Legislature(2017 - 2018)SENATE FINANCE 532

02/22/2018 09:00 AM Senate FINANCE

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+= SB 104 EDUCATION CURRICULUM TELECONFERENCED
Heard & Held
+ Bills Previously Heard/Scheduled: TELECONFERENCED
+= SB 168 APPROP: SUPPLEMENTAL OP.; FUND; AMENDING TELECONFERENCED
Heard & Held
                 SENATE FINANCE COMMITTEE                                                                                       
                     February 22, 2018                                                                                          
                         9:02 a.m.                                                                                              
                                                                                                                                
9:02:55 AM                                                                                                                    
                                                                                                                                
CALL TO ORDER                                                                                                                 
                                                                                                                                
Co-Chair MacKinnon called the Senate Finance Committee                                                                          
meeting to order at 9:02 a.m.                                                                                                   
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Senator Lyman Hoffman, Co-Chair                                                                                                 
Senator Anna MacKinnon, Co-Chair                                                                                                
Senator Click Bishop, Vice-Chair                                                                                                
Senator Peter Micciche                                                                                                          
Senator Donny Olson                                                                                                             
Senator Gary Stevens                                                                                                            
Senator Natasha von Imhof                                                                                                       
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
None                                                                                                                            
                                                                                                                                
ALSO PRESENT                                                                                                                  
                                                                                                                                
Pete  Ecklund, Staff,  Senator  Lyman  Hoffman; David  Teal,                                                                    
Director, Legislative  Finance Division;  Brittany Hartmann,                                                                    
Staff,    Senator   Anna    MacKinnon;   Michael    Johnson,                                                                    
Commissioner,    Department   of    Education   and    Early                                                                    
Development.                                                                                                                    
                                                                                                                                
SUMMARY                                                                                                                       
                                                                                                                                
SB 104    EDUCATION CURRICULUM                                                                                                  
                                                                                                                                
          SB 104 was HEARD and HELD in committee for                                                                            
          further consideration.                                                                                                
                                                                                                                                
SB 168    APPROP: SUPPLEMENTAL OP.; FUND; AMENDING                                                                              
                                                                                                                                
          SB 168 was HEARD and HELD in committee for                                                                            
          further consideration.                                                                                                
                                                                                                                                
                                                                                                                                
SENATE BILL NO. 168                                                                                                           
                                                                                                                                
     "An  Act making  supplemental appropriations  and other                                                                    
     appropriations; making  an appropriation  to capitalize                                                                    
     a fund;  amending appropriations; and providing  for an                                                                    
     effective date."                                                                                                           
                                                                                                                                
9:03:19 AM                                                                                                                    
                                                                                                                                
Co-Chair Hoffman  informed the committee that  in past years                                                                    
the  supplemental  bill  had   been  incorporated  into  the                                                                    
capital  budget;  and  in the  current  year  the  committee                                                                    
intended  to   address  the  supplemental  bill   early.  He                                                                    
believed that addressing the bill  early was a positive move                                                                    
for the  agencies. He indicated that  an identical companion                                                                    
bill  was  expected  to  arrive  from  the  other  body  the                                                                    
following week.                                                                                                                 
                                                                                                                                
Co-Chair  MacKinnon MOVED  to ADOPT  the proposed  committee                                                                    
substitute    for   SB    168,   Work    Draft   30-GS2781\D                                                                    
(Wallace/Martin, 2/20/18).                                                                                                      
                                                                                                                                
Co-Chair Hoffman OBJECTED for discussion.                                                                                       
                                                                                                                                
PETE  ECKLUND, STAFF,  SENATOR LYMAN  HOFFMAN, reminded  the                                                                    
committee  that supplemental  items  were  requested in  the                                                                    
governor's  original operating  and capital  budget requests                                                                    
on December  15, 2027. On  January 31, 2018 he  introduced a                                                                    
standalone supplemental  bill. He  noted that  the committee                                                                    
had  held  overviews  on  all  the  governor's  supplemental                                                                    
requests.                                                                                                                       
                                                                                                                                
9:06:07 AM                                                                                                                    
                                                                                                                                
Mr. Ecklund  addressed that the high  level figures included                                                                    
in the bill  were $67.7 million in all  funds, $49.5 million                                                                    
in  Unrestricted  General  Funds   (UGF),  $5.1  million  in                                                                    
Designated General  Funds (DGF), and $13.1  million in other                                                                    
funds.                                                                                                                          
                                                                                                                                
Mr.  Ecklund addressed  the  spreadsheet  document "FY  2018                                                                    
Supplemental Bill" (copy  on file). He reported  that item 2                                                                    
was  in  the  amount  of  $453.5  thousand  for  the  Public                                                                    
Defender Agency.  He delineated that the  agency experienced                                                                    
a reduction in  Criminal Rule 39 fee  revenue, exceeding the                                                                    
ethical  number   of  maximum  caseloads.  The   funds  were                                                                    
necessary to  replace the  reduced program  receipt revenue,                                                                    
maintain  staffing  levels,  and  reduce  the  caseload.  He                                                                    
turned  to  the  item  3   for  $10,447.6  million  for  the                                                                    
Department  of  Corrections  (DOC),  Institution  Director's                                                                    
Office and  offered that  the funds  were necessary  to meet                                                                    
institutional shortfalls  from overestimating  the reduction                                                                    
in offender  populations due to  passage of SB 91  - Omnibus                                                                    
Crim  Law &  Procedure;  Corrections [CHAPTER  36  SLA 16  -                                                                    
07/11/2016]. He  highlighted item  4 amounting  to $10,341.5                                                                    
million  for DOC,  Institution Director's  Office. He  noted                                                                    
that the funding was needed  to meet increased inmate health                                                                    
care  costs.  He  reviewed  item 5  for  the  Department  of                                                                    
Environmental  Conservation  (DEC), Solid  Waste  Management                                                                    
for  increased Program  Receipt Authority  in the  amount of                                                                    
$35 thousand.  The department  increased its  fees effective                                                                    
October  27, 2017  and the  increased receipt  authority was                                                                    
necessary  to collect  the additional  revenue. He  moved to                                                                    
item 6  for DEC, Air  Quality for decreased  Program Receipt                                                                    
Authority in the  amount of $35 thousand.  He addressed item                                                                    
7  for the  Department  of Revenue  (DOR), Alaska  Permanent                                                                    
Fund Corporation  (APFC) Investment Management  Fees request                                                                    
of  $5   million  for  Investment   and  Custody   Fees.  He                                                                    
underlined  item  8   for  the  Legislature,  Administrative                                                                    
Services  totaling   $121.3  thousand  in   Program  Receipt                                                                    
Authority  and   Expenditure  for  Contractual   Lease  Cost                                                                    
Increases.                                                                                                                      
                                                                                                                                
Mr. Ecklund  continued with  item 13  for the  Department of                                                                    
Commerce,  Community   and  Economic   Development  (DCCED),                                                                    
Alaska  Reinsurance  Program that  was  a  repayment of  $25                                                                    
million from  Premera to the Reinsurance  Program. He turned                                                                    
to item  14 and noted  that it  was the only  capital budget                                                                    
item  in the  supplemental. The  item was  for DCCED  in the                                                                    
amount  of $8.125  million in  Statutory Designated  Program                                                                    
Receipts   for  the   Alaska  Energy   Authority  Volkswagen                                                                    
Settlement  that  represented  the state's  portion  of  the                                                                    
settlement for emission problems.                                                                                               
                                                                                                                                
9:10:38 AM                                                                                                                    
                                                                                                                                
Senator  von Imhof  observed that  item  13 corresponded  to                                                                    
Section  4 (a)  in  the  bill that  showed  the  sum of  $30                                                                    
million  versus  the $25  million  on  the spreadsheet.  Mr.                                                                    
Ecklund explained  that the  original appropriation  was $55                                                                    
million, and the current version  modified the amount to $30                                                                    
million, which was a difference of $25 million.                                                                                 
                                                                                                                                
Mr. Ecklund  continued to  address the  Supplemental summary                                                                    
spreadsheet.  He turned  to item  15 for  the Department  of                                                                    
Education   and   Early    Development   (DEED),   Executive                                                                    
Administration  that  extended  a grant  for  Every  Student                                                                    
Succeeds Act  (ESSA) support  funding. The  request extended                                                                    
the date  for expending the  funds. He reviewed item  16 for                                                                    
Special Appropriations;  Judgments, Claims,  and Settlements                                                                    
in  the amount  of $322  thousand for  a DEC  Wage and  Hour                                                                    
settlement.  He  noted  that   item  17  was  an  open-ended                                                                    
language appropriation for FY  18 Judgments and Settlements.                                                                    
He   presented   item   18  that   pertained   to   a   Fund                                                                    
Capitalization  for   the  Community  Assistance   Fund.  He                                                                    
detailed that the statutes dictated  that if there was no FY                                                                    
18 appropriation  to the  fund the  balance would  total $60                                                                    
million, and  one-third of the balance  would be distributed                                                                    
to communities  in FY 19 in  the amount of $20  million. The                                                                    
supplemental originally proposed to  use $30 million in one-                                                                    
time funds from the  Power Cost Equalization (PCE) Endowment                                                                    
Fund using  FY 17  earnings for FY  19. The  statue mandated                                                                    
that  FY 17  earnings were  intended for  the FY  19 budget.                                                                    
Therefore, the current  supplemental proposed to appropriate                                                                    
$30   million   in   one-time  funding   from   the   Alaska                                                                    
Comprehensive Health Care Fund  for the Community Assistance                                                                    
Fund bringing  the balance from  $60 million to  $90 million                                                                    
and providing the $30 million payout to communities.                                                                            
                                                                                                                                
Co-Chair Hoffman  stated the amount would  bring the program                                                                    
back on track.                                                                                                                  
                                                                                                                                
Senator  Olson asked  about  the effect  on  the Power  Cost                                                                    
Equalization Endowment  Fund. Mr.  Ecklund replied  that the                                                                    
FY 17  earnings would be available  to pay FY 19  PCE costs,                                                                    
community assistance,  renewable energy, and other  items in                                                                    
the capital budget per statute.  Senator Olson was concerned                                                                    
what  the   balance  of   the  fund   would  be   after  the                                                                    
supplemental  appropriation.  Mr.  Ecklund stated  that  the                                                                    
appropriation in the supplemental did not expend PCE funds.                                                                     
                                                                                                                                
9:14:52 AM                                                                                                                    
                                                                                                                                
Co-Chair  MacKinnon   interjected  that  the   chairman  had                                                                    
presented  a  way  to  ensure  that the  PCE  fund  was  not                                                                    
overdrawn as  it had been  in the past. She  elaborated that                                                                    
the PCE  Fund maintained a  lower expectation on  returns to                                                                    
ensure adequate  funding for its main  purpose; to stabilize                                                                    
energy  costs in  rural Alaska.  Additionally,  she and  Co-                                                                    
Chair  Hoffman had  carried two  pieces  of legislation  the                                                                    
previous  session  that  protected  the  PCE  endowment  and                                                                    
"rolled  off"   funds  for   community  assistance   if  the                                                                    
endowment  earnings  were  sufficient. The  returns  in  the                                                                    
previous year  allowed a $30  million draw from the  fund in                                                                    
FY  19.   The  administration   had  proposed  to   take  an                                                                    
additional $30  million from the PCE  fund, which threatened                                                                    
to  overdraw  of  the  fund.  The  current  version  of  the                                                                    
supplemental  proposed  the legislature's  original  intent;                                                                    
excess  PCE  earnings  would start  to  fund  the  Community                                                                    
Assistance Fund  and possible  energy projects  statewide in                                                                    
FY 19.  Therefore, the current  version of  the supplemental                                                                    
employed another source of funding for FY 18.                                                                                   
                                                                                                                                
Co-Chair Hoffman pointed out that  when Office of Management                                                                    
and  Budget (OMB)  Director, Pat  Pitney  had presented  the                                                                    
budget  she  spoke  of transparency.  He  had  informed  Ms.                                                                    
Pitney that  the governor's budget had  short-funded the PCE                                                                    
program and  a "couple"  other items. He  specifically noted                                                                    
that if  the $30  million was  expended from  PCE for  FY 18                                                                    
then a $60 million deposit  would be necessary the following                                                                    
year.  The current  supplemental transaction  was attempting                                                                    
to get the fund balances "back on track."                                                                                       
                                                                                                                                
9:17:51 AM                                                                                                                    
                                                                                                                                
Senator  Micciche asked  if the  committee would  review the                                                                    
purpose  of the  Community  Assistance Program.  He was  not                                                                    
sure that  Alaskans were aware  of how the funds  were used.                                                                    
He  discussed  the  use  of  funds  for  emergency  response                                                                    
services for  people utilizing roads in  the jurisdiction of                                                                    
small rural communities, which was  the only source of state                                                                    
support for the communities.                                                                                                    
                                                                                                                                
Co-Chair  Hoffman  thought  the   topic  was  expedient.  He                                                                    
recounted that  the previous  community assistance  fund was                                                                    
too  heavily   dependent  on  state  resources   and  became                                                                    
unaffordable to maintain. Three  years earlier the Co-Chairs                                                                    
of  the  Senate  Finance Committee,  Senator  MacKinnon  and                                                                    
Senator  Kelly reduced  the  program by  50  percent, so  it                                                                    
could be  more affordable for  the state, but still  be able                                                                    
to provide services to many  communities. He agreed that the                                                                    
subject should  be revisited in  a future meeting.  He added                                                                    
that   he  had   cautioned  the   administration  that   the                                                                    
governor's original  budget placed a large  financial burden                                                                    
on  the  state  with  his  proposed  $30  million  draw.  He                                                                    
reiterated his effort to get the program back on track.                                                                         
                                                                                                                                
9:20:22 AM                                                                                                                    
                                                                                                                                
Co-Chair  MacKinnon stated  that  given  the state's  fiscal                                                                    
situation, it might  be helpful to discuss  the inception of                                                                    
the PCE program.  She thought some might  not understand the                                                                    
genesis of the  program. She delineated that  many years ago                                                                    
the legislature  had "heavily invested" in  capital projects                                                                    
(dams)  in  urban Alaska  to  provide  a lower  cost  stable                                                                    
energy supply.  In an effort  to support  rural communities,                                                                    
the legislature  had established  an "investment  model;" an                                                                    
endowment set up like the  corpus of the Permanent Fund. She                                                                    
reiterated  that the  PCE  fund was  adjusted  to allow  the                                                                    
"rolling  off"  of  funding  to  urban  communities  through                                                                    
community assistance. The entire  state was benefitting from                                                                    
the saved assets,  but the original function  of the program                                                                    
was  to   ensure  the  equitable  investment   of  resources                                                                    
throughout the state.                                                                                                           
                                                                                                                                
Senator  von  Imhof asked  for  an  explanation of  how  the                                                                    
funding worked.                                                                                                                 
                                                                                                                                
Co-Chair  Hoffman explained  that when  the $60  million per                                                                    
year distribution  for the Community Assistance  Program was                                                                    
reduced  to   a  $30  million  per   year  distribution  the                                                                    
communities  were given  an  additional  two year's  notice.                                                                    
Therefore,  and  additional  $60 million  appropriation  was                                                                    
necessary  bringing  the  total  to  $90  million.  The  $30                                                                    
million  would be  matched with  and additional  $30 million                                                                    
appropriation  to  guarantee  the amount  communities  would                                                                    
receive for  the two years.  Senator von Imhof asked  if the                                                                    
money would  no longer be  available in approximately  FY 20                                                                    
or  FY 21.  Co-Chair Hoffman  answered in  the negative.  He                                                                    
continued  that next  year a  $30 million  appropriation was                                                                    
necessary.  He reminded  the committee  that the  amount was                                                                    
subject to appropriation by the legislature.                                                                                    
                                                                                                                                
Senator  Micciche   shared  that  when  the   fiscal  crisis                                                                    
developed  he  wanted  to  shut  down  the  revenue  sharing                                                                    
program. However,  as he  reviewed the  public value  of the                                                                    
program  he  appreciated  the  changes   made  to  save  the                                                                    
program.  He  strongly  endorsed  an  informational  meeting                                                                    
about PCE and the CAP programs.                                                                                                 
                                                                                                                                
9:25:26 AM                                                                                                                    
                                                                                                                                
Mr. Ecklund  continued to  review the  supplemental summary.                                                                    
He addressed  Item 19, which  was a Fund  Capitalization for                                                                    
the Disaster  Relief Fund  increased from  $2 million  to $4                                                                    
million. The increase  was necessary due to  the low balance                                                                    
of the disaster relief fund  and the estimated amount needed                                                                    
for  spring 2018  disasters. He  stated  that currently  the                                                                    
balance   of   the   fund  was   $1.5   million,   and   the                                                                    
administration typically kept $5 million in the fund.                                                                           
                                                                                                                                
Senator  Micciche asked  if there  had ever  been a  problem                                                                    
appropriating additional  funds when  the fund was  used for                                                                    
significant disaster  response. Mr. Ecklund stated  that the                                                                    
recommended balance  of the fund  was $5 million and  if the                                                                    
fund  ran  out of  money  he  was  unsure whether  merely  a                                                                    
ratification  or   a  special   session  was   necessary  to                                                                    
appropriate  more funding.  Senator Micciche  was struggling                                                                    
with the  appropriation because he  was uncertain  the state                                                                    
could afford to "tie up" the money.                                                                                             
                                                                                                                                
Co-Chair  Hoffman was  not sure  that the  funds were  being                                                                    
"tied up." He viewed the funds as a "safety measure."                                                                           
                                                                                                                                
9:27:44 AM                                                                                                                    
                                                                                                                                
DAVID TEAL,  DIRECTOR, LEGISLATIVE FINANCE  DIVISION, stated                                                                    
that  historically  funding  for disaster  relief  had  been                                                                    
intermittent   and   jumped    between   large   and   small                                                                    
appropriations. He  recalled that $32 million  was deposited                                                                    
into the  Disaster Relief Fund 5  years prior. Subsequently,                                                                    
the balance had  since fallen from over $30  million down to                                                                    
the   current  $1.5   million.   He   determined  that   the                                                                    
legislature faced a  choice of a higher  annual funding rate                                                                    
or  a  large  lump  sum when  necessary.  Given  the  fiscal                                                                    
situation,  the recommendation  was to  increase the  annual                                                                    
deposit to $4 million and hope the amount was sufficient.                                                                       
                                                                                                                                
Senator Micciche  supposed that  the administration  had the                                                                    
authority to spend on emergency  response over the amount of                                                                    
the fund. He offered that  he viewed the funding differently                                                                    
under  the  climate  of  constrained  spending.  He  favored                                                                    
keeping  funding in  accounts  that  earned interest  rather                                                                    
than depositing  large amounts of  funding in  accounts that                                                                    
accrued nothing. Mr.  Teal had neglected to  mention that it                                                                    
was possible to  spend more money than was in  the fund, but                                                                    
the amount  was limited to  $1 million. He reasoned  that if                                                                    
the  balance was  too low  when disaster  struck, additional                                                                    
funding  beyond  the $1  million  authority  was subject  to                                                                    
appropriation.                                                                                                                  
                                                                                                                                
Co-Chair  Hoffman interjected  that it  was important  to be                                                                    
able to  respond to a  disaster no  matter what part  of the                                                                    
state   the    disaster   happened.   He    considered   the                                                                    
appropriation   a  small   amount  of   insurance  for   the                                                                    
protection of Alaskan citizens.                                                                                                 
                                                                                                                                
Senator Micciche  agreed with  Co-Chair Hoffman.  He thought                                                                    
it was  time to reevaluate  the $1 million  in over-spending                                                                    
authority and felt that it was insufficient.                                                                                    
                                                                                                                                
Co-Chair MacKinnon  asked if Mr.  Teal had a figure  for the                                                                    
use  of  the fund  in  the  previous  year. Mr.  Teal  would                                                                    
provide the numbers.                                                                                                            
                                                                                                                                
9:32:30 AM                                                                                                                    
                                                                                                                                
Mr. Ecklund continued to  discuss the Supplemental document.                                                                    
He  addressed Item  20 for  Fund Transfers  into the  Alaska                                                                    
Marine  Highway   System  (AMHS)  Fund  in   the  amount  of                                                                    
$23,918.2  million.  He  remarked  out of  the  $30  million                                                                    
appropriated  from GF  to the  AMHS fund  for FY  2018, only                                                                    
$6,081,800 was  available to transfer due  to the associated                                                                    
contingent  language.  The   appropriation  back-filled  the                                                                    
short fall.  He moved to item  21 for Fund Transfers  to the                                                                    
Civil Legal  Services Fund for  $10.4 thousand.  He reviewed                                                                    
item  22 for  Salary  and Benefit  Adjustments. He  reported                                                                    
that after  the prior session was  over, contract agreements                                                                    
had  been reached  with  the  Fairbanks Firefighters  Union,                                                                    
IAFF  Local  1324  and  the   United  Academics  -  American                                                                    
Association  of University  Professors, American  Federation                                                                    
of Teachers without any monetary impacts.                                                                                       
                                                                                                                                
Senator von  Imhof referenced  item 21  and asked  why there                                                                    
was no amount of UGF  listed. Mr. Ecklund corrected that the                                                                    
amount was $10.4 thousand and not million.                                                                                      
                                                                                                                                
Mr.   Ecklund   noted   that  the   remaining   items   were                                                                    
ratifications that did  not add to the  budget. He indicated                                                                    
that   ratifications   "straightened    out"   prior   years                                                                    
accounting.                                                                                                                     
                                                                                                                                
9:34:54 AM                                                                                                                    
                                                                                                                                
Senator  Stevens referenced  the  Disaster  Relief Fund  and                                                                    
wanted to  see the  longer term  use of the  fund -  for the                                                                    
prior  five years.  Co-Chair Hoffman  agreed to  provide the                                                                    
information.                                                                                                                    
Co-Chair  Hoffman WITHDREW  his  objection.  There being  NO                                                                    
further  OBJECTION,  it  was  so  ordered.  The  CS  for  SB
168(FIN) was ADOPTED.                                                                                                           
                                                                                                                                
Co-Chair Hoffman handed the gavel to Co-Chair MacKinnon.                                                                        
                                                                                                                                
9:36:34 AM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
9:39:04 AM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                
SENATE BILL NO. 104                                                                                                           
                                                                                                                                
     "An Act relating to the duties of the state Board of                                                                       
     Education and Early Development; and relating to                                                                           
     school curriculum."                                                                                                        
                                                                                                                                
9:39:04 AM                                                                                                                    
                                                                                                                                
Co-Chair   MacKinnon  informed   the   committee  that   the                                                                    
Committee  Substitute (CS)  for SB  104(FIN) was  moved from                                                                    
committee  on  April  14,  2017.   The  committee  would  be                                                                    
rescinding its  action in moving  the bill out  of committee                                                                    
and would then adopt a new CS.                                                                                                  
                                                                                                                                
Vice-Chair  Bishop  MOVED  to  RESCIND  the  action  of  the                                                                    
committee to  report CSSB 104(FIN)  from committee  on April                                                                    
14, 2017. There being NO  OBJECTION, the bill was before the                                                                    
committee for consideration.                                                                                                    
                                                                                                                                
Vice-Chair  Bishop MOVED  to  ADOPT  the proposed  committee                                                                    
substitute  for  SB  104, Work  Draft  30-LS0786\N  (Glover,                                                                    
2/21/18).                                                                                                                       
                                                                                                                                
Co-Chair MacKinnon OBEJCTED for discussion.                                                                                     
                                                                                                                                
Co-Chair  MacKinnon spoke  to the  CS. She  stated that  the                                                                    
committee had been working with  the Department of Education                                                                    
and  Early  Development  (DEED)   and  school  districts  to                                                                    
improve  student   success  and   test  scores.   The  state                                                                    
continued  to  have  challenges in  competing  both  at  the                                                                    
national and global  level. Over the course  of the previous                                                                    
summer,   the  department   "undertook  Alaska's   Education                                                                    
Challenge."  She explained  that  the reason  she wanted  to                                                                    
take a "second  look" at the legislation was  to examine the                                                                    
best  recommendations   to  improve  student   outcomes.  In                                                                    
consultation with  the department and the  commissioner, the                                                                    
bill requested what she considered  was possible to achieve.                                                                    
She announced  that the  bill would enable  the state  to do                                                                    
better  with the  investments the  state  made versus  doing                                                                    
more with  less. The  bill provided  improved access  to the                                                                    
best curriculum in the United  States (US) and the world and                                                                    
empowered the  state Board  of Education  to adopt  the best                                                                    
curriculum and  offer flexibility to local  school districts                                                                    
with enough time to adopt and review the curriculum.                                                                            
                                                                                                                                
9:43:42 AM                                                                                                                    
                                                                                                                                
BRITTANY HARTMANN,  STAFF, SENATOR ANNA MACKINNON,  spoke to                                                                    
the  CS.  She  explained  that   SB  104  allowed  DEED,  in                                                                    
consultation  with  school  districts,   to  find  the  best                                                                    
curriculum for  English/Language Arts  and Math  from around                                                                    
the world  in three tiers;  tier 1 was the  highest quality.                                                                    
Once reviewed and approved by  the state Board of Education,                                                                    
the curriculum will be tested as  part of a pilot program in                                                                    
five districts (2  rural and 2 urban) around  Alaska for two                                                                    
years to  determine its effectiveness. The  districts chosen                                                                    
for the pilot program would  receive the curriculum paid for                                                                    
by the state,  not exceeding 150 times  the school formula's                                                                    
average  daily   membership  (ADM)   or  $10   million.  She                                                                    
elucidated  that  if  the new  curriculum  improves  student                                                                    
outcomes,  school districts,  if  they so  choose, would  be                                                                    
granted  3  school  years  to  request  the  curriculum  and                                                                    
funding would  be distributed  in the  order of  requests in                                                                    
addition to one-time funding of  150 times the districts ADM                                                                    
not to exceed $6.7 million per year.                                                                                            
                                                                                                                                
9:44:44 AM                                                                                                                    
                                                                                                                                
Co-Chair MacKinnon  WITHDREW her  OBJECTION. There  being NO                                                                    
further OBJECTION, it was so ordered.                                                                                           
                                                                                                                                
9:45:35 AM                                                                                                                    
                                                                                                                                
MICHAEL JOHNSON,  COMMISSIONER, DEPARTMENT OF  EDUCATION AND                                                                    
EARLY DEVELOPMENT,  expressed his excitement over  the bill.                                                                    
He  declared that  the legislation  was "well-conceived  and                                                                    
informed by the challenges  of the past," recognized current                                                                    
realities,  and shared  a vision  for the  future. The  best                                                                    
practices  were  discovered  through  participation  in  the                                                                    
Alaska Education  Challenge. He stated that  the legislation                                                                    
used  curriculum as  a lever  for  support and  a lever  for                                                                    
improvement.  He  stated  that the  department  was  looking                                                                    
forward  to  the positive  impact  the  bill would  have  on                                                                    
students.                                                                                                                       
                                                                                                                                
Senator  Stevens referenced  a provision  that extended  the                                                                    
requirement  for curriculum  review  from every  6 years  to                                                                    
every  10 years.  He asked  for the  rationale. Commissioner                                                                    
Johnson replied that the rationale  had multiple factors. He                                                                    
explained that  the requirement did not  prevent adopting or                                                                    
reviewing a  curriculum in  a shorter  time frame.  He noted                                                                    
that many  curricula had digital components  and the content                                                                    
was frequently  updated. The content  of some  subjects such                                                                    
as math  did not  change dramatically over  time and  the 10                                                                    
year time period created efficiencies.                                                                                          
                                                                                                                                
9:49:11 AM                                                                                                                    
                                                                                                                                
Senator  Olson   referenced  Senator  Stevens'   point,  and                                                                    
wondered  if  rapid  technology  advancements  changed  more                                                                    
frequently  than a  period of  10 years,  which might  lower                                                                    
test  scores. Commissioner  Johnson agreed  that much  would                                                                    
change over a ten-year time  frame. He thought that in terms                                                                    
of purchasing  a curriculum it  was important to  be mindful                                                                    
of  the risk  of too  many changes  in too  short of  a time                                                                    
frame.  He  thought the  argument  could  be made  that  the                                                                    
bill's time  frame provided stability for  a curriculum that                                                                    
addressed student's needs.                                                                                                      
                                                                                                                                
9:51:08 AM                                                                                                                    
                                                                                                                                
Ms.  Hartmann addressed  a Sectional  Analysis for  CSSB 104                                                                    
(version N) (copy on file):                                                                                                     
                                                                                                                                
     Section 1 AS 14.07.030:                                                                                                    
     The  Department may  not require  a school  district to                                                                    
     review  their curriculum  more than  once in  a 10-year                                                                    
     period.                                                                                                                    
                                                                                                                                
     Section 2 AS 14.07.180:                                                                                                    
     (a)  The Board  of Education  must establish  standards                                                                    
     and a  procedure for the review,  ranking, and approval                                                                    
     of math and English  language arts curricula for school                                                                    
     districts to use in each grade level.                                                                                      
     (b)  The  Department  shall  review  math  and  English                                                                    
     language arts curricula from                                                                                               
     Alaska,   other  states,   and  other   countries.  The                                                                    
     department  has  until July  1,  2019  to identify  the                                                                    
     three best  curricula in these subjects  for each grade                                                                    
     level  and   the  best  practices  for   teaching  each                                                                    
     subject.                                                                                                                   
     (c)  The Board  of  Education  shall approve  curricula                                                                    
     currently  being  used  by  the  five  best  performing                                                                    
     schools  (two urban  schools and  three rural  schools)                                                                    
     according  to  the  scores   of  the  2018  Performance                                                                    
     Evaluation for Alaska's Schools assessments (PEAKS).                                                                       
     (d) The  Department may submit the  curricula that they                                                                    
     find to be the best (under  section b), to the Board of                                                                    
     Education  for approval,  if the  Department deems  the                                                                    
     curricula    appropriate,   aligned    with   education                                                                    
     standards,   and    results   in    improved   academic                                                                    
     achievement for students.                                                                                                  
     (e) The  Board may  approve of the  curricula submitted                                                                    
     by the  Department (under section  d) as long as  it is                                                                    
     consistent with the standards  established by the Board                                                                    
     of education under (a) of  this section. The Department                                                                    
     shall rank  the approved curricula  in 3 tiers.  Tier 1                                                                    
     is the curricula that the  Department ranks the highest                                                                    
     for each grade level.                                                                                                      
     (f)  The  Department  shall conduct  a  two-year  pilot                                                                    
     program beginning in  the 2019 school year  to test the                                                                    
     appropriateness  and   effectiveness  of  the   tier  1                                                                    
     curricula  approved.  The  Department  shall  select  5                                                                    
     school districts  to participate  in the  pilot program                                                                    
     (at  least 2  rural schools  and 2  urban schools)  and                                                                    
     those districts will  be given no more  than a combined                                                                    
     total  of $10  million  to purchase  and implement  the                                                                    
     curricula.                                                                                                                 
     (g) If  the Department deems the  curricula appropriate                                                                    
     and effective, the Department  shall make the curricula                                                                    
     and  one-time  incentive   payments  available  to  all                                                                    
     school  districts  starting  in school  year  2021  and                                                                    
     ending  in  the  school  year  of  2023.  If  a  school                                                                    
     district chooses  Tier 1, they will  receive a one-time                                                                    
     appropriation. This appropriation  is available for all                                                                    
     districts  and shall  not exceed  a  combined total  of                                                                    
     $6,700,000  for all  districts  that  apply each  year.                                                                    
     This incentive  payment will be available  for 3 years,                                                                    
     however   districts  will   only  receive   a  one-time                                                                    
     payment. The Department  shall award incentive payments                                                                    
     in  the order  of which  the request  is received.  The                                                                    
     incentive payment will not exceed 150xADM.                                                                                 
                                                                                                                                
Ms.  Hartmann delineated  that the  $30 million  fiscal note                                                                    
was predicated on the number  of students statewide, roughly                                                                    
129  thousand and  multiplied  that by  150  divided over  5                                                                    
years.                                                                                                                          
                                                                                                                                
9:54:58 AM                                                                                                                    
                                                                                                                                
Ms. Hartmann continued to address the Sectional Analysis:                                                                       
                                                                                                                                
     (h)  The   Department  shall  publish   all  curriculum                                                                    
     currently  used   by  all  school  districts,   on  the                                                                    
     Department's website. Included  in that curriculum will                                                                    
     be the  3 tiers of  the English language arts  and math                                                                    
     curriculum adopted.                                                                                                        
     ` (i) The Department  shall submit an electronic report                                                                    
     to  the   legislature  providing  information   on  the                                                                    
     curricula that each school district has adopted.                                                                           
     (j) All  payments for the  pilot program  and curricula                                                                    
     adoption  are subject  to  appropriation. This  section                                                                    
     provides   the   definitions   for   "rural",   "school                                                                    
     district" and "urban".                                                                                                     
                                                                                                                                
     Sections  3-5  AS  14.08.111,   AS  14.14.090,  and  AS                                                                    
     14.16.020:                                                                                                                 
     Conforming language  requiring school boards  to review                                                                    
     all  textbooks  and  instructional materials  at  least                                                                    
     once every 10 years.                                                                                                       
                                                                                                                                
     Section 6 AS 14.07.180(f), 14.07.180(g), 14.07.180(j):                                                                     
     Repeals the  pilot program  and the  one-time incentive                                                                    
     payments on July 1, 2024.                                                                                                  
                                                                                                                                
     Sec. 7 4 AAC 05.080(e):                                                                                                    
     Annuls  the regulatory  requirement of  a local  school                                                                    
     board  having  to  evaluate their  curriculum  every  6                                                                    
     years.                                                                                                                     
                                                                                                                                
9:57:01 AM                                                                                                                    
                                                                                                                                
Co-Chair Hoffman addressed Section  2(h), which pertained to                                                                    
publishing  all  curriculum  currently used  by  all  school                                                                    
districts.  He asked  whether the  requirement included  the                                                                    
curriculum  developed  because  of the  bill.  Ms.  Hartmann                                                                    
answered  in  the affirmative.  She  stated  that all  three                                                                    
tiers   established  through   the   legislation  would   be                                                                    
published online.                                                                                                               
                                                                                                                                
Co-Chair MacKinnon interjected that  the goal was to provide                                                                    
an incentive program  of best practices. She  found that the                                                                    
larger school districts  were agreeing on a  set of criteria                                                                    
that already  existed. However, in the  smaller districts it                                                                    
was more difficult  to find the time or  expertise to engage                                                                    
in the  same process  as the  larger districts.  She thought                                                                    
there  was   a  disadvantage  for  smaller   districts.  She                                                                    
observed  that  sometimes  salespersons  from  other  states                                                                    
offered Alaska's  smaller districts curriculum that  was not                                                                    
supportable in  a rural area.  She emphasized that  the bill                                                                    
would not impose a curriculum that  did not fit into a local                                                                    
community. Rather  the bill attempted  to empower  the state                                                                    
school board  to help  find curriculum  that works  in rural                                                                    
school  districts and  all districts  as  well. She  thought                                                                    
curriculum was  a foundational tool  and hoped  an empowered                                                                    
statewide  school board  that was  provided resources  could                                                                    
find  the best  practices, work  with school  districts, and                                                                    
utilize a pilot program  to discover curriculum that worked.                                                                    
She reiterated that her hope  was the statewide school board                                                                    
could identify  a curriculum  that offered  Alaskan students                                                                    
an opportunity to compete globally.                                                                                             
                                                                                                                                
10:01:50 AM                                                                                                                   
                                                                                                                                
Senator  von Imhof  clarified that  there  was a  difference                                                                    
between curriculum and state  standards. She understood that                                                                    
the  program  was volunteer  and  did  not impede  on  local                                                                    
control.                                                                                                                        
                                                                                                                                
Co-Chair MacKinnon added that it  was her hope that the bill                                                                    
would  provide  school  districts  the  opportunity  to  use                                                                    
something  vetted  by the  state  school  board and  not  be                                                                    
subject to the 6 year review process                                                                                            
                                                                                                                                
Senator  Stevens thought  the bill  was forward-looking.  He                                                                    
had  concerns.  He  commented on  staff  reductions  at  the                                                                    
department and  wondered how it  would achieve the  goals of                                                                    
the bill.  Co-Chair MacKinnon clarified that  there would be                                                                    
a  forthcoming fiscal  note with  three positions  that were                                                                    
previously removed from the department,  however the new job                                                                    
duties would  be different in  support of  reading, writing,                                                                    
and math.                                                                                                                       
                                                                                                                                
10:05:03 AM                                                                                                                   
                                                                                                                                
Senator  Micciche   added  that   there  would   be  "fairly                                                                    
significant  contract dollars  for  some  of the  curriculum                                                                    
evaluation."  Co-Chair  MacKinnon  indicated that  the  bill                                                                    
would need  to have the  support of the full  legislature to                                                                    
move forward.  The goal  was to reduce  the costs  to school                                                                    
districts and  improve educational outcomes. She  added that                                                                    
the  fiscal  note  would  be  scrutinized  but  if  adequate                                                                    
funding was not provided the goals would not be met.                                                                            
                                                                                                                                
Senator Stevens  thought education was a  unifying issue and                                                                    
applauded Co-Chair MacKinnon's efforts.                                                                                         
                                                                                                                                
Co-Chair  MacKinnon   affirmed  that  the   committee  would                                                                    
continue to work with the  department on the bill and fiscal                                                                    
note. She reported  that Senator von Imhof  wanted to ensure                                                                    
that the  curriculum chosen  by the  state school  board met                                                                    
the  Alaska  Standards,  which  was  currently  the  board's                                                                    
responsibility.                                                                                                                 
                                                                                                                                
Ms.  Hartmann mentioned  three other  benefits of  the bill.                                                                    
The bill would save school  districts time and money through                                                                    
the extension  of the curriculum  review and paying  for the                                                                    
curriculum,  which freed  up funding  for  other needs.  The                                                                    
bill  allowed for  collaboration among  school districts  in                                                                    
both teacher training and professional development.                                                                             
                                                                                                                                
Senator  von  Imhof  thought the  Division  of  Student  and                                                                    
School  Achievement under  DEED whose  core mission  was "to                                                                    
provide   academic  standards,   academic  assessments   and                                                                    
accountability  and  assist  schools by  providing  programs                                                                    
technical  onsite  and   distance  delivery  support"  would                                                                    
likely be affected by the  bill. She noted that the division                                                                    
had a  total of  41 staff,  twelve positions  were Education                                                                    
Specialist II, which were the  positions that would be added                                                                    
by the bill. She thought  it was important to take advantage                                                                    
of  all  the  state's  resources. She  maintained  that  the                                                                    
bill's  goals needed  accountability,  data collection,  and                                                                    
collaboration  between districts.  She  mentioned that  some                                                                    
school  districts  used Power  School  software  that was  a                                                                    
platform  for  student  information.   She  wondered  if  in                                                                    
addition to working with curriculum,  the bill would address                                                                    
software to allow districts to communicate with each other.                                                                     
                                                                                                                                
10:09:15 AM                                                                                                                   
                                                                                                                                
Vice-Chair  Bishop  voiced  that besides  the  collaboration                                                                    
across  school  districts,  he hoped  the  university  would                                                                    
collaborate with  the school board to  ensure the curriculum                                                                    
was  sufficient to  carry  the  student into  post-secondary                                                                    
education.                                                                                                                      
                                                                                                                                
Co-Chair  Hoffman agreed  with Senator  Stevens remarks.  He                                                                    
thanked  Co-Chair MacKinnon  for  taking  leadership on  the                                                                    
issue.  He   acknowledged  that   the  topic   of  education                                                                    
solutions had been discussed for  some time and believed the                                                                    
bill was a good approach.                                                                                                       
                                                                                                                                
Co-Chair  MacKinnon reiterated  that the  legislation was  a                                                                    
committee bill  and appreciated members' work  on the issue.                                                                    
She informed the  committee that there was  not currently an                                                                    
updated fiscal note for the CS.                                                                                                 
                                                                                                                                
Co-Chair MacKinnon  discussed the  agenda for  the following                                                                    
day.                                                                                                                            
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
10:11:37 AM                                                                                                                   
                                                                                                                                
The meeting was adjourned at 10:11 a.m.                                                                                         
                                                                                                                                
                                                                                                                                

Document Name Date/Time Subjects
SB 104 Sponsor Statement.pdf SFIN 2/22/2018 9:00:00 AM
SB 104
CSSB 104 Version N Sectional Analysis.pdf SFIN 2/22/2018 9:00:00 AM
SB 104
SB 168 work draft version D.pdf SFIN 2/22/2018 9:00:00 AM
SB 168
SB 168 Fast Track StatewideTotals-Op Cap.pdf SFIN 2/22/2018 9:00:00 AM
SB 168
SB 168 FY18 Supplemental Summary and Detail with LFD Notes-Senate.pdf SFIN 2/22/2018 9:00:00 AM
SB 168
SB 104 work draft version N.pdf SFIN 2/22/2018 9:00:00 AM
SB 104