar increase. He contended that $45 did not
begin to come close to meeting the rate of inflation. He
opined that major tax breaks could be given to oil companies
when the infrastructure that should be of major focus was
Alaska's children. He felt that spending $95 to $100 million
over the next three years was not a big price to pay,
especially if the legislature was considering tax breaks for
oil companies that had recently experienced record profits.
He reiterated that Alaska's infrastructure was its children,
and that the relief was necessary in order for school
districts to meet the goals set by both the districts and
the state.
9:53:18 AM
LISA BUSH, PARENT, SITKA (via teleconference), testified in
support of SB 171. She stressed that the state needed an
educated workforce. She said that in order to provide for
the expected workforce trained gap in marine sciences and
fisheries students in Alaska needed to understand basic
science concepts, as well as modern science techniques. She
relayed that the access to the Pacific Ocean, and forests,
gave Alaska the opportunity to have the greatest science
programs in the country. She asserted that this would not
occur without reliable, steady educational funding. She
reiterated that school districts in the state needed to
offer a strong K-12 education. She stated that as a business
owner, and a person involved in Alaska scientific research
and science education, she had witnessed directly the need
to increase the BSA now. She noted that good schools would
attract people from outside of Alaska that were thinking of
relocating. She believed that the state was responsible to
help the school districts meet the rising costs of health
care and energy. She concluded that the bill reflected good
financial planning on the part of the state.
9:55:52 AM
CHARLIE WILBER, SELF, SITKA (via teleconference), expressed
support of 171. He stated that his two daughters had
received a quality education from Sitka High and he wanted
to ensure that other students received the same quality
education. He shared that one of the first questions asked
by interviewees for the Seafood Producers Cooperative was
about the quality of the school systems in the state. He
said that a strong school system not only attracted quality
families, but it retained the families in the community. He
shared that Sitka had experienced declining enrollments and
increased expenses, which had made the budgeting process
difficult.
9:58:35 AM
PETE LEWIS, SUPERINTENDENT, FAIRBANKS NORTH STAR BOROUGH
SCHOOL DISTRICT (via teleconference), spoke in support of SB
171. He stated that an increase in the BSA would allow
Fairbanks to keep some of the teachers who may otherwise
lose their positions. He relayed that the district faced a
shortfall of over $12 million. He understood that the bill
would generate $3.3 million for the district, which would
enable the district to keep some staff and allow for future
financial planning.
9:59:44 AM
KRISTINA BROPHY, PRESIDENT, FAIRBANKS NORTH STAR BOROUGH
SCHOOL DISTRICT BOARD OF EDUCATION, FAIRBANKS (via
teleconference), testified in support of SB 171. She
stressed the importance that students receive a quality
education in Alaska schools. She shared that Fairbanks had
recently seen positive results in its schools; the dropout
rate had decreased in the last 6 years to fewer than 4
percent. She said that the dropout rate for Alaska Native
students had been cut in half, while the graduation rate had
increased by over 17 percent.
10:01:00 AM
CINDY JORGENSEN, SELF, FAIRBANKS (via teleconference),
expressed support of SB 171.
10:01:47 AM
ANNE KILKENNY, SELF, MAT-SU (via teleconference), testified
in support of SB 171. She stated that the legislation would
retain approximately 36 teaching jobs in Mat-Su; roughly 300
statewide. She felt SB 171 would result in education more
responsible citizens. She stressed that well educated
students became productive members of society.
10:05:19 AM
JILL SHOWMAN, PRESIDENT, MAT-SU EDUCATION ASSOCIATION (via
teleconference), spoke in support of SB 171. She echoed
previous testimony that flat funding resulted in
underfunding. She shared that in 2011, the Mat-Su lost
approximately 40 teaching positions due to budget
constraints. She furthered that some district schools were
currently without full-time specialists, physical education,
music programs, and libraries. She stated that many core
classes carried a roster of well over 30 students each. She
added that school nurses had been a casualty of budget cuts.
She indicated that without an addition to the BSA, 142 jobs
could be cut in the district.
10:07:48 AM
ROB THOMASON, PETERSBURG, SUPERINTENDENT, PETERSBURG CITY
SCHOOL DISTRICT (via teleconference), testified in support
of SB 171. He pointed out to the committee that in 2003-2004
Alaska was 10th nationally for per pupil education funding,
falling to 22nd place in 2009-2010. He stated that the
Petersburg School District had already reduced staff by 6
full-time positions over the last 3 years. He opined that
declining enrollment when combined with increasing health
insurance, personnel, and energy costs had been damaging. He
noted that 48 percent of the 2011 graduating class had
qualified for the governor's performance scholarship.
10:09:53 AM
MICHELLE STRICKLER, SELF, spoke in support of SB 171. She
stated that she was a parent with several children in
state's education state system. She noted that statewide
graduation rates had improved, and that the state had
improved at meeting the career and technical needs of
students. She warned that without funding children would not
feel safe, empowered, or respected. She felt that the bill
did not go far enough to adequately fund districts.
10:13:12 AM
MONICA WITTER, JUNEAU EDUCATION ASSOCIATION, testified in
support of SB 171. She stated that the benefits of the
legislation were vast: from improving technology; to
retaining highly qualified teachers, para and cultural
educators, music teacher, librarians, and arts specialists.
She spoke of a program that was designed to improve
graduation rates called Advancement Via Individual
Determination (AVID). She explained that the dilemma faced
by the district was whether to expand the program beyond the
middle school, or to cut effective programs and personnel.
She said that the BSA increase would help the district to be
innovative in the implementation of new technology and
research based curriculum. She stressed that having access
to modern technology increased student attendance rates,
addressed a variety of learning styles, made learning
enjoyable, and drew greater interest from the students. She
continued that specialized educators were vital to student
achievement, and were often the first individuals that gave
high-risk students a positive school experience. She stated
that larger class sizes caused teachers to spend more time
on classroom management and less in innovative instruction.
10:17:25 AM
JENNY MALECHA, SELF, spoke in support of SB 171. She shared
that her 5 year old son had type 1 diabetes and would be
starting kindergarten in the fall. She expressed concern
with the planned reduction in the number of registered
nurses working in schools. She explained that her son
required frequent blood sugar tests, multiple daily insulin
injections, and monitoring for hyper and hypoglycemia. She
was hopeful that with increased state funding her son would
have music, art, gym, a clean school, and a registered nurse
to keep him healthy and safe.
10:18:55 AM
MAX MERTZ, JUNEAU CHAMBER COMMERCE, voiced his support of SB
171. He felt that the BSA increase presented in the
legislation was too modest. He presented the latest consumer
price index (CPI) numbers, which indicated that over the
past 12 months, inflation in the country went up 3 percent;
6.3 percent in Anchorage. He stated that the scheduled
increases proposed in the bill of 2.2 percent, each year
over the next three years, were modest in light of the
figures, and did not begin to cover the real cost of
inflation. He furthered that medical care in Anchorage
increased by 23 percent in 2011, and utility costs increased
by 8.5 percent. He added that when increased medical costs
were removed from the equation inflation in Anchorage was
5.8 percent. He believed that schools had been fiscally
responsible. He understood that the vast majority of the
budget went to salaries, and the vast majority of that to
teacher's salaries. He felt that there was nowhere that the
district could easily cut spending. He reiterated that
strong schools would make Alaskan communities attractive to
people relocating from the lower 48.
10:22:02 AM
MARC CHOATE, JUNEAU SCHOOL BOARD, testified in support of SB
171. He discussed the education budget as it related to the
overall state budget. He felt that restricting the
educational opportunities for the young people in the state
would be detrimental to the state. He said that by fully
funding education the state was investing in future leaders.
10:23:59 AM
CARL ROSE, EXECUTIVE DIRECTOR, ASSOCIATION OF ALASKA SCHOOL
BOARDS, spoke in support of SB 171. He indicated that
previous testimony had voiced the symptoms of a greater
problem. He stated that there was no correlation between how
revenue was calculated through enrollment and how increased
operating costs were addressed. He offered that the only
correlation was the BSA. He said if the BSA was inadequate
that districts could not generate enough revenue to cover
costs. He asserted that his testimony was a message for the
entire legislature and the governor. He opined that the lack
of an increase in the BSA for 2013 would mark 3 years of
flat funding, and would throw the foundation formula off
kilter. He stressed that the district needed the BSA to
reach $320 for FY13 simply to maintain current spending. He
concluded that the association supported the legislation
because it addressed an increase that was critically
important and introduced the whole spectrum of forward
funding.
10:27:23 AM
MOLLY HILLIS, SELF, spoke in support of SB 171. She praised
the forward thinking of the intent of the legislation. She
noted that studies showed that there had been upward
achievement in Juneau schools. She said that the measuring
of adequate progress (MAP) testing in math indicated that
every grade level had improved in 2011.
10:29:03 AM
ANDI STORY, JUNEAU SCHOOL BOARD, testified in support of SB
171. She stated that setting the BSA one year in advance
would allow districts to plan educational programs with
certainty, and would promote public confidence in schools.
She added that it would allow for districts to meet key
staff contract deadlines. She explained that the budget not
being approved until the legislature adjourned in April
resulted in the late retention and recruitment of quality
teachers for Alaska schools. She furthered that the
Department of Education and Early Childhood Development
(DEED) and school districts invested hundreds of $1000's
into training and mentoring programs for teachers and often
the investment was lost. She shared that Juneau's city
charter deadline was March 31st for the district to present
a balanced budget to the assembly, but since the legislature
adjourned in April, the board, staff, and public spent
unnecessary time revising budgets based on legislative
action after the local process has begun. She reiterated
that knowing the BSA ahead of time would prevent this
situation and allow for budget efficiencies. She stated that
in 2012 the district was cutting approximately $5.8 million,
on top of the $4.1 million cut in 2011. She relayed that
more than 65 school staff members would lose their jobs. She
said that the Juneau Economic Development Council had
estimated that the job losses would result in a negative
economic impact to Juneau of nearly $11.5 million.
10:32:05 AM
Co-Chair Hoffman commented that in the past 2 years the
legislature had taken the position to forward fund education
so that pink slips would not be sent out. He noted that
although the BSA remained the same, there was forward
funding for education in the budget. He noted that pink
slips were prevalent in the past, which was why the
committee had passed SB 87. He hoped that the public
recalled the work done by the committee to improve forward
funding for education.
Ms. Story though that the problem was a symptom of
miscommunication between the school board and local
legislators. She explained that when districts did not have
a number for the BSA, regardless of forward funding, there
was no mechanism for planning because there was no number
indicated in the budget.
Co-Chair Hoffman responded that the most recent number
passed by the legislature would be the number districts
should employ. He said the last number passed by the
legislature was the number to use until the legislature took
different action.
10:34:39 AM
AMY LUJAN, EXECUTIVE DRIECTOR, ALASKA ASSOCIATION OF SCHOOL
BUSINESS OFFICIALS, spoke in support of SB 171. She
indicated that the association really liked the multi-year
funding that was built into SB 171. She concluded that the
legislature had funded regular increases to state government
agencies in response to annual increases in wages, benefits,
utilities, and other operating costs and the same
consideration should be taken for the school districts.
10:36:45 AM
JOHN ALCANTRA, GOVERNMENT RELATIONS DIRECTOR, NATIONAL
EDUCATION ASSOCIATION (NEA) - ALASKA, spoke in support of SB
171. He shared that the flat funding of the BSA for 2012 in
the Mat-Su had resulted in an increase in student to teacher
ratios from 25.2 children per classroom to 30.2, in one
year. He indicated that NEA-Alaska recommended more funding
to the BSA than SB 171 provided. He urged the committee to
consider additional funding of the BSA.
10:39:34 AM
Senator Olson asked Mr. Alcantra to comment on prior funding
and pink slips.
Mr. Alcantra responded that the work of prior legislatures
had alleviated the issuance of pink slips. He reiterated
previous testimony that it was unknown to districts how the
legislature would fund until adjournment, so the cuts would
have to be made according to flat funding figures. He added
if positive movement happened with the BSA the district
needed to work in retrograde. He commended the work of HB
273. He felt that the flat funding of the BSA had caused
budgetary problems to resurface.
Senator Olson understood that the no matter how much money
was put into forward funding there would still be a threat
of issuing pink slips because the district was waiting to
see what action the legislature would take before
establishing their budget.
Mr. Alcantra indicated that Senator Olson was correct.
10:42:36 AM
MARY HAKALA, COORDINATOR, SCIENCE TECHNOLOGY ENGINEERING
MATH INITIATIVE, spoke in support of SB 171. She discussed
the value of multi-year formula increases. She explained
that a formula approach offered an education dividend to
schools that allowed schools to focus on improving learning
and instruction. She stressed that the multi-year formula
approach allowed schools to focus on educating children. She
expressed concern with the future of math and science
education programs in the state.
10:46:02 AM
ADAM BERKEY, SELF, testified in support of SB 171. He
related his frustration at Governor Parnell's approach to
funding education. He stated that the state was failing its
children. He stated that $60 thousand per year salaries for
teachers were a myth. He noted that a qualified teacher had
to hold a master's degree which resulted in large student
loans. He assured the committee that the money being spent
on education was not making it to students, teacher's
salaries, or into classrooms. He could not comment on
administrative salaries. He expressed confusion as to where
the funds were being allocated.
10:49:31 AM
Co-Chair Stedman CLOSED public testimony.
SB 171 was HEARD and HELD in committee for further
consideration.
ADJOURNMENT
10:49:52 AM
The meeting was adjourned at 10:49 AM.
| Document Name | Date/Time | Subjects |
|---|---|---|
| SB 187 retirement fund sectional summary.pdf |
SFIN 2/8/2012 9:00:00 AM |
SB 187 |
| SB 187 sponsor statement.pdf |
SFIN 2/8/2012 9:00:00 AM |
SB 187 |
| SB187 020712 PERS savings.pdf |
SFIN 2/8/2012 9:00:00 AM |
SB 187 |
| SB187 020712 PERS Actuarial Data.pdf |
SFIN 2/8/2012 9:00:00 AM |
SB 187 |
| SB187 020712 reserves.pdf |
SFIN 2/8/2012 9:00:00 AM |
SB 187 |
| SB 171 dropout rate chart.pdf |
SFIN 2/8/2012 9:00:00 AM |
SB 171 |
| SB 171 JSD Support.pdf |
SFIN 2/8/2012 9:00:00 AM |
SB 171 |
| SB 171 report from Alaska Council of School Administrators.pdf |
SFIN 2/8/2012 9:00:00 AM |
SB 171 |
| SB 171 letter from haines.pdf |
SFIN 2/8/2012 9:00:00 AM |
SB 171 |
| SB 171 sample of district budgets.pdf |
SFIN 2/8/2012 9:00:00 AM |
SB 171 |
| SB 171 shares of per pupil spending.pdf |
SFIN 2/8/2012 9:00:00 AM |
SB 171 |
| SB 171 spending per student by state.pdf |
SFIN 2/8/2012 9:00:00 AM |
SB 171 |
| SB 171 sponsor statement.pdf |
SFIN 2/8/2012 9:00:00 AM |
SB 171 |
| SB 171 State snapshot reports.pdf |
SFIN 2/8/2012 9:00:00 AM |
SB 171 |
| SB 171 Support Comeau.doc |
SFIN 2/8/2012 9:00:00 AM |
SB 171 |
| SB 171 support emails 1.pdf |
SFIN 2/8/2012 9:00:00 AM |
SB 171 |
| SB 171 support emails 2.pdf |
SFIN 2/8/2012 9:00:00 AM |
SB 171 |