Legislature(1993 - 1994)

03/08/1993 09:20 AM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
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                             MINUTES                                           
                    SENATE FINANCE COMMITTEE                                   
                          March 8, 1993                                        
                            9:20 a.m.                                          
                                                                               
  TAPES                                                                        
                                                                               
  SFC-93, #30, Side 2 (end-000)                                                
  SFC-93, #36, Side 1 (000-356)                                                
                                                                               
  CALL TO ORDER                                                                
                                                                               
  Senator Drue  Pearce,  Co-chair,  convened  the  meeting  at                 
  approximately 9:20 a.m.                                                      
                                                                               
  PRESENT                                                                      
                                                                               
  In  addition  to  Co-chair  Pearce,  Senators  Jacko, Kelly,                 
  Kerttula, Rieger,  and Sharp  were present.   Senator  Frank                 
  arrived while the meeting was in progress.                                   
                                                                               
  ALSO  ATTENDING:   Senator Robin Taylor,  sponsor of  SB 43;                 
  Darsie Beck, Alaska Environmental Lobby; Representative  Ron                 
  Larson, Co-chair  for House Finance Committee;  John Bitney,                 
  staff  to  Representative  Larson;  Duane Guiley,  Director,                 
  School Finance,  Department of  Education; Steve  McPhetres,                 
  Executive Director, Alaska Council of School Administrators;                 
  Vernon  Marshall,  Executive  Director,  National  Education                 
  Association-Alaska;   Mike   Greany,  Director,   and  Karen                 
  Rehfeld,  Fiscal Analysts,  and other  analysts, Legislative                 
  Finance Division; and aides to committee members.                            
                                                                               
  SUMMARY INFORMATION                                                          
                                                                               
  CSSB 43(RES) - An Act establishing a grant program  relating                 
                 to transplantation of  elk; and providing for                 
                 an effective date.                                            
                                                                               
                 CSSB 43 work  draft dated  March 3, 1993  was                 
                 ADOPTED  for  discussion  purposes.   Senator                 
                 Taylor, sponsor of SB 43 testified in support                 
                 of   the   bill.      Darsie   Beck,   Alaska                 
                 Environmental Lobby, testified in opposition.                 
                 CSSB 43(FIN)  was REPORTED  OUT of  committee                 
                 with unanimous consent.                                       
                                                                               
  CSHB 45(FIN) - An   Act   making   appropriations   to   the                 
                 Department  of  Education   for  support   of                 
                 kindergarten,    primary,    and    secondary                 
                 education and community schools  programs and                 
                 for school construction debt  retirement; and                 
                 providing for an effective date.                              
                                                                               
                 Testimony was heard and discussion was had on                 
                                                                               
                                                                               
                 CSHB  45(FIN).   Those  testified  in support                 
                 were  Representative  Ron   Larson,  Co-chair                 
                 House Finance Committee;  John Bitney,  staff                 
                 to  Rep.  Larson;  Duane   Guiley,  Director,                 
                 School  Finance,  Department   of  Education;                 
                 Steve  McPhetres,  Alaska  Council of  School                 
                 Administrators; and Vernon Marshall, National                 
                 Education Association-AK.   CSHB 45(FIN)  was                 
                 HELD in committee  until Wednesday, March 10,                 
                 1993.                                                         
                                                                               
                                                                               
  CS FOR SENATE BILL NO. 43(RES):                                              
                                                                               
       An  Act  establishing  a  grant  program   relating  to                 
       transplantation of elk; and  providing for an effective                 
       date.                                                                   
                                                                               
  C0-CHAIR DRUE PEARCE announced that  CSSB 43(RES) was before                 
  the committee and  invited Senator Robin Taylor,  sponsor of                 
  the bill, to join the committee at  the table.  A work draft                 
  dated  March  3, 1993  was  distributed for  the committee's                 
  review.                                                                      
                                                                               
  SENATOR STEVE RIEGER MOVED for adoption  of the CSSB 43 work                 
  draft  dated  March 3,  1993.    No  objections having  been                 
  raised,  the  CSSB 43  work draft  dated  March 3,  1993 was                 
  ADOPTED.                                                                     
                                                                               
  SENATOR ROBIN  TAYLOR asked  the committee  to consider  the                 
  work draft in  lieu of the original bill.  He said he feared                 
  that the Department of Fish &  Game (DF&G) would not perform                 
  a follow up on  the previously successful transplant  of elk                 
  as specified in the original bill.  He said since the recent                 
  transplant  in 1987, or  as long ago  as 1927, when  elk had                 
  been  transplanted to Afognak Island,  that DF&G had made no                 
  effort to  study the  effect of  elk on  indigenous species.                 
  Even though studies have not been done, DF&G still maintains                 
  that a study  is needed to  determine if competition  exists                 
  between  elk  and other  deer families.    He felt  DF&G had                 
  already reached the conclusion that elk and deer compete for                 
  the  same  food.   He  maintained  that  DF&G  felt the  elk                 
  transplant would  fail and it  had not.   He wanted  DF&G to                 
  start  managing the  existing elk  population and  determine                 
  when the first hunt  might be sustained.  He  suggested that                 
  the elk could provide a source of food for the residents  of                 
  southeast Alaska, and  could cut  trails through which  deer                 
  and other game could  pass.  He maintained that deer and elk                 
  seemed to  be able to  co-exist quite  well.  CSSB  43 would                 
  make it mandatory for DF&G to transplant a certain number of                 
  elk on  Kruzof Island, Gravina Island,  Cleveland Peninsula,                 
  and Prince of  Wales Island in  a specified period of  time.                 
  He estimated  that it  would cost  approximately $1,000  per                 
                                                                               
                                                                               
  animal.                                                                      
                                                                               
  Senator  Taylor  passed  to the  committee  photographs  and                 
  showed a video  of existing transplanted  elk.  He  informed                 
  the committee  that in  1987, of  the  52 elk  transplanted,                 
  approximately  half  survived.   He  estimated that  the elk                 
  population today is approximately 100 to 120 animals.                        
                                                                               
  SENATOR JAY KERTTULA pointed out that  CSSB 43 called for an                 
  appropriation  but  asked  if  there  would  be  any  public                 
  contribution.  Senator Taylor maintained that there would be                 
  a  significant local  contribution and  effort, even  though                 
  CSSB  43  did not  contain  the  50 percent  match  or grant                 
  language of  the original bill.   Senator Kerttula  asked if                 
  there was any  additional cost other than  the handling cost                 
  of $1,000 per  animal.  Senator  Taylor said that the  state                 
  may have to  exchange goats for the  elk as was done  in the                 
  past transplant but  that $1,000  per animal should  include                 
  veterinarian costs, crates, etc.                                             
                                                                               
  SENATOR TIM KELLY asked for clarification on the cost of the                 
  transplant of the elk and asked if the state was funding the                 
  transplant at  100 percent.   Senator  Taylor  said that  he                 
  would    appropriate any  additional  funding needed  out of                 
  discretionary  funds to  complete  the transplant.   Senator                 
  Taylor  explained that  if the state  had to fund  it at 100                 
  percent   it   would  not   happen.     He   projected  that                 
  approximately  50 percent  of the  cost would  be  funded by                 
  volunteer  labor and  contributions as  it had  in the  last                 
  transplant.                                                                  
                                                                               
  DARSIE BECK, Alaska Environmental Lobby, spoke in opposition                 
  to CSSB  43, on  the grounds  that transplanting  elk was  a                 
  biological threat, and that the economic costs and potential                 
  impact on subsistence users far outweighed any benefits.  He                 
  said  introduction of  foreign  species  into  a  eco-system                 
  frequently   have   disastrous   ecological   and   economic                 
  consequences.   He offered  examples in  other parts  of the                 
  world of  the damage it has  caused.  He said  that wildlife                 
  biologists they have talked to do not endorse  CSSB 43.  The                 
  greatest threat seems to  be the spread of disease  to other                 
  wild animals  and humans.   He said that  transplant figures                 
  from DF&G  showed that  the cost  per elk  was  $5,000.   He                 
  called the  committee's attention to  page 2  of the  fiscal                 
  note for DF&G  that said "costs for  a five year program  to                 
  accomplish the above goals would range from $200.0 to $250.0                 
  per  year."   The  Alaska  Environmental Lobby  suggested it                 
  would be  less expensive for the state of Alaska to fund elk                 
  hunting  trips  for individuals  outside  the state  than to                 
  transplant elk.                                                              
                                                                               
  Discussion followed between Senators Kerttula, Kelly, Taylor                 
  and Mr. Beck regarding various diseases, their transmission,                 
  and whether elk were indigenous to Alaska.                                   
                                                                               
                                                                               
  SENATOR BERT  SHARP MOVED for  passage of CSSB  43(FIN) from                 
  committee with the accompanying fiscal  note.  No objections                 
  having  been  raised,  CSSB  43(FIN)  was  REPORTED  OUT  of                 
  committee with a zero fiscal note for the Department of Fish                 
  & Game.   Co-chairs Pearce, Frank, and  Senator Sharp signed                 
  the  committee  report  with  a  "do  pass"  recommendation.                 
  Senators  Kerttula,  Kelly, Jacko  and  Rieger signed  a "no                 
  recommendation."                                                             
                                                                               
                          Recess 9:35am                                        
                        Reconvene 9:37am                                       
                                                                               
  CS FOR HOUSE BILL NO. 45(FIN):                                               
                                                                               
       An  Act  making  appropriations to  the  Department  of                 
       Education  for support  of  kindergarten, primary,  and                 
       secondary education and community  schools programs and                 
       for school construction debt retirement; and  providing                 
       for an effective date.                                                  
                                                                               
  Co-chair Pearce announced  that CSHB 45(FIN) was  before the                 
  committee and  invited John Bitney, staff  to Representative                 
  Larson,  to  join the  committee  at  the table.    She also                 
  directed  the committee's  attention  to  a handout  titled,                 
  "Small   Single  Site  School  District  Funding"  from  the                 
  Consortium of Single Site School Districts.                                  
                                                                               
  JOHN  BITNEY,  staff  to  Representative  Larson, said  CSHB
  45(FIN) provided for the appropriation for the Department of                 
  Education (DOE) to fully fund,  at the $61,000 instructional                 
  unit level, the  foundation formula  for public schools,  as                 
  well as  full funding  for pupil  transportation and  public                 
  school debt  service.  Included  in the appropriation  is an                 
  allocation of $3.3M for single  site school districts across                 
  the state of Alaska.   He said that it was  the intention of                 
  the House, with the  early passage of the  bill, to give  an                 
  indication to school districts of their appropriation  level                 
  for public education for next year.                                          
                                                                               
  Senator Kelly asked  if Section 2 on  page 3 had to  do with                 
  retirement service.  Mr. Bitney agreed that Section 2 listed                 
  the  debt service  that  the state  would  provide to  local                 
  municipalities  for school  construction debt  service.   In                 
  answer to Senator Kelly, Mr. Bitney said that this money was                 
  sent to the local municipalities by DOE.                                     
                                                                               
  DUANE  GUILEY,  Director,  School   Finance,  Department  of                 
  Education, spoke in  support of CSHB  45(FIN).  He said  the                 
  difference between this  bill and the Governor's  budget was                 
  that  this  bill  would  fund  pupil transportation  at  100                 
  percent.  Another  difference is the single  site supplement                 
  in  the Governor's budget  was based upon  FY93 actual daily                 
                                                                               
                                                                               
  membership, whereas, in HB  45, it is based upon  the school                 
  district's projection for  FY94.  He asked  the committee to                 
  support the FY93 amount at $3,358,050 as opposed to the FY94                 
  projection.                                                                  
                                                                               
  Senator Rieger  asked if  DOE was  in support  of additional                 
  district support on page 2.  Mr.  Guiley said DOE was not in                 
  support of the single site supplement but had included it in                 
  the budget two years ago because that money was available.                   
                                                                               
  REPRESENTATIVE  RON  LARSON,  Co-chair  for  House   Finance                 
  Committee,  said that  the committee had wanted the  bill to                 
  be  as  current as  possible, and  had  decided to  use FY94                 
  numbers.    He  said, for  consistency  purposes,  the House                 
  Finance Committee decided it was better to use FY93 numbers,                 
  and that was the reason the  amended CSHB 45(FIN) was before                 
  Senate Finance Committee.                                                    
                                                                               
  Senator Kerttula  said that some southeast  schools received                 
  forest receipts to assist their unique educational problems.                 
  He  asked   if  those   forest  receipts   had  come   under                 
  consideration  when  funding was  given  to the  single site                 
  school  districts.  Representative  Larson said that between                 
  seven and twenty-one schools had  been considered for single                 
  site designation.   Last year, it  was decided that  funding                 
  could  not  be  determined by  forest  receipts  since those                 
  receipts varied  considerably from  year to  year.   Senator                 
  Kerttula  felt that forest receipts  should at least be able                 
  to be estimated so they  might be taken under consideration.                 
  Co-chair  Pearce  asked  Mr. Guiley  if  last  year's forest                 
  receipts would be made available to the committee.                           
                                                                               
  SENATOR  GEORGE  JACKO  asked  why  FY93 figures  were  used                 
  instead of FY94.  Representative Larson said in the past the                 
  prior year's  figures were used  to estimate funding.   FY93                 
  figures were used to remain consistent.                                      
                                                                               
  Senator Rieger asked  if legislative  action had been  taken                 
  last year to create a  new school district.   Representative                 
  Larson explained that  by a popular  vote of the people,  it                 
  was  decided that  the Yupik  School District, not  a single                 
  site  school  district,  and Tanana,  a  single  site, would                 
  operate separately from the REAA.                                            
                                                                               
  Senator Kerttula said that last  year the instructional unit                 
  had been  set at  $61,000.   Varying districts using  backup                 
  information had said that figure was not high enough because                 
  of the inflationary  spiral and other  costs.  He asked  how                 
  that funding could  be accomplished  without increasing  the                 
  instructional unit.   Representative  Larson said that  CSHB
  45(FIN) was a  $3.2M increase over the  Governor's proposal.                 
  He said the increase has been caused by a greater percent of                 
  gifted  and  talented, and  special  ed children  within the                 
  school  districts,  not  necessarily  from  an  increase  in                 
                                                                               
                                                                               
  enrollment.    Mr.  Guiley submitted  that  the supplemental                 
  request for FY93 is $6.4M, and of that, $5.1M is an increase                 
  in special ed.                                                               
                                                                               
  STEVE  MCPHETRES,  Executive  Director,  Alaska  Council  of                 
  School Administrators  (ACSA),  spoke  in  support  of  CSSB
  45(FIN).   He said  that early  funding for  schools was  of                 
  great  benefit  to  the teachers  and  school  districts for                 
  planning and  preparation for  the coming school  year.   He                 
  said  that  there  was  a  need   for  an  increase  in  the                 
  instructional unit values  but ACSA did appreciate  the fact                 
  that this bill fully funded  instructional units at $61,000,                 
  and  recognized  the  single  site  school  districts.    He                 
  explained that in 1986, the  legislature recognized that the                 
  educational formula  was in  need of  adjustment.   He hoped                 
  that DOE would  come forward with  a new formula, but  until                 
  then, he  hoped the committee  would pass  CSSB 45(FIN)  for                 
  early funding for schools.                                                   
                                                                               
  Senator  Rieger  asked  for an  explanation  of  single site                 
  school districts.  Mr. McPhetres said a multiple-site school                 
  district has a multiplication factor  that is different from                 
  single  site school districts,  and increases  its potential                 
  for higher instructional unit values.   Senator Rieger asked                 
  if the single site  funding brought equality to  single site                 
  schools.  Mr.  McPhetres said  that the educational  formula                 
  needed to be changed instead of a one-time a year funding to                 
  try   to  equalize  that  funding.     He  added  that  some                 
  communities do not have a tax  base and therefore are unable                 
  to  adequately fund their  educational needs.   In answer to                 
  Senator Kerttula, Mr.  McPhetres said that ACSA  did support                 
  an increase in the instructional unit.                                       
                                                                               
  VERNON  MARSHALL,  Executive  Director,  National  Education                 
  Association-Alaska, spoke in  support of CSSB 45(FIN)  since                 
  it did not cut funding to schools.  He said NEA-AK supported                 
  an increase in the  instructional unit to $67,000.   He said                 
  student  enrollment  is increasing,  and  some needs  in the                 
  school  districts  are   not  being   met  by  the   $61,000                 
  instructional unit.  He said that NEA-AK also supports early                 
  funding so that school districts may budget and plan for the                 
  coming  school  year.    In   response  to  Senator  Kelly's                 
  question,  Mr.  Marshall  said that  NEA-AK  supported other                 
  programs such as student lunch programs but the  funding for                 
  those programs was not meeting all the needs of the students                 
  either.    He suggested  that  a breakfast  program  in some                 
  schools is necessary so that children may attend school with                 
  a healthier attitude.                                                        
                                                                               
  Senator Kerttula made note that funding for tuition students                 
  had been reduced in SB  45.  He wanted to point out that not                 
  all items had been increased.                                                
                                                                               
  Senator Rieger  asked  Mr. Guiley  if  there was  an  actual                 
                                                                               
                                                                               
  increase in special  ed student enrollment or had special ed                 
  reclassification  caused the funding  increase.   Mr. Guiley                 
  said that there definitely was  an increase in the  incident                 
  rate for special ed students in schools.  He said one reason                 
  may be that  schools are doing  a better job of  identifying                 
  special ed  students.   Although schools  are audited  every                 
  five years, he could  not speak to the justification  of the                 
  increased  incident  rate.    Discussion  followed   between                 
  Senator Rieger and Mr. Guiley  regarding students chosen for                 
  special ed, and the funding and restrictive environment that                 
  follows those students.                                                      
                                                                               
  At this time, Mr. Guiley provided the committee with  copies                 
  of  a memo  dated  January 7,  1992,  listing the  requested                 
  forest receipts  data (copy of file).  He said that the memo                 
  may have been  written in  1993.  He  explained that  forest                 
  receipt money goes straight  to the borough or city,  and by                 
  state statute, a  certain portion of that money  is required                 
  to be  set aside  for schools.   He  believed the  remaining                 
  portion is used for roads.                                                   
                                                                               
  Senator Jacko asked if there were any other arrangements  in                 
  the state for severance  taxes.  Mr. Guiley said  there were                 
  other localities that had their own severance tax but forest                 
  receipts  is a  federal  program with  legislation  attached                 
  stating how  those funds must be used.  He explained that of                 
  the thirty-two organized  school districts, only  about two-                 
  thirds have  a property  tax that  comes up  to four  mills.                 
  Some  districts  have  other   types  of  taxes--hotel   bed                 
  receipts, raw fish tax, and sales tax.                                       
                                                                               
  In answer to  Senator Kelly, Mr.  Guiley said that he  would                 
  provide data  dating back to  1988, showing the  increase in                 
  special  ed  funding  per  district  by year.    Mr.  Guiley                 
  explained  that  if   three  students   are  classified   as                 
  intensive,  it would generate one unit of funding or $61,000                 
  to the district.  Discussion  followed between Senator Kelly                 
  and Mr. Guiley  regarding school  districts that were  above                 
  the norm because of their percentage of special ed students.                 
  Mr. Guiley explained that DOE did not place  a limit for the                 
  district on  the number of students that could be classified                 
  as special ed.                                                               
                                                                               
  Senator  Rieger  asked  where  Alaskan  students   stood  in                 
  relation to  other states  in regard  to SAT  or other  test                 
  results.  Mr. Guiley said that he  did not have the data but                 
  would provide it to the committee.  Senator Kerttula offered                 
  that Mat Su area students' test  results had risen, and some                 
  were at the top of the national standings.                                   
                                                                               
  Co-chair  Frank  asked  how  the  Governor's budget  request                 
  compared to prior years lists by DOE for the single and dual                 
  site school districts.   Mr. Guiley said in FY92  there were                 
  direct  appropriations  of  $2,131.0  and  that  amount  was                 
                                                                               
                                                                               
  attributed to fifteen single site city and borough districts                 
  only, excluding  REAA's.  In  answer to Co-chair  Frank, Mr.                 
  Guiley said that  DOE has never  gone on record in  complete                 
  support of the single site supplement,  in that DOE does not                 
  have the data to  support 100 percent for all  the districts                 
  on the list.  The only thing the districts have in common is                 
  their size, and that  they only have one  funding community.                 
  Mr.  Guiley supplied  the  committee with  a list  of school                 
  districts showing  the  prior year's  funding  and  national                 
  forest receipts dated March 9, 1993 (copy on file).                          
                                                                               
  Senator  Jacko  asked what  figures  DOE supports  for pupil                 
  transportation.  Mr. Guiley said  that the Governor's budget                 
  set aside a proration of 10 percent equaling $25,718,100.                    
                                                                               
  Senator  Rieger  asked  the  logic  behind having  different                 
  lists.  Mr.  Guiley said that the Governor had  asked DOE to                 
  prepare a budget that fully funded education.  He went on to                 
  explain a short history of legislative school funding.                       
                                                                               
  In answer  to  Senator Rieger,  Mr. Guiley  stated the  very                 
  small districts  that have  values  of less  than $100.0  in                 
  support of each student were  St. Mary's, Hydaburg, Klawock,                 
  Nenana, Kake and Hoonah.   The statewide average runs $241.0                 
  in  support of  each student.    In the  range of  $100.0 to                 
  $200.0  in  support  of  each  student are  Tanana,  Galena,                 
  Yakutat, Craig and  Nome.  The required  local contribution,                 
  for example, for  Nenana is  equal to $60,449.   The  single                 
  site supplement would more than  make up their contribution.                 
  Senator Rieger asked  if that  was the ratio  for the  other                 
  single site  school districts.  Mr. Guiley  answered that it                 
  was dependent upon full value  determination and not related                 
  to student population.                                                       
                                                                               
  Co-chair Pearce asked  John Bitney, staff to  Representative                 
  Larson, if  the numbers  that DOE proposed  in their  budget                 
  presentation  to the legislature  differs somewhat  than the                 
  numbers that the House Finance Committee finally settled on.                 
  She   wanted   to   know  if   the   difference   was  pupil                 
  transportation.    Mr.  Bitney said  that  the  reduction in                 
  funding   was   the   difference   between   the   increased                 
  instructional unit value and the  original unit value single                 
  site school districts received.                                              
                                                                               
  In answer to  Senator Jacko, Mr.  Bitney said that the  bill                 
  that   passed  the   House   included  funding   for   pupil                 
  transportation not including an administrative fee.                          
                                                                               
  With  no  further  testimony to  be  heard,  Co-chair Pearce                 
  announced that CSHB 45(FIN) would be held in committee.  She                 
  also  announced   that  Senator  Kerttula's   amendment  #1,                 
  increasing the formula  level per unit,  would be held  with                 
  the bill.                                                                    
                                                                               
                                                                               
                         Recess 10:30am                                        
                        Reconvene 10:32am                                      
                                                                               
  ADJOURNMENT                                                                  
                                                                               
  The meeting was adjourned at approximately 10:32 a.m.                        
                                                                               

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