Legislature(2011 - 2012)SENATE FINANCE 532

02/08/2012 09:00 AM FINANCE


Download Mp3. <- Right click and save file as

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

Document Name Date/Time Subjects
SB 187 retirement fund sectional summary.pdf SFIN 2/8/2012 9:00:00 AM
SB 187
SB 187 sponsor statement.pdf SFIN 2/8/2012 9:00:00 AM
SB 187
SB187 020712 PERS savings.pdf SFIN 2/8/2012 9:00:00 AM
SB 187
SB187 020712 PERS Actuarial Data.pdf SFIN 2/8/2012 9:00:00 AM
SB 187
SB187 020712 reserves.pdf SFIN 2/8/2012 9:00:00 AM
SB 187
SB 171 dropout rate chart.pdf SFIN 2/8/2012 9:00:00 AM
SB 171
SB 171 JSD Support.pdf SFIN 2/8/2012 9:00:00 AM
SB 171
SB 171 report from Alaska Council of School Administrators.pdf SFIN 2/8/2012 9:00:00 AM
SB 171
SB 171 letter from haines.pdf SFIN 2/8/2012 9:00:00 AM
SB 171
SB 171 sample of district budgets.pdf SFIN 2/8/2012 9:00:00 AM
SB 171
SB 171 shares of per pupil spending.pdf SFIN 2/8/2012 9:00:00 AM
SB 171
SB 171 spending per student by state.pdf SFIN 2/8/2012 9:00:00 AM
SB 171
SB 171 sponsor statement.pdf SFIN 2/8/2012 9:00:00 AM
SB 171
SB 171 State snapshot reports.pdf SFIN 2/8/2012 9:00:00 AM
SB 171
SB 171 Support Comeau.doc SFIN 2/8/2012 9:00:00 AM
SB 171
SB 171 support emails 1.pdf SFIN 2/8/2012 9:00:00 AM
SB 171
SB 171 support emails 2.pdf SFIN 2/8/2012 9:00:00 AM
SB 171