Legislature(2001 - 2002)

05/01/2001 09:41 AM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                              MINUTES                                                                                         
                     SENATE FINANCE COMMITTEE                                                                                 
                           May 01, 2001                                                                                       
                             9:41 A.M.                                                                                        
                                                                                                                                
                                                                                                                                
TAPES                                                                                                                       
                                                                                                                                
SFC-01 # 91, Side A                                                                                                             
SFC 01 # 91, Side B                                                                                                             
                                                                                                                              
CALL TO ORDER                                                                                                               
                                                                                                                                
Co-Chair Pete Kelly convened  the meeting at approximately 9:41 A.M.                                                            
                                                                                                                                
PRESENT                                                                                                                     
                                                                                                                                
Senator Dave Donley, Co-Chair                                                                                                   
Senator Pete Kelly, Co-Chair                                                                                                    
Senator Jerry Ward, Vice Chair                                                                                                  
Senator Loren Leman                                                                                                             
Senator Lyda Green                                                                                                              
Senator Gary Wilken                                                                                                             
Senator Alan Austerman                                                                                                          
Senator Lyman Hoffman                                                                                                           
Senator Donald Olson                                                                                                            
                                                                                                                                
Also Attending:   REPRESENTATIVE  FRED DYSON;  REPRESENTATIVE  PEGGY                                                          
WILSON; WES  KELLER, Staff, Representative  Fred Dyson; EDDY  JEANS,                                                            
Manger,  School  Finance  and  Facilities   Section,  Department  of                                                            
Education    and   Early   Development;    DENNY   DEWITT,    Staff,                                                            
Representative Eldon Mulder.                                                                                                    
                                                                                                                                
Attending  via  Teleconference:    From  Soldotna:   LARRY  SEMMENS,                                                          
Chairman of the  Academic Policy Committee, Aurora  Borealis Charter                                                            
School; From Kenai: GENE PALM, Aurora Borealis Charter School.                                                                  
                                                                                                                                
SUMMARY INFORMATION                                                                                                         
                                                                                                                                
HB 101-CHARTER SCHOOLS                                                                                                          
                                                                                                                                
Following discussion, HB 101 was HELD in Committee.                                                                             
                                                                                                                                
HB 203-SPECIAL APPROP: SCHOOL DIST. COST FACTORS                                                                                
                                                                                                                                
Following discussion, HB 203 was HELD in Committee.                                                                             
                                                                                                                                
HB 250-OPERATING BUDGET MISSIONS AND MEASURES                                                                                   
                                                                                                                                
Following discussion, HB 250 was HELD in Committee.                                                                             
                                                                                                                                
                                                                                                                                
     SENATE CS FOR CS FOR HOUSE BILL NO. 101(HES)                                                                               
     "An Act relating to charter schools; and providing for an                                                                  
     effective date."                                                                                                           
                                                                                                                                
                                                                                                                                
REPRESENTATIVE FRED DYSON  noted that HB 101 was similar to previous                                                            
legislation  passed from the Senate  Finance Committee, however,  is                                                            
accompanied  by have  a significant  fiscal note.   He acknowledged                                                             
that  there had  been much  discussion  in the House  regarding  the                                                            
fiscal  note.   HB 101  is intended  to  extend and  strengthen  the                                                            
existing Alaska  Charter School Law.   The current law is  scheduled                                                            
to sunset on July  1, 2005, which means that any new  charter school                                                            
cannot be approved  for the allowable  five-year charter.   Existing                                                            
charter  schools  are having  a  difficult  time  securing  facility                                                            
purchase and lease agreements  because their remaining contracts are                                                            
less than 4.5 years and cannot be extended.                                                                                     
                                                                                                                                
The legislation  would make  the following  changes to the  existing                                                            
charter school law:                                                                                                             
                                                                                                                                
     ·    Would eliminate the July, 2005 sunset clause;                                                                         
     ·    Would extend the allowable contract length from 5 to 10                                                               
          years;                                                                                                                
     ·    Would eliminate the geographic distribution requirements;                                                             
     ·    Would double the cap from 30 to 60 charter schools;                                                                   
     ·    Would clarify that charter schools are not exempt from                                                                
          competency testing;                                                                                                   
     ·    Would allow Charter Schools to be counted as separate a                                                               
          school if the ADM is over 150 (reference AS 14.17.905);                                                               
     ·    Would provide a one-time "start-up" grant; and                                                                        
     ·    Would allow for charter school use of safe public                                                                     
          buildings with District Superintendent approval.                                                                      
                                                                                                                                
Senator Wilken  asked about  the one-time startup  of a $6000  grant                                                            
scheduled to be given to three cyber schools.                                                                                   
                                                                                                                                
WES  KELLER,  Staff,  Representative   Fred  Dyson,  explained  that                                                            
establishing  a  charter  school  does  cost  a  lot  of  money  for                                                            
computers and other start up essentials.                                                                                        
                                                                                                                                
Senator Wilken referenced  Page 3, Line 13, and the safety standards                                                            
applicable to public buildings.   He suggested that the standards be                                                            
lowered for the charter schools.                                                                                                
                                                                                                                                
Senator  Austerman assumed  that all  the existing  charter  schools                                                            
would make  the application for the  start-up grant.  He  questioned                                                            
why the one-time grant continued into the future.                                                                               
                                                                                                                                
Co-Chair  Kelly  explained  that  not all  of  the  charter  schools                                                            
qualify for the grant.                                                                                                          
                                                                                                                                
Senator  Austerman would  expect  to see  a balloon  payment in  the                                                            
first year for the current schools.                                                                                             
                                                                                                                                
Representative  Dyson explained that the fiscal note  represents the                                                            
Department's  guess of what  the costs would  be.  He believed  that                                                            
the fiscal note was optimistic.                                                                                                 
                                                                                                                                
Senator Austerman  noticed  that there were  two fiscal notes  which                                                            
would further explain his query.                                                                                                
                                                                                                                                
Representative  Dyson  noted that  the  on-going $609,000  would  be                                                            
delegated  for  the schools  that  receive  more money  because  the                                                            
threshold was changed.                                                                                                          
                                                                                                                                
Senator  Austerman  understood   that  the  grant  program  was  for                                                            
$170,000 per year.                                                                                                              
                                                                                                                                
Representative  Dyson explained  that the  Department would  use the                                                            
$170,000 for a position  and support staff to take care of the needs                                                            
associated with the charter schools.                                                                                            
                                                                                                                                
EDDY  JEANS,   Manger,  School  Finance   and  Facilities   Section,                                                            
Department  of Education  and  Early  Development,  stated that  the                                                            
confusion results  from the two fiscal notes.  The  $609,000 note is                                                            
the reoccurring  cost from dropping the threshold  from 200 students                                                            
to 150 students.   That is why that  costs have been extended.   The                                                            
second fiscal  note indicates  the fiscal  costs for that  position,                                                            
which the Department  is requesting  in order to adequately  address                                                            
the legislation.  The legislation  will institutionalize the charter                                                            
school  program.   At this time,  it is  a pilot  program slated  to                                                            
sunset in 2005.  The grant  program is indicated on that note in the                                                            
amount of $1.4  million dollars.  There is no projection  for fiscal                                                            
costs in  the out-years  because the  Department  does not know  how                                                            
many new  charter schools  will be  coming-on-board  or the size  of                                                            
those schools.                                                                                                                  
                                                                                                                                
                                                                                                                                
AT EASE 9:55 AM/9:57AM                                                                                                          
                                                                                                                                
                                                                                                                                
Co-Chair Kelly  inquired the funding  mechanism, which will  be used                                                            
for size determination.                                                                                                         
                                                                                                                                
Mr. Jeans advised  that the section,  which the bill affects,  is AS                                                            
14.17.905,  school  size adjustment.    Section  B of  that  statute                                                            
states  that alternative  programs  serving less  than 200  students                                                            
would be counted.   The legislation  does allow for charter  schools                                                            
that serve up to 150 students be counted as a separate school.                                                                  
                                                                                                                                
Co-Chair Kelly  questioned if those  schools would receive  the same                                                            
amount per student.                                                                                                             
                                                                                                                                
Mr. Jeans  explained that  the legislation  would allow the  schools                                                            
the funding for  the school size adjustment table  as an independent                                                            
school.                                                                                                                         
                                                                                                                                
Mr. Jeans added that there are three break points:                                                                              
                                                                                                                                
     ·    Communities serving less than 100 count as one school;                                                                
     ·    Communities serving students between 750 counting as two                                                              
          schools; and                                                                                                          
     ·    Beyond that 750 students, each school in the district                                                                 
          counts as an independent school unless it is an                                                                       
          alternative school.  The Department has classified                                                                    
          alternative schools are charter schools.                                                                              
                                                                                                                                
Senator  Leman  asked about  the  start-up  grants versus  the  $500                                                            
dollars per student that some of the schools would be receiving.                                                                
                                                                                                                                
Representative   Dyson  replied   that  all   of  the  schools   are                                                            
financially "on  the ropes".  He emphasized that this  issue was one                                                            
of fairness.                                                                                                                    
                                                                                                                                
Senator  Leman questioned  what  he would  be able to  say to  those                                                            
charter  schools that  have less than  150 students.   He  suggested                                                            
that the bill does not reach far enough.                                                                                        
                                                                                                                                
Representative  Dyson reminded  members that  he had requested  that                                                            
the bill  be pulled  last  year from  the Senate  floor because  the                                                            
extra financial  help had been amended out.  He understood  that the                                                            
federal  government was undertaking  measures  that would also  help                                                            
the  situation.   He noted  that he  had been  trying  to make  some                                                            
strategic decisions  regarding help  to the charter schools  to keep                                                            
them alive and still address the fiscal note concerns.                                                                          
                                                                                                                                
Co-Chair  Kelly  understood  that  the  intention  of  creating  the                                                            
charter schools  would be that they could act as incubators  for new                                                            
methods of educating  students and that the larger  school districts                                                            
would be  able to then  incorporate some  of those techniques  which                                                            
work well.   However,  he commented  that it appears  that they  are                                                            
producing better  students.  Any time there is a situation  in which                                                            
there  are fewer  students and  a requirement  for a  high level  of                                                            
parental  participation, it  is no surprise  that there are  better-                                                            
educated students resulting  from these schools.  The public schools                                                            
cannot mandate parental  involvement nor can they drop the number of                                                            
students in  each classroom.  He questioned  if the charter  schools                                                            
were really providing a greater benefit.                                                                                        
                                                                                                                                
Senator Green  reminded Senator Kelly  that the charter schools  are                                                            
public schools.                                                                                                                 
                                                                                                                                
Representative  Dyson commented that  the passage of the  bill would                                                            
help  the charter  schools  by providing  them a  little  "financial                                                            
breathing  room" so that  they could accomplish  more than  being in                                                            
survival  mode.  He stressed  that the private  and charter  schools                                                            
are not sweeping the "cream"  off the top of the student population.                                                            
                                                                                                                                
Co-Chair  Kelly interjected  that the bill  would be brought  before                                                            
the Committee at a later date.                                                                                                  
                                                                                                                                
Senator Austerman  commented that the discussion had  reinforced his                                                            
concerns  that  the charter  schools  would  eventually  weaken  the                                                            
public school  system.  He noted that there exists  a problem in the                                                            
public schools  that needs fixing  and that the State should  not be                                                            
contributing  other sources  that  drain the  current public  school                                                            
system. He reiterated his reservations for the legislation.                                                                     
                                                                                                                                
Senator  Green emphasized  that charter schools  are public  schools                                                            
and should be viewed as an adjunct to public education.                                                                         
                                                                                                                                
Senator  Olson voiced  support  of  the bill.   He  encouraged  that                                                            
action be taken sooner rather than later.                                                                                       
                                                                                                                                
LARRY SEMMENS,  Chairman  of the Academic  Policy Committee,  Aurora                                                            
Borealis Charter School,  testified via teleconference from Soldotna                                                            
that  his school  has a  successful  program  and that  they have  a                                                            
waiting list of over 200  students.  He added that the school's test                                                            
scores are the highest in the district.                                                                                         
                                                                                                                                
Mr. Semmens  emphasized  that he  hoped that  the Committee's  goals                                                            
were  like his  own and  that the  concern was  for better-educated                                                             
students, and not with  only saving money.  He testified in complete                                                            
support for HB  101.  The charter schools are separate  and yet they                                                            
are  being penalized  in their  funding  by the  alternative  school                                                            
limit.                                                                                                                          
                                                                                                                                
GENE PALM,  Teacher, Aurora Borealis  Charter School, testified  via                                                            
teleconference from Kenai  in support for the legislation.  He urged                                                            
that  the  Legislature  feed  the programs  that  are  meeting  some                                                            
students with  success.  He added  that his school wants  to further                                                            
develop  their  programs,  which  currently  is being  done  on  the                                                            
teachers off  time.  He reiterated  the need for the "extra  staff".                                                            
                                                                                                                                
Co-Chair Kelly reported that HB 101 would be HELD in Committee.                                                                 
                                                                                                                                
                                                                                                                                
     SENATE CS FOR CS FOR HOUSE BILL NO. 203(HES)                                                                               
     "An Act making an appropriation to the Legislative Budget and                                                              
     Audit Committee for a study of school district cost factors;                                                               
     and providing for an effective date."                                                                                      
                                                                                                                                
                                                                                                                                
REPRESENTATIVE   PEGGY   WILSON   explained   that  Alaska   has   a                                                            
constitutional  obligation  to  provide  a full  education  for  all                                                            
students.  The  challenge inherent in the mission  is to account for                                                            
diverse geographic, cultural, and economic conditions.                                                                          
                                                                                                                                
Representative  Wilson stated the formula currently  employed, while                                                            
well  intentioned,  has unintentional  consequences.    HB 203  will                                                            
provide factual  answers and  will propose  an independent  study of                                                            
school  cost  differentials  to be  contracted  by  the Legislative                                                             
Budget & Audit Committee at the cost of $350,000 dollars.                                                                       
                                                                                                                                
Senator  Austerman  commented  that in  the  past, there  have  been                                                            
similar studies  based on what is spent in schooling  rather than on                                                            
the actual  costs.  He questioned  if it was the intent of  the bill                                                            
to include cost factors.                                                                                                        
                                                                                                                                
Representative Wilson referenced  Page 1, Line 10:  "The cost should                                                            
be based on cost providing  education in each school district".  She                                                            
continued,   the  cost  should   include   the  cost  of   classroom                                                            
instruction and administrative support.                                                                                         
                                                                                                                                
EDDY  JEANS,   Manger,  School  Finance   and  Facilities   Section,                                                            
Department  of Education and Early  Development, spoke on  behalf of                                                            
the  Department  in  support  of  the  proposed  legislation.    The                                                            
Department is required  to make recommended changes every other year                                                            
to  the cost  differentials  as passed  in SB  36.   The  Department                                                            
fulfilled  its  requirement  this  year  and attempted  to  use  the                                                            
McDowell  methodology,   used  in  establishing  the   current  cost                                                            
differentials.   He noted that the Department found  the methodology                                                            
"flawed" and did not work  for the updating.  The Department request                                                            
that there be funding provided for a study.                                                                                     
                                                                                                                                
Senator Austerman asked  about the changes made in the House Finance                                                            
version of the legislation.                                                                                                     
                                                                                                                                
Senator Wilken  replied that  there has been  an attempt to  measure                                                            
the cost of education as compared to the cost of living.                                                                        
                                                                                                                                
Senator Austerman  stated that  the cost of  keeping a teacher  in a                                                            
remote area will differ  from other places, which will have a direct                                                            
cost link to the budget.                                                                                                        
                                                                                                                                
Senator   Wilken  understood   that  the   study  would  take   into                                                            
consideration variable issues throughout the State.                                                                             
                                                                                                                                
Co-Chair  Kelly suggested  that  the cost  of the  teacher's  salary                                                            
should be included in the cost of education.                                                                                    
                                                                                                                                
Senator  Wilken  agreed.   He provided  a  history of  the  process.                                                            
Senator Wilken  pointed out that there  have only been two  studies.                                                            
One was undertaken  in 1982, a cost of living study.   Another study                                                            
was done in 1987.                                                                                                               
                                                                                                                                
                                                                                                                                
SFC 01 # 91, Side B 10:31 AM                                                                                                    
                                                                                                                                
                                                                                                                                
Senator  Wilken continued  that  the 1987  study  adjusted the  1982                                                            
study.  That  information is what  was used until SB 36 passed.   At                                                            
that time,  there was not  a uniform chart  and accounts being  done                                                            
for the entire State.   The McDowell study undertaken in 1997 & 1998                                                            
updated  all the costs  of education  information  for the State  of                                                            
Alaska.   He hoped  that within ten  years, the  State would  have a                                                            
"rolling model" which constituents could trust.                                                                                 
                                                                                                                                
Co-Chair Donley noted that HB 203 would be HELD in Committee.                                                                   
                                                                                                                                
Representative  Wilson pointed out  that there are only five  states                                                            
in the lower  48 that use  some kind of  a cost differential  study.                                                            
Each one is  different.  She acknowledged  that this is not  an easy                                                            
process.   She added that  the cost of living  in some districts  is                                                            
important  because some  districts have  to provide  housing.   Some                                                            
districts  have  no electricity  or  water.    No teacher  would  be                                                            
willing  to go  to a  school  district  like that  without  adequate                                                            
housing needs being provided for them.                                                                                          
                                                                                                                                
                                                                                                                                
     CS FOR HOUSE BILL NO. 250(FIN)                                                                                             
     "An  Act relating  to missions  and measures  to be applied  to                                                            
     certain   expenditures  by  the   executive  branch   of  state                                                            
     government   and the  University   of  Alaska  from  the  state                                                            
     operating budget for  the fiscal year ending June 30, 2002; and                                                            
     providing for an effective date."                                                                                          
                                                                                                                                
                                                                                                                                
DENNY DEWITT, Staff, Representative  Eldon Mulder, explained that HB                                                            
250  was   the  missions   and   measures  bill   complied  by   the                                                            
subcommittees  from both  the House and  Senate Finance Committees.                                                             
The bill  started with  last year's  missions and  measures and  has                                                            
been  worked  through  making  the  necessary   adjustments.    That                                                            
information  was complied into a draft  bill, which was distributed                                                             
to each of the Senate Finance subcommittees.                                                                                    
                                                                                                                                
Mr. DeWitt  pointed out that the only  significant amendment  to the                                                            
bill was  in the  initial draft  on Page  2, Lines  15 and 16,  "The                                                            
average time taken to respond  to complaints and questions that have                                                            
been elevated  to  the Commissioner's  office".   That language  was                                                            
added to the  final draft from the  House Finance Committee  version                                                            
in  order  to  determine  how  the  departments  were  handling  the                                                            
consumer complaints  and concerns.  He noted that  the Department of                                                            
Revenue used it last year  and that found it to be simple to respond                                                            
to using the measure last year.                                                                                                 
                                                                                                                                
Senator  Wilken  asked  if it  was  intended  that the  mission  and                                                            
measures  would be consolidated  at  some point  to a book-form  for                                                            
each department to have on hand.                                                                                                
                                                                                                                                
Mr. Dewitt explained that  last year; both the operating budget bill                                                            
and the  missions and measures  bill were  included together  in one                                                            
stapled  edition.     This year,  the departmental   order has  been                                                            
reorganized to mirror the operating budget bill.                                                                                
                                                                                                                                
Co-Chair Donley  pointed out that the House has been  working on the                                                            
bill  for nearly  four  months.   He  asked  if there  was  anything                                                            
essential  which  must  be  addressed  this  year, or  would  it  be                                                            
reasonable to  undertake the concerns of the bill  over the interim.                                                            
                                                                                                                                
Mr. Dewitt  stressed that it was important  that the bill  move this                                                            
budget  year, as these  missions  and measures  match the  operating                                                            
budget for FY02.                                                                                                                
                                                                                                                                
Co-Chair Donley  stated that HB 250  would be HELD in Committee  for                                                            
further consideration.                                                                                                          
                                                                                                                                
ADJOURNMENT                                                                                                                 
                                                                                                                                
Co-Chair Dave Donley adjourned the meeting at 10:40 A.M.                                                                        
                                                                                                                                

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