Legislature(2013 - 2014)SENATE FINANCE 532

04/09/2014 09:00 AM FINANCE

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09:33:45 AM Start
09:35:21 AM HB278
10:48:02 AM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Scheduled But Not Heard
Heard & Held
+ Bills Previously Heard/Scheduled TELECONFERENCED
                 SENATE FINANCE COMMITTEE                                                                                       
                       April 9, 2014                                                                                            
                         9:33 a.m.                                                                                              
9:33:45 AM                                                                                                                    
CALL TO ORDER                                                                                                                 
Co-Chair Kelly called the Senate Finance Committee meeting                                                                      
to order at 9:33 a.m.                                                                                                           
MEMBERS PRESENT                                                                                                               
Senator Pete Kelly, Co-Chair                                                                                                    
Senator Kevin Meyer, Co-Chair                                                                                                   
Senator Anna Fairclough, Vice-Chair                                                                                             
Senator Click Bishop                                                                                                            
Senator Mike Dunleavy                                                                                                           
Senator Lyman Hoffman                                                                                                           
Senator Donny Olson                                                                                                             
MEMBERS ABSENT                                                                                                                
ALSO PRESENT                                                                                                                  
Michael  Hanley, Commissioner,  Department of  Education and                                                                    
Early  Development; Grey  Mitchell, Assistant  Commissioner,                                                                    
Department  of  Labor   and  Workforce  Development;  Angela                                                                    
Rodell,  Commissioner, Department  of Revenue;  Senator John                                                                    
SB 119    BUDGET: CAPITAL                                                                                                       
          SB 119 was SCHEDULED but not HEARD.                                                                                   
CSHB 278(FIN) am                                                                                                                
          EDUCATION: FUNDING/TAX CREDITS/PROGRAMS                                                                               
          CSHB 278(FIN)am was HEARD and HELD in committee                                                                       
          for further consideration.                                                                                            
CS FOR HOUSE BILL NO. 278(FIN) am                                                                                             
     "An Act increasing the base  student allocation used in                                                                    
     the  formula for  state  funding  of public  education;                                                                    
     relating  to  the  exemption   from  jury  service  for                                                                    
     certain  teachers;  relating  to   the  powers  of  the                                                                    
     Department   of   Education  and   Early   Development;                                                                    
     relating to  high school  course credit  earned through                                                                    
     assessment;  relating  to school  performance  reports;                                                                    
     relating to  assessments; establishing a  public school                                                                    
     and  school   district  grading  system;   relating  to                                                                    
     charter  schools and  student transportation;  relating                                                                    
     to residential school  applications; relating to tenure                                                                    
     of  public school  teachers;  relating to  unemployment                                                                    
     contributions for  the Alaska technical  and vocational                                                                    
     education  program;  relating  to earning  high  school                                                                    
     credit for  completion of vocational  education courses                                                                    
     offered   by  institutions   receiving  technical   and                                                                    
     vocational  education  program   funding;  relating  to                                                                    
     schools  operated by  a federal  agency; relating  to a                                                                    
     grant for  school districts; relating to  education tax                                                                    
     credits;   establishing  an   optional  municipal   tax                                                                    
     exemption for  privately owned real property  rented or                                                                    
     leased  for  use as  a  charter  school; requiring  the                                                                    
     Department of Administration to  provide a proposal for                                                                    
     a salary  and benefits  schedule for  school districts;                                                                    
     making  conforming  amendments;  and providing  for  an                                                                    
     effective date."                                                                                                           
9:35:21 AM                                                                                                                    
MICHAEL  HANLEY, COMMISSIONER,  DEPARTMENT OF  EDUCATION AND                                                                    
EARLY DEVELOPMENT,  spoke to a  sectional analysis  (copy on                                                                    
file) of  the bill  and related  that certain  components of                                                                    
the  legislation were  specific to  the Department  of Labor                                                                    
and  Workforce  Development  (DOL)  and  the  Department  of                                                                    
Revenue  (DOR).  He  stated  that  Section  1  of  the  bill                                                                    
consisted of clean-up language and  that it allowed for jury                                                                    
service  exemptions for  certain teachers  in low-performing                                                                    
Co-Chair Kelly requested that  Commissioner Hanley skip over                                                                    
conforming-language sections  of the  bill and speak  to the                                                                    
sectional portions  that were the  meat of  the legislation.                                                                    
Commissioner Hanley responded in the affirmative.                                                                               
Vice-Chair Fairclough inquired  which sectional analysis was                                                                    
being  presented. Co-Chair  Kelly noted  that the  sectional                                                                    
analysis in his packet was different.                                                                                           
Vice-Chair Fairclough requested a brief at ease.                                                                                
9:37:12 AM                                                                                                                    
AT EASE                                                                                                                         
9:38:05 AM                                                                                                                    
Co-Chair Kelly  stated that the document  that the committee                                                                    
would be  working with was  notated in the  lower right-hand                                                                    
corner and  was prepared by M.  Herman on 4/8/14; it  was in                                                                    
landscape format.                                                                                                               
Commissioner  Hanley continued  to  speak  to the  sectional                                                                    
analysis of  the bill  and related  that Section  2 required                                                                    
school  districts to  allow high  school  students to  prove                                                                    
their  proficiency  and gain  credit  by  testing out  of  a                                                                    
course;  the  current  language  in  the  bill  allowed  for                                                                    
testing out of  any subject. He explained  that the governor                                                                    
had  originally  had  language in  the  bill  that  required                                                                    
districts to  have assessments  in the  core areas  of math,                                                                    
language   arts,   science,   social  studies,   and   world                                                                    
languages.  He   offered  that   some  subjects   that  were                                                                    
experiential  in  nature  did  not  lend  themselves  to  an                                                                    
assessment. He stated that Section  4 of the bill prohibited                                                                    
the  Department of  Education and  Early Development  (DEED)                                                                    
from entering into a contract  that would cede its authority                                                                    
over its standards and assessments.  He explained that there                                                                    
had  been  a  perception   that  the  department  had  given                                                                    
something  away  when it  had  joined  the Smarter  Balanced                                                                    
Assessment  Consortium and  that the  language in  Section 4                                                                    
restricted DEED  from giving up  its autonomy  and authority                                                                    
over its standards.                                                                                                             
Commissioner  Hanley  continued  to  speak  to  a  sectional                                                                    
analysis  of the  bill  and  related that  Section  5 was  a                                                                    
report  to  DEED from  school  districts  and added  another                                                                    
component to  the information that was  garnered from school                                                                    
districts; the report included  information for students who                                                                    
have  parents  in  the active  military.  He  reported  that                                                                    
Section 6 on page 5  established a new accountability system                                                                    
for Alaska's schools.  He explained that as a  result of the                                                                    
waver received from the No  Child Left Behind Act, there had                                                                    
been  a new  accountability system  implemented to  get away                                                                    
from the adequate  yearly progress (AYP) that  was no longer                                                                    
adequate  or an  accurate measurement  of schools;  DEED had                                                                    
moved  to the  Alaska  School Performance  Index (ASBI)  and                                                                    
used a 5-star rating system.  He stated the other night, the                                                                    
House added language to the  bill that would require DEED to                                                                    
grade  its  schools  on  an  A though  F  basis;  Section  8                                                                    
established  the  definitions  of  what  that  A  through  F                                                                    
criteria  would be.  He stated  that Section  9 of  the bill                                                                    
added integrity to  the local process of applying  for a new                                                                    
charter  school.  He  explained that  charter  schools  were                                                                    
operated within  school districts  and needed  to go  to the                                                                    
local school  board; language  had been  added in  Section 9                                                                    
that  specified  that  the answer  from  that  school  board                                                                    
needed to  be in writing  and be  based on findings  of fact                                                                    
and conclusions  of law. Section  9 also allowed  for appeal                                                                    
to commissioner of DEED if there  was a denial from a school                                                                    
Commissioner  Hanley   continued  to  address   a  sectional                                                                    
analysis of  the bill  and related  that Section  10 allowed                                                                    
the  commissioner  of  DEED to  review  a  charter  school's                                                                    
appeal on  the findings of  fact and conclusion of  law; the                                                                    
commissioner  could remand  the  decision  back for  further                                                                    
consideration, suggest  an approval  to the state  board, or                                                                    
agree with  the denial. He  added that a  reconsideration of                                                                    
the appeal needed to be  conducted within 90 days. He stated                                                                    
that Section  11 of  the bill continued  to focus  on equity                                                                    
for charter schools and spoke  to charter schools having the                                                                    
first right of  refusal to lease space from  the district in                                                                    
which they reside; the section  also allowed charter schools                                                                    
to negotiate  a lease agreement for  true operational costs.                                                                    
He explained  that a charter-school  budget was  defined and                                                                    
shall not be less than  the amount generated by the students                                                                    
enrolled  in that  charter school.  He  recalled that  David                                                                    
Teal,  who  was  the  director of  the  Legislative  Finance                                                                    
Division, had  spoken the  previous day  to the  amount that                                                                    
was generated  by students, which  included things  like the                                                                    
base student  allocation (BSA), the  geographic-cost factor,                                                                    
the   special  education   component,  and   the  vocational                                                                    
technology education;  Section 12 specified that  the budget                                                                    
for a charter school could not  be less than the amount that                                                                    
its   students   generate   in  that   formula   minus   the                                                                    
administrative fee  that the district  could retain  for the                                                                    
work that  it did on  behalf of  a charter school.  He added                                                                    
that  Section  12  limited  the   administrative  fee  to  4                                                                    
Commissioner  Hanley  continued  to  address  the  sectional                                                                    
analysis and related  that Section 13 was new  and was added                                                                    
in  the House  Finance  Committee; the  section allowed  for                                                                    
charter schools that  were starting out to  apply for start-                                                                    
up  funding in  the  amount  of $500  per  student that  was                                                                    
enrolled  in  the  charter school.  He  explained  that  the                                                                    
start-up money  was a one-time  funding source  for start-up                                                                    
costs.  He  stated  that  Section  15  was  similar  to  the                                                                    
language in Section  4 of the bill that  prevented DEED from                                                                    
giving up its authority  with its assessments and standards;                                                                    
Section 15  prevented DEED  from spending  any money  on the                                                                    
implementation  of the  common-core standards.  He explained                                                                    
that common-core  standards were  developed by  the National                                                                    
Governors Association and the  Council of Chief State School                                                                    
Officers  and   noted  that  46  states   have  adopted  the                                                                    
standards.  He pointed  out that  Alaska had  referenced the                                                                    
common-core  standards,  but that  it  had  its own  set  of                                                                    
standards that were comparable and equal in rigor.                                                                              
9:44:47 AM                                                                                                                    
Commissioner  Hanley  continued  to  address  the  sectional                                                                    
analysis.  He explained  that the  State Board  of Education                                                                    
provided an annual report to  legislature that was typically                                                                    
presented to both the House  and Senate Education Committees                                                                    
and that  Section 16 added  another component to  the report                                                                    
that  included  recommendations  to the  legislature  around                                                                    
educational spending and efficiencies.  He observed that new                                                                    
a  reporting  component was  added  in  the House  side  and                                                                    
opined  that the  language seemed  a little  outside of  the                                                                    
statutory  purview  of  the State  Board  of  Education.  He                                                                    
offered that  board was a  policy entity more than  a fiscal                                                                    
board  and thought  that the  idea that  it would  recommend                                                                    
methods of spending  to the legislature seemed  to be beyond                                                                    
its purview; regardless,  the idea was that  the board would                                                                    
at  least come  to the  legislature with  recommendations on                                                                    
education.  He  stated  that  Section  17  was  created  for                                                                    
recognizing some  equity in funding for  charter schools and                                                                    
pointed out that transportation  was a separate formula that                                                                    
was also generated by students.  He explained that districts                                                                    
received funding  for transportation based on  its number of                                                                    
students  and  that Section  17  designated  that a  charter                                                                    
school  had  to   have  a  minimal  level   of  funding  for                                                                    
transportation  along routes  that it  currently served.  He                                                                    
directed the committee's  attention to line 7 on  page 11 of                                                                    
the bill and quoted the  minimum level of responsibility for                                                                    
school districts to provide for transportation:                                                                                 
     at  a  minimum,  provide  transportation  services  for                                                                    
     students  enrolled in  the charter  school  on a  space                                                                    
     available  basis  along  the regular  routes  that  the                                                                    
     students  attending schools  in an  attendance area  in                                                                    
     the district are transported                                                                                               
Commissioner  Hanley   continued  to  address   a  sectional                                                                    
analysis  of the  bill. He  related that  the intent  behind                                                                    
Section  17  was   that  charter-school  students  generated                                                                    
funding for  the school  and that  they should  also receive                                                                    
services,   including  transportation.   He  reported   that                                                                    
Section 18  included the state's  boarding schools  like Mt.                                                                    
Edgecombe in  the requirement  to provide  opportunities for                                                                    
students  to test  out of  the courses  that previously  had                                                                    
been spoken  to at the  beginning of the meeting.  He stated                                                                    
that in order for a district  to apply to open a residential                                                                    
school,  it  needed  to do  so  during  an  open-application                                                                    
period.  He explained  that the  commissioner of  DEED could                                                                    
currently  open an  application  as  deemed appropriate  and                                                                    
recalled  that he  opened one  the  prior year;  he did  not                                                                    
think  that any  open-application  periods  had been  opened                                                                    
prior to that  by a commissioner. Section  19 specified that                                                                    
the  application period  shall be  opened annually,  but did                                                                    
not  require the  commissioner to  approve  new schools.  He                                                                    
thought  that the  opportunity should  be there  for schools                                                                    
and  districts to  apply for  residential schools.  He noted                                                                    
that one thing that was  missing from Section 19, which that                                                                    
had been  in governor's original  bill, was the  increase in                                                                    
boarding stipends;  this component  was currently a  part of                                                                    
SB 113.  He noted  that SB  113 had  been considered  by the                                                                    
legislature the  previous year and that  the legislature had                                                                    
increased the funding for boarding  stipends, but not to the                                                                    
extent that  was requested in  the bill. He stated  that the                                                                    
numbers were the same in the  current year and that the idea                                                                    
behind increasing the stipends was  to come close the actual                                                                    
cost of housing students in the residential schools.                                                                            
9:48:28 AM                                                                                                                    
Commissioner  Hanley   continued  to  address   a  sectional                                                                    
analysis of  the bill. He spoke  to Sections 20, 21,  and 22                                                                    
and pointed  out they  were BSA  components. He  stated that                                                                    
the  governor had  put in  $85  in order  to get  discussion                                                                    
started  regarding increasing  the BSA.  He stated  that the                                                                    
House  had  increased the  $85  to  $185  and had  kept  the                                                                    
amounts  of  $58  and  $58  in  subsequent  years  that  the                                                                    
governor had  recommended. He noted  that at the end  of the                                                                    
bill, the  House had also  included $30 million  as one-time                                                                    
funding  that would  be distributed  using  the formula.  He                                                                    
related for comparison  to the $30 million  that providing a                                                                    
$185 BSA  represented about  a $46  million cost.  He stated                                                                    
that Section 23 discussed tenure  for teachers in Alaska and                                                                    
moved  the  tenure  period  from  3 years  to  5  years.  He                                                                    
observed that the  change in tenure was added  in the house,                                                                    
but that  he was unsure how  it would improve scores  or the                                                                    
education system;  however, it  was determined  that holding                                                                    
off on  tenure for an additional  2 years would be  a better                                                                    
route.  He   observed  that   Section  24   allowed  smaller                                                                    
communities  that  had less  than  5,500  people to  provide                                                                    
tenure  for  their  teachers  in   2  years  less  than  the                                                                    
standard. He  explained that  if the  current tenure  in the                                                                    
bill  stayed  at  5  years, Section  24  would  allow  these                                                                    
smaller communities to offer tenure at 3 years.                                                                                 
GREY MITCHELL,  ASSISTANT COMMISSIONER, DEPARTMENT  OF LABOR                                                                    
AND WORKFORCE  DEVELOPMENT, spoke to the  sectional analysis                                                                    
of  the  bill  and  directed the  committee's  attention  to                                                                    
Section 25  and in particular  to page 14, lines  15 through                                                                    
31  of bill;  the main  change was  located on  line 17  and                                                                    
extended  the  Technical  and Vocational  Education  Program                                                                    
(TVEP)  through  June 30  of  2017.  He explained  that  the                                                                    
governor's version of the bill  had originally established a                                                                    
sunset  state  of 2024  and  that  the administration  would                                                                    
prefer  that  sunset date  to  allow  the regional  training                                                                    
centers  more  stability  to develop  training  programs  in                                                                    
light  of large  projects on  the horizon;  additionally, it                                                                    
would allow  them to more  effectively meet  industry needs.                                                                    
He spoke to  Section 26 and in particular to  page 15, lines                                                                    
1 through 28, which  added performance requirements for TVEP                                                                    
recipients   to   establish   and   document   duel   credit                                                                    
articulation agreements  with school districts to  allow for                                                                    
high school students to get  school credit for technical and                                                                    
vocational training.                                                                                                            
9:51:45 AM                                                                                                                    
AT EASE                                                                                                                         
9:52:34 AM                                                                                                                    
Mr. Mitchell continued  to speak to a  sectional analysis of                                                                    
the bill  and related  that Section  26 also  removed former                                                                    
Sections 4  and 5  from the  bill; Sections 4  and 5  of the                                                                    
previous  version of  the bill  had dealt  with student  and                                                                    
employer related  satisfaction related  to the  training. He                                                                    
concluded that  Sections 4  and 5  had been  removed because                                                                    
they were  subjective measures  and were  not viewed  in the                                                                    
same   categories  as   the   other  performance   measures;                                                                    
paragraph 6 was added to Section  26 to allow DOL to collect                                                                    
performance   and    financial   information    or   develop                                                                    
regulations   to    collect   performance    and   financial                                                                    
information from  TVEP participants. He spoke  to Section 27                                                                    
and in  particular to  lines 29  through 31  on page  15 and                                                                    
lines 1 through 4 on page  16. He stated that Section 27 was                                                                    
amended to  require institutions  receiving TVEP  funding to                                                                    
establish and  maintain at least one  articulation agreement                                                                    
for duel credit  for high school students who  were taking a                                                                    
vocational  education course;  furthermore,  it allowed  the                                                                    
DOL  to  establish a  penalty  of  20  percent of  the  TVEP                                                                    
funding  in the  following  year if  a  participant did  not                                                                    
comply with  the performance  or reporting  requirements. He                                                                    
directed the committee's attention to  Section 28 on page 16                                                                    
and  in  particular to  lines  5  through 12;  this  section                                                                    
established  the   definitions  for  what   an  articulation                                                                    
agreements and duel credits were.                                                                                               
9:54:53 AM                                                                                                                    
ANGELA   RODELL,   COMMISSIONER,  DEPARTMENT   OF   REVENUE,                                                                    
addressed a sectional analysis of  the bill and related that                                                                    
Section 29  gave municipalities  the expressed  authority if                                                                    
they chose to exempt property  used for charter schools from                                                                    
their  local property  tax. She  stated that  Sections 30-41                                                                    
all related to  tax credits that were  offered for donations                                                                    
and noted that the tax  credits were replicated based on the                                                                    
individual tax  that the  credit was  allowed to  be applied                                                                    
to; some sections  applied to the corporate  income tax, the                                                                    
fisheries tax,  the fisheries resource landing  tax, and the                                                                    
mining tax, which  was why the same  language was replicated                                                                    
over the course  of Sections 30 through 41.  She stated that                                                                    
Section  30  had  originally  been  for  a  tax  credit  for                                                                    
instruction  research   and  educational  support   for  the                                                                    
University  of  Alaska,  as  well   as  two  and  four  year                                                                    
colleges; this had been extended  to also include public and                                                                    
private  non-profit elementary  and  secondary schools.  She                                                                    
reported   that   the  ability   of   a   donation  for   an                                                                    
intercollegiate sports tournament had  been removed from the                                                                    
bill  as  an eligible  qualifier  for  the tax  credit.  She                                                                    
continued to  speak to Section  30 and related  that funding                                                                    
for scholarships had been added  for the cost of duel-credit                                                                    
courses,  tuition and  text  books, registration,  on-campus                                                                    
room  and board,  transportation  costs,  and other  program                                                                    
costs.  She  stated  that the  construction  of  residential                                                                    
housing, childhood  early learning and  development programs                                                                    
that were  provided by non-profit  corporations, as  well as                                                                    
science,  technology, engineering,  and  math programs  that                                                                    
were provided by a non-profit  or a school district were all                                                                    
added  as  eligible  uses   for  the  tax-credit  donations;                                                                    
donations  to any  of those  programs  throughout the  state                                                                    
would qualify  for a tax  credit under the  corporate income                                                                    
tax,  the state's  fisheries tax,  fishery resource  landing                                                                    
tax, and the mining tax.                                                                                                        
9:57:30 AM                                                                                                                    
Commissioner   Hanley   clarified   that   the   residential                                                                    
facilities were  for the state's proved  residential schools                                                                    
and  a tax  credit would  be provided  because there  was no                                                                    
other way to fund the schools.                                                                                                  
Commissioner  Hanley continued  to  speak  to the  sectional                                                                    
analysis of  the bill and  noted that Section 42  repealed a                                                                    
statute that  was noticed by  the House; the statute  was no                                                                    
longer in  effect and mostly  spoke to the Bureau  of Indian                                                                    
Affairs'  schools   and  the  absorption  of   those  school                                                                    
districts. He stated that Section  43 removed a sunset for a                                                                    
provision that  allowed Alaska to  apply for  federal grants                                                                    
for starting  up charter schools;  Alaska had  received some                                                                    
of those grants about six or  seven years prior, but had not                                                                    
received  any  recently. Section  43  allowed  the state  to                                                                    
continue  to at  least  have the  opportunity  to apply  for                                                                    
those  federal grants  as they  became available.  He stated                                                                    
that  Section   44  contained  the   applicability  language                                                                    
related to  the teacher-tenure  provisions and  that Section                                                                    
47  required  the  Department  of  Administration  (DOA)  to                                                                    
submit a written  report to the legislature on  January 1 of                                                                    
2016  in regards  to implementing  a  state-wide salary  and                                                                    
benefits  service  for  school  districts.  He  stated  that                                                                    
Section  48 contained  the $30  million in  one-time funding                                                                    
that was added by the House  and would be distributed by the                                                                    
adjusted  average daily  membership; the  remaining sections                                                                    
contained effective dates.                                                                                                      
Co-Chair  Kelly requested  that Commissioner  Hanley pretend                                                                    
that  there were  parents in  the room  and explain  how the                                                                    
bill  made  education   better  for  Alaskans.  Commissioner                                                                    
Hanley replied that the legislation  did several things; one                                                                    
was  that it  included  additional funding  for the  state's                                                                    
schools and districts that actually  went to the schools and                                                                    
districts  as  opposed  to  things  that  didn't  reach  the                                                                    
schools.  He explained  that  the bill  also  removed a  few                                                                    
barriers and added new opportunities  for students. He spoke                                                                    
about the  opportunity to  test out of  a class  He recalled                                                                    
previous testimony that some of  the state's charter schools                                                                    
were struggling  with funding and  finding leases;  the bill                                                                    
removed  some of  the barriers  on charter  schools, created                                                                    
equity, clarified what funding  generated by students really                                                                    
was, and provided  opportunities for charter-school students                                                                    
to have transportation like other  students in the district.                                                                    
He  noted  that  the  bill   also  provided  incentives  for                                                                    
Alaska's  public   entities  to  join  with   the  state  in                                                                    
increasing   educational  opportunities.   He  stated   that                                                                    
Alaska's  residential schools  were proven  models that  had                                                                    
been very effective for students  in rural and urban Alaska;                                                                    
the  bill   provided  an   annual  opportunity   for  school                                                                    
districts  to open  new residential  schools. He  hoped that                                                                    
eventually, the bill would support  residential schools to a                                                                    
greater extent.                                                                                                                 
10:01:57 AM                                                                                                                   
Senator  Hoffman  directed   the  committee's  attention  to                                                                    
Section  47,  which  required DOA  to  conduct  a  statewide                                                                    
salary and benefit report by  January 1 of 2016. He inquired                                                                    
if  the study  would  include a  cost  of living  adjustment                                                                    
(COLA)   element   as   it  related   to   rural   teachers.                                                                    
Commissioner Hanley replied that  the component was added in                                                                    
the  House and  that he  would have  to check  regarding the                                                                    
intent on  how DOA would  conduct the report. He  added that                                                                    
the section in question had  not been part of the governor's                                                                    
original bill and was only added recently.                                                                                      
Senator Hoffman thought that if  the section did not contain                                                                    
a COLA adjustment for rural  teachers, it would be difficult                                                                    
to  hire teachers  in those  areas. He  observed that  rural                                                                    
districts continued  to have  problems regarding  hiring and                                                                    
that one of  the ways that they were able  to hire competent                                                                    
teachers  was  to have  a  different  salary structure  than                                                                    
urban schools.                                                                                                                  
Vice-Chair  Fairclough  commented  that  the  committee  had                                                                    
already gone  through a process  to evaluate  benefits other                                                                    
than  salary  for school  districts  in  a survey  that  was                                                                    
conducted  for an  insurance pooling  issue.  She wanted  to                                                                    
make  sure  that as  the  Senate  reviewed the  survey,  the                                                                    
committee  did   not  ask   for  duplicate   information  or                                                                    
something that was already collected.  She wondered what the                                                                    
administration would  do differently  in acquiring  the data                                                                    
on the health and benefit side of the equation.                                                                                 
10:04:16 AM                                                                                                                   
Senator Hoffman  wondered if  Commissioner Hanley  was ready                                                                    
to  give a  comparison  between what  level  of funding  the                                                                    
Senate  had  provided in  the  operating  budget versus  the                                                                    
level  of  funding  that  the  House  provided  in  HB  278.                                                                    
Commissioner Hanley  responded that he could  give a general                                                                    
comparison of the  2 levels. He reported that  in the House,                                                                    
the  $185 in  the BSA  translated to  about $46  million and                                                                    
that including the $30 million  appropriation, the House had                                                                    
provided about $75 million to  $76 million; part of that was                                                                    
a one-time allocation, while part  was in the BSA. He stated                                                                    
that the Senate  had added a $100  million, which translated                                                                    
to  about  a $400  increase  to  the  BSA and  that  House's                                                                    
funding  level translated  to about  $300  BSA increase.  He                                                                    
noted that  another difference was  that the Senate  had all                                                                    
of the funding as a one-time appropriation.                                                                                     
10:05:36 AM                                                                                                                   
AT EASE                                                                                                                         
10:07:28 AM                                                                                                                   
10:07:41 AM                                                                                                                   
Vice-Chair Fairclough  noted that there had  been a question                                                                    
about  broadband before  the  AT EASE  and  stated that  the                                                                    
Legislative  Budget and  Audit  Committee  had been  working                                                                    
with Senator  Olson's office on broadband  and the necessity                                                                    
of  taking a  closer look  at how  the state's  schools were                                                                    
setup in  their ability  to communicate  electronically. She                                                                    
noted that there  was a survey done on schools  and that the                                                                    
committee  was   trying  to  ascertain  what   those  actual                                                                    
hardware  positions were  that  was  specific to  individual                                                                    
districts, what options and abilities  there were to connect                                                                    
those areas, and  what the required level would  be to carry                                                                    
data. She noted that the  issue on broadband for schools was                                                                    
unresolved  for the  Senate and  that she  did not  think it                                                                    
would  be resolved  in the  current session.  She understood                                                                    
that  broadband  survey would  not  be  completed until  the                                                                    
following session.                                                                                                              
Co-Chair Kelly  requested Commissioner Hanley to  comment on                                                                    
the E-Rate  legislation and thought  it should  be discussed                                                                    
along  with broadband.  Commissioner Hanley  stated that  he                                                                    
could  give a  high level  overview,  but that  it had  been                                                                    
several days since he had  reviewed the bill. He stated that                                                                    
the idea behind  the E-Rate bill was simply to  bring all of                                                                    
the state's  schools up  to a minimum  level of  10 megabits                                                                    
per  second of  bandwidth; additionally,  it would  increase                                                                    
the  bandwidth  10  percent  for  those  schools  that  were                                                                    
already at the minimum level.  He stated that the bill would                                                                    
set a floor for expectations of broadband across the state.                                                                     
Co-Chair Kelly  inquired if  the fiscal  note on  the E-Rate                                                                    
bill was  around $13 million. Commissioner  Hanley responded                                                                    
that it  was somewhere in  that area, but that  it increased                                                                    
in the out-years.                                                                                                               
10:09:46 AM                                                                                                                   
Senator Olson noted  that the bill converted DEED  from an A                                                                    
through F system  for grading its schools as  opposed to the                                                                    
star  system  and inquired  what  the  reason was  for  that                                                                    
change. Commissioner  Hanley replied  that DEED  had behaved                                                                    
very intentionally when it received  its waiver to move to a                                                                    
star system; he related that  the star system was similar to                                                                    
rating  system  for a  hotel  and  represented a  place  for                                                                    
improvement. He recalled  that going to the  star system was                                                                    
a  hugely public  process  and  that there  had  been a  lot                                                                    
feedback from people across the  state. He stated that the A                                                                    
through  F system  had  been introduced  in  the House,  but                                                                    
opined that  an F still  denoted failing. He was  unsure how                                                                    
the A  through F system would  motivate students, particular                                                                    
in small rural  areas, where there were no  other schools in                                                                    
town;  he added  that a  student could  not really  directly                                                                    
impact  a school's  score. He  opined that  the A  through F                                                                    
system seemed  to have detrimental consequences  rather than                                                                    
providing motivation. He understood  that the sponsor of the                                                                    
amendment in the  House believed that having an  A through F                                                                    
system  would  motivate  students  in schools,  as  well  as                                                                    
Senator Olson  surmised that Commissioner Hanley  was not in                                                                    
favor  of language  that changed  DEED  to the  A through  F                                                                    
system.  Commissioner Hanley  responded  in the  affirmative                                                                    
and   explained  that   the  department   had  been   acting                                                                    
intentionally when it had gone to the star system.                                                                              
10:11:50 AM                                                                                                                   
Senator Olson  noted that  Section 24  on page  14 discussed                                                                    
rural school  districts and requested clarification  on what                                                                    
the definition of a small borough  was. He noted that he had                                                                    
two  boroughs in  his Senate  district that  had populations                                                                    
that may or may not go  above the threshold of 5,500 people.                                                                    
Commissioner  Hanley understood  that any  borough that  had                                                                    
less than 5,500 people was  considered small; he did not see                                                                    
any  other criteria  offered and  did not  have any  further                                                                    
insight into the subject.                                                                                                       
Senator  Olson surmised  that  Commissioner  Hanley was  not                                                                    
necessarily in  favor of  that distinction  of what  a small                                                                    
borough was. Commissioner Hanley  understood that the intent                                                                    
behind  having a  shorter  tenure for  rural  Alaska was  to                                                                    
incentivize teachers to work in  those areas, but was unsure                                                                    
if that was the intent of  tenure. He stated that tenure was                                                                    
not designed as  an incentive, but that it could  be if used                                                                    
in  that way.  He noted  that  tenure was  designed to  give                                                                    
administrators and  teachers an  opportunity to  prove their                                                                    
effectiveness   before   being  provided   with   additional                                                                    
security in their job.                                                                                                          
Senator Olson expressed concern  about how the bill's tenure                                                                    
change  might  affect his  district.  He  noted that  if  an                                                                    
educator went from the Nome  public-school system, which was                                                                    
a  single site  school district,  as opposed  to the  Bering                                                                    
Strait School  District and then  moved the  Northwest Artic                                                                    
Borough School  District, it would  be unclear  what exactly                                                                    
applied  regarding  tenure.  Commissioner  Hanley  responded                                                                    
that the  different districts in question  could potentially                                                                    
have different tenure systems under the bill.                                                                                   
Senator Olson  pointed to  Section 47 on  page 28,  lines 10                                                                    
through 15.  He noted  that it appeared  that the  state was                                                                    
attempting to  establish a salary  schedule in  the section,                                                                    
but  observed that  the employees  being  affected were  not                                                                    
state employees but were essentially  employed by the school                                                                    
district.  He  noted  that   salaries  and  retirement  were                                                                    
important  to  people and  wondered  if  that those  aspects                                                                    
should  be left  up  to districts  in collective  bargaining                                                                    
rather than  being mandated in statute.  Commissioner Hanley                                                                    
responded that the  section did remove the  authority to set                                                                    
salaries  for teachers  at the  local level  and moved  that                                                                    
authority to  the state level.  He did not believe  that the                                                                    
intent  was to  make the  teachers state  employees, but  to                                                                    
determine  their salaries  at  the state  level. He  thought                                                                    
that that Senator Olson was  correct that the intent of that                                                                    
particular  section  was  to   look  at  a  statewide-salary                                                                    
10:15:32 AM                                                                                                                   
Senator Olson interpreted that DEED  was not in favor of the                                                                    
change and  that it  wanted to  continue with  local control                                                                    
for  the schools.  Commissioner  Hanley  responded that  the                                                                    
department was relatively neutral on  the change and that it                                                                    
had  not really  seen what  it  would like  yet; the  change                                                                    
represented  a  plan  to provide  a  recommendation  to  the                                                                    
Co-Chair Kelly thought  that one of the  vexing things about                                                                    
education  costs in  Alaska was  that most  people were  not                                                                    
satisfied  with the  education product  that  the state  was                                                                    
getting.  He  added  that Alaska  had  some  great  schools,                                                                    
students,  and programs,  but that,  in general,  people did                                                                    
not think that  the state was getting the  product it wanted                                                                    
from  its education  system. He  expressed frustration  that                                                                    
superintendents or  other school district  people complained                                                                    
about rising  costs, but thought  that there had not  been a                                                                    
lot  of effort  by  the school  districts  to control  labor                                                                    
costs. He  noted that  some costs  could not  be controlled,                                                                    
but that there  was some ability to have  control over labor                                                                    
costs; the  reason for the  state-wide salary  structure was                                                                    
because the districts  did not, in general, seem  to want to                                                                    
control those costs.                                                                                                            
Senator  Dunleavy inquired  what the  genesis of  the 5-star                                                                    
rating  system had  been. Commissioner  Hanley replied  that                                                                    
one of the requirements for  the waiver was that DEED needed                                                                    
to  put in  a separate  accountability system.  He explained                                                                    
that   if  AYP   was  scrapped,   something  needed   to  be                                                                    
implemented to  measure schools  and school  districts with;                                                                    
this was what had driven DEED to create a different system.                                                                     
Senator Dunleavy inquired  what the goal of  the star rating                                                                    
system was  and how it  would manifest itself in  the state.                                                                    
Commissioner  Hanley replied  that  the  waiver was  totally                                                                    
optional  and  that there  was  no  compulsion to  get  one;                                                                    
however, if the state had  stayed with AYP under a component                                                                    
of the  No Child Left  Behind Act,  about 98 percent  of the                                                                    
state's  schools  would  have  been deemed  as  failing.  He                                                                    
reported that  if DEED  has stayed with  AYP, it  would have                                                                    
had to reach 100 percent  efficiency in the current year and                                                                    
that  it would  have to  be implementing  school improvement                                                                    
plans  and  interacting  with  schools   as  if  there  were                                                                    
failing, even  if a school  might have a 85  percent success                                                                    
rate. He added that DEED felt  like the AYP was an erroneous                                                                    
model  and that  getting out  from under  it represented  an                                                                    
opportunity to  build a better  system. He reported  that he                                                                    
was very happy with the  Alaska School Performance Index and                                                                    
the new star  rating system and explained  that the feedback                                                                    
from  superintendents  and  principals  had  been  good.  He                                                                    
offered  that new  system allowed  school districts  to have                                                                    
greater control  and ownership over their  scores, which had                                                                    
not happened  with AYP or the  No Child Left Behind  Act and                                                                    
explained that  the prior system  had not provided a  way to                                                                    
fix things within  the system. He added that  the new rating                                                                    
system also  allowed DEED to  provide resources to  help the                                                                    
1-star schools, which had been  designated as a priority; it                                                                    
also  provided the  department with  a  chance to  recognize                                                                    
some of its  5-star schools for their good  work. He thought                                                                    
that  the motivation  for switching  rating systems  was the                                                                    
need  for  an  honest  system that  reflected  how  Alaska's                                                                    
schools were doing.                                                                                                             
10:20:19 AM                                                                                                                   
Vice-Chair  Fairclough thought  that it  was difficult  when                                                                    
America  was falling  behind in  the rankings  in the  world                                                                    
education market.  She knew that teachers  were working hard                                                                    
and had  many new challenges  in the classroom,  but pointed                                                                    
out  that America  was losing  ground  in terms  of how  its                                                                    
students  would compete  in the  world market.  She recalled                                                                    
attending  education   conferences  and  trying   to  attend                                                                    
educational  meetings   in  an  effort  to   understand  the                                                                    
perspective of what was happening.  She thought that she was                                                                    
informed  enough to  know that  some systems  were exclusive                                                                    
and some were inclusive and  that America was taking on more                                                                    
than  other than  others it  might be  compared to.  She was                                                                    
trying to  find footing  in looking  at Alaska's  system for                                                                    
rural and  urban students. She  thought that Alaska  was not                                                                    
facing that America was losing  ground on education and that                                                                    
that  aspect had  nothing  to with  Alaska.  She wanted  the                                                                    
tools to  identify why groups  were gaining ground  in front                                                                    
of America  on education and  needed to know  that America's                                                                    
students could still  compete in a global  market. She noted                                                                    
what the federal government setting  for hurdles for Alaskan                                                                    
students   played   into   how   Commissioner   Hanley   was                                                                    
responsible  for  setting  a bar  for  Alaskan  students  to                                                                    
cross.  She was  unsure if  an A  through F  system was  the                                                                    
right way  to go  or whether the  star system  was; however,                                                                    
she  thought that  if Alaska  had F  or failing  schools, it                                                                    
seemed that it was important for  the state to know that and                                                                    
be able to  act to change it. She acknowledged  that she was                                                                    
not a  teacher and had  not been a school  administrator and                                                                    
that   she  looked   to  Commissioner   Hanley  to   provide                                                                    
leadership in  how Alaska's  students competed.  She thought                                                                    
that maybe  an F rating would  make the state look  a little                                                                    
bit harder  at an  area than a  star rating.  She understood                                                                    
concerns  regarding how  an F  rating would  help people  in                                                                    
smaller   communities,  but   wondered   what  the   state's                                                                    
responsibility was if  it was labeling a school  as a 1-star                                                                    
school when it really had an F rating.                                                                                          
Co-Chair  Kelly did  not  think that  the  committee or  any                                                                    
legislator should  be concerned  about the self-esteem  of a                                                                    
community. He  stated that a  community needed to know  if a                                                                    
school was  failing and should  be outraged if that  was the                                                                    
case.  He did  not  want  to implement  a  system that  made                                                                    
people feel  better about their  school failing.  He thought                                                                    
that  a lot  of people  in  the committee  room were  former                                                                    
teachers  or  administrators.   He  noted  that  self-esteem                                                                    
worked on  children and that  the state should  be concerned                                                                    
about  it; however,  adults who  were supposed  to do  their                                                                    
jobs were being  discussed. He thought that if  a school was                                                                    
failing and the adults who  were required to make it succeed                                                                    
were   failing,  he   wanted  people   to  know   about  it;                                                                    
furthermore, a community  should be outraged if  they have a                                                                    
failing school and demand a  better one. Commissioner Hanley                                                                    
agreed and thought  that the state had not  been honest with                                                                    
its kids  in the past; He  thought that the state  needed to                                                                    
be honest with  its students. He recalled  that students had                                                                    
graduated  high  school, but  had  not  been ready  for  the                                                                    
university  and needed  to take  remedial classes.  He noted                                                                    
that some students had graduated  high school in Alaska, but                                                                    
had not ready  for careers or had not been  able to pass the                                                                    
written exam to  get into the military. He did  not have any                                                                    
desire  to  continue the  past  and  noted that  the  Alaska                                                                    
needed  to  be honest  with  its  communities, schools,  and                                                                    
kids. He stated that DEED  believed that the system that was                                                                    
in place, whether  it was called a  star or an F,  was a way                                                                    
to  look   at  deficiencies,  strengths,  and   how  to  fix                                                                    
problems. He  reported that DEED focused  and prioritized 1-                                                                    
star  schools  and  that the  department  would  help  those                                                                    
schools fix those deficits; the  star system would allow the                                                                    
department  to put  responsibilities on  schools to  address                                                                    
deficits and was  not hiding anything. He did  not know that                                                                    
designating a school as a  failure added to the conversation                                                                    
in a positive way and thought  that the goal was honesty and                                                                    
addressing the current needs.                                                                                                   
Commissioner Hanley  responded to Co-Chair  Kelly's comments                                                                    
and expressed  concerns that  the A through  F system  as it                                                                    
was listed  in the bill  was strictly based on  progress. He                                                                    
wondered  how an  A through  F system  would affect  schools                                                                    
that  were  at  the  99th percentile  and  how  these  high-                                                                    
achieving  schools would  get  adequate  progress. He  noted                                                                    
that  a 99th  percentile schools  would get  5-stars in  the                                                                    
current system, but  could receive an F in  the other system                                                                    
because it did  not make enough progress; he  was unsure how                                                                    
much  progress  could  be  achieved by  a  school  that  was                                                                    
already  at the  99th percentile.  He was  unsure about  the                                                                    
definitions  of the  A  through F  system,  but stated  that                                                                    
DEED's intent  was to address  needs in communities  and not                                                                    
to try and hide them anymore.                                                                                                   
10:27:41 AM                                                                                                                   
Co-Chair  Kelly  expressed  appreciation  that  Commissioner                                                                    
Hanley had  pointed out a nuance  in the A through  F system                                                                    
and thought  that the commissioner's explanation  had been a                                                                    
reasonable one.                                                                                                                 
Senator Bishop  noted that the discussion  was using general                                                                    
statements  regarding what  a failing  school  was versus  a                                                                    
passing school,  but that there  had been  little discussion                                                                    
about  the kids  and issues  like bullying.  He agreed  that                                                                    
adults could  take an A,  B, C, D, or  F, but that  it could                                                                    
negatively affect some children  that were transferring from                                                                    
one school to the next.  He expressed strong feelings on the                                                                    
issue. He recalled  that the commissioner had  stated that a                                                                    
99th percentile school could still  be an F school under the                                                                    
A through F  system. He recalled taking  two 17-year-olds to                                                                    
a school to register for  an apprenticeship program and that                                                                    
both kids  had been stuck  at a  3rd grade reading  and math                                                                    
level.  He stated  that today,  those  two individuals  were                                                                    
journeymen operators  making $80,000  per year;  he inquired                                                                    
if they were considered failures.                                                                                               
Senator  Dunleavy commented  that there  had been  a lot  of                                                                    
discussion in the current year  about school choice, much of                                                                    
it  housed  in  the  private  school  concept.  He  wondered                                                                    
whether a child could move from a  1-star school to a 4 or 5                                                                    
-star  public school  with the  assistance of  the state  or                                                                    
whether they  were destined to  remain in that  school until                                                                    
it was  fixed. Commissioner Hanley responded  that there was                                                                    
not  currently a  system where  the  state would  pay for  a                                                                    
student to move  to another community to  attend a different                                                                    
school. He stated that in areas   where there were more than                                                                    
one  school,  DEED  was  seeing   more  and  more  districts                                                                    
providing totally  open enrollment  in allowing  students to                                                                    
move  around within  the district;  however,  there was  not                                                                    
currently anything in place to  support students moving from                                                                    
a small community to a large community.                                                                                         
10:32:00 AM                                                                                                                   
Senator Dunleavy  thought that the state  did have something                                                                    
like  that  in  place.  He  noted  that  Mt.  Edgecombe  was                                                                    
directly under DEED and inquired  if the state paid for kids                                                                    
to attend  Mt. Edgecombe.  Commissioner Hanley  responded in                                                                    
the affirmative and added that it was a public school.                                                                          
Senator Dunleavy  noted that there  were funds and  a system                                                                    
already  in  place  that  allowed  children  to  go  to  Mt.                                                                    
Edgecombe who  might be in smaller  communities; he inquired                                                                    
if this process could be  reviewed to allow children from 1-                                                                    
star or 2-star  school to have first dibs  at Mt. Edgecombe,                                                                    
another  regional boarding  school,  or  anywhere. He  noted                                                                    
that he was not trying to  put the commissioner on the spot,                                                                    
but  wanted  his thoughts  on  the  issue of  school  choice                                                                    
within  the public  school system.  He  wondered if  someone                                                                    
really had  school choice if  they had no assistance  to go.                                                                    
Commissioner  Hanley thought  that  it would  be a  valuable                                                                    
thing  to consider  regarding  the  application process  and                                                                    
that the only  school that the department  had any authority                                                                    
over in  that regard was  Mt. Edgecombe; although  the state                                                                    
did have  other residential  schools, they were  operated by                                                                    
local  schools districts.  He thought  that adding  criteria                                                                    
that factored in  where a student came from could  be a part                                                                    
of the application process.                                                                                                     
Co-Chair  Meyer  was interested  in  how  the BSA,  the  $30                                                                    
million outside  of cap, and how  TRS was dealt with  in the                                                                    
bill. He noticed that the  House had included testing out of                                                                    
classes in the  bill and expressed concern that  in the case                                                                    
of larger schools, testing out  of hundreds of classes could                                                                    
be very  expensive. He  inquired what  Commissioner Hanley's                                                                    
thoughts were  on the  issue. Commissioner  Hanley responded                                                                    
that testing out of classes  had also been in the governor's                                                                    
bill,  but that  the governor's  version had  language added                                                                    
that had specifically had in mind  that it could be a burden                                                                    
for districts  to have  to develop  an assessment  for every                                                                    
subject. The  part that had  been removed from the  bill was                                                                    
the  specific language  around the  courses; currently,  the                                                                    
bill  stated that  any subject  could be  tested out  of. He                                                                    
reported that  DEED preferred  that only  the core  areas of                                                                    
math,  language arts,  science,  social  studies, and  world                                                                    
languages be included for testing out.                                                                                          
10:35:18 AM                                                                                                                   
Co-Chair Meyer agreed and thought  that allowing for testing                                                                    
out of  the core  courses would be  achievable, but  that it                                                                    
would be  expensive and cumbersome to  do so for all  of the                                                                    
Co-Chair  Meyer  inquired  if the  committee  had  discussed                                                                    
charter  schools  and  how  they  were  dealt  with  in  the                                                                    
legislation. Commissioner Hanley  noted that charter schools                                                                    
were  addressed  in  Section  9  of the  bill  and  that  it                                                                    
contained  two components.  He reported  that one  component                                                                    
was the removal  of barrier and allowing  an appeal process;                                                                    
the other component  was to provide some  equity for charter                                                                    
schools.  He  explained  that the  integrity  of  the  local                                                                    
process allowed  an appeal that  required a district  to say                                                                    
no  to new  charter schools  based on  fact and  conclusion;                                                                    
furthermore,  this needed  to put  into writing.  He thought                                                                    
that the new appeal system  brought integrity to the process                                                                    
and  noted that  it allowed  for an  appeal to  come to  the                                                                    
commissioner  of DEED.  He reported  that if  a commissioner                                                                    
felt that  a districts' decision  was not based on  fact and                                                                    
law, they could  send the decision to the state  board for a                                                                    
final review.  He added  that there  was also  some language                                                                    
that the governor  had originally put in  and some additions                                                                    
regarding treating  charter schools equitably  and explained                                                                    
that charter  schools had a  different structure  than other                                                                    
schools; they were run by  an advisory policy committee that                                                                    
consisted  largely  of  parents.  He reported  that  the  in                                                                    
current  language of  the bill,  the funding  for a  charter                                                                    
school could  not be  less than the  funds generated  by the                                                                    
students in that  school. He explained that  the equity part                                                                    
of the bill  stated that the funds generated  by students in                                                                    
a charter school included  the special education, vocational                                                                    
and technical  education components,  but also  required the                                                                    
consideration of transportation by the school district.                                                                         
Commissioner  Hanley continued  to address  Co-Chair Meyer's                                                                    
question and  related that  language had  been added  to the                                                                    
bill  that  allowed  charter  schools  the  first  right-of-                                                                    
refusal  for lease  space. There  was language  that allowed                                                                    
municipalities to  remove a private building  that was being                                                                    
leased  by charter  schools from  the tax  rules; there  was                                                                    
also  language  that  added  a $500  per  student  grant  to                                                                    
charter schools for startup money.                                                                                              
10:38:17 AM                                                                                                                   
Co-Chair Meyer  inquired the $500  per student grant  was in                                                                    
the  governor's bill  or whether  it had  been added  in the                                                                    
House. Commissioner  Hanley replied  that the  component was                                                                    
added  in  the  House   Finance  Committee.  Co-Chair  Meyer                                                                    
inquired  if it  was  something  he supported.  Commissioner                                                                    
Hanley responded  that the only  negative part would  be the                                                                    
responsibility for  the fiscal  component, which  he thought                                                                    
was about $168,000  based on passed trends.  He thought that                                                                    
it was a  way to help charter schools get  on their feet and                                                                    
would equate to  about $75,000 to $100,000  depending on the                                                                    
school's size.                                                                                                                  
Co-Chair  Kelly  inquired  if   school  districts  were  not                                                                    
required  to  pass on  money  from  the  BSA to  charter  to                                                                    
schools. Commissioner Hanley replied that was incorrect.                                                                        
Co-Chair Kelly  inquired if schools districts  were required                                                                    
to pass on funding to  charter schools that was appropriated                                                                    
outside of the BSA.  Commissioner Hanley that theoretically,                                                                    
that was true. He stated that  the idea was that the charter                                                                    
schools were funded  in the same manner as  other schools in                                                                    
the district.                                                                                                                   
Co-Chair  Meyer  noted that  there  was  a lot  interest  in                                                                    
charter schools  and that  Commissioner Hanley  thought that                                                                    
the  $500 per  student grant  was manageable  from a  fiscal                                                                    
perspective.  He inquired  if  there was  a  cap on  charter                                                                    
schools.  Commissioner Hanley  responded that  there was  no                                                                    
longer  a  cap.  Co-Chair  Meyer inquired  if  the  cap  was                                                                    
removed. Commissioner Hanley replied in the affirmative.                                                                        
Co-Chair Meyer  inquired how the  high school exit  exam was                                                                    
addressed in the bill. Commissioner  Hanley replied that the                                                                    
removal of high  school exit exam had been taken  out of the                                                                    
governor's version  of the  bill, but that  it had  been the                                                                    
focus of the  administration. He understood that  HB 220 was                                                                    
currently being considered  by the Senate and  that the bill                                                                    
repealed  the  exit exam.  He  did  not believe  that  issue                                                                    
needed  to  be addressed  in  HB  278,  but that  DEED  felt                                                                    
strongly that  the time had  come to repeal the  high school                                                                    
exit exam.                                                                                                                      
Co-Chair  Meyer  agreed  with Commissioner  Hanley  and  was                                                                    
unsure  if the  SAT/ACT testing  or WorkKeys  was the  right                                                                    
mechanism.  Commissioner Hanley  commented that  the SAT/ACT                                                                    
was  simply  added as  a  choice;  currently, Alaska's  11th                                                                    
graders  were  required  to  take  WorkKeys,  which  was  an                                                                    
assessment that gave  people an idea of how  they would fair                                                                    
in their  career. He  stated that  the governor's  intent in                                                                    
adding ACT/SAT  testing was  not to  replace the  exit exam,                                                                    
but  to   provide  a   choice  for   students;  furthermore,                                                                    
WorkKeys, the  ACT, and the  SAT all qualified  students for                                                                    
the Alaska Performance Scholarship.                                                                                             
10:42:14 AM                                                                                                                   
Co-Chair  Meyer  voiced  frustration   that  the  state  was                                                                    
picking  up  a  lot  more  of the  share  of  the  education                                                                    
funding,  but that  it was  not  getting credit  for it.  He                                                                    
recalled  that 2  years prior,  the legislature  had changed                                                                    
the mill rate  from 4.0 to 2.65, which meant  that the state                                                                    
was  picking up  a larger  share of  the funding,  while the                                                                    
municipalities were taking a smaller  share. He thought that                                                                    
the mill  rate could be  discussed, but that the  change had                                                                    
given  cities extra  money  to use  for  other purposes.  He                                                                    
noted  that with  school construction,  the state  funded 70                                                                    
percent and that the municipalities  picked up 30 percent if                                                                    
they could pass  the bond. He noted that  it was troublesome                                                                    
that  the  state   had  no  control  over   the  bonding  of                                                                    
municipalities and that if one  passed a school construction                                                                    
bill, the  state automatically funded  70 percent;  he added                                                                    
that he  was not saying this  was right or wrong,  but noted                                                                    
that  the state  could  not  control or  plan  for this.  He                                                                    
inquired  if  Commission  Rodell  had any  thoughts  on  the                                                                    
issue. Commissioner  Rodell thought  that there  were things                                                                    
that the  state could  do to  the School  Debt Reimbursement                                                                    
Program that  would fulfill the  goals and capital  needs of                                                                    
the  school districts  while still  bringing the  state more                                                                    
control over  its match  and debt  costs. She  recalled that                                                                    
DOR had heard from communities  that might want to cash fund                                                                    
some of  their capital costs  instead of debt  funding them;                                                                    
she thought that  this was something that DOR  might want to                                                                    
respect, but that there was  currently no mechanism in place                                                                    
under  school debt  reimbursement  for a  community to  cash                                                                    
fund some of  its capital costs. She thought  that DOR would                                                                    
be  receptive to  looking  at different  ways  to amend  the                                                                    
School Debt Reimbursement Program  that allowed the state to                                                                    
have  more  control  over its  costs  associated  with  that                                                                    
program without  impacting the school districts'  ability to                                                                    
fund the capital needs that were required.                                                                                      
Co-Chair  Meyer noted  that he  would  like to  work on  the                                                                    
issue  further  with  Commissioner Hanley  and  Commissioner                                                                    
Rodell. He  observed that he  had many other  questions, but                                                                    
yielded his  time to other  members in the  recognition that                                                                    
there would more hearings on the bill.                                                                                          
10:45:24 AM                                                                                                                   
Senator  Hoffman recalled  having  several discussions  with                                                                    
Commissioner Hanley  regarding the  quality of  education in                                                                    
rural  Alaska and  that  he had  the  same discussions  with                                                                    
three  or four  of the  previous commissioners  of DEED.  He                                                                    
stated  that the  school district  that  had been  discussed                                                                    
most  intensely was  the Yupiit  School  District and  noted                                                                    
that  DEED  had  taken  oversight  over  that  district.  He                                                                    
wondered how that oversight had  improved education in those                                                                    
three  communities, as  well as  how  the legislation  would                                                                    
help  the  district and  other  like  communities provide  a                                                                    
better  education  to  their students.  Commissioner  Hanley                                                                    
responded that  a little  over a year  prior, he  had worked                                                                    
with  Willie Kasayulie,  Mike Williams,  and  others on  the                                                                    
Yupiit  School  Board  and  had  determined  that  having  a                                                                    
trustee there was not the  best methodology; the trustee had                                                                    
been  removed  for over  a  year.  He  noted that  DEED  had                                                                    
provided resources  directly to  the Yupiit  School District                                                                    
and  that they  had  made  some huge  gains.  He was  really                                                                    
excited about the direction that  the district was going and                                                                    
stated that  the DEED had provided  additionally funding and                                                                    
that  the  district  had   requested  for  opportunities  to                                                                    
empower  its  advisory  committees  in  each  community  and                                                                    
empower its  teachers; DEED  had paid  for some  of training                                                                    
for that. He thought that  the Yupiit School District was on                                                                    
an  upward swing  and that  things  had changed  extensively                                                                    
over the last year and a  half. He thought that the bill did                                                                    
not  focus on  rural or  urban  schools, but  that it  would                                                                    
raise  all boats  and  would have  an  impact statewide.  He                                                                    
concluded  that the  bill should  benefit the  Yupiit School                                                                    
10:47:55 AM                                                                                                                   
CSHB  278(FIN)  am  was  HEARD and  HELD  in  committee  for                                                                    
further consideration.                                                                                                          
SB 119 was SCHEDULED but not HEARD.                                                                                             
10:48:02 AM                                                                                                                   
The meeting was adjourned at 10:48 a.m.                                                                                         

Document Name Date/Time Subjects
CSHB 278(FIN) am Additional Letters of Support.pdf SFIN 4/9/2014 9:00:00 AM
HB 278
CSHB 278(FIN) am Alaska's Education Opportunity Act Present.pdf SFIN 4/9/2014 9:00:00 AM
HB 278
CSHB 278(FIN) am Letters of Support.pdf SFIN 4/9/2014 9:00:00 AM
HB 278
CSHB 278(FIN) am Resolutions of Support.pdf SFIN 4/9/2014 9:00:00 AM
HB 278
CSHB 278(FIN) am Sectional.pdf SFIN 4/9/2014 9:00:00 AM
HB 278
CSHB 278(FIN) am Sponsor Statement-Transmittal Letter.pdf SFIN 4/9/2014 9:00:00 AM
HB 278
CSHB 278(FIN) am summary of changes HB 278.pdf SFIN 4/9/2014 9:00:00 AM
HB 278
HB 278 (section 8 page 3). provision involving letter grades A-F - Kito.msg SFIN 4/9/2014 9:00:00 AM
HB 278
HB 278 Section 23 - Bernoski.msg SFIN 4/9/2014 9:00:00 AM
HB 278
HB278 4 8 14 SFC FY14 ADM to AADM by district.pdf SFIN 4/9/2014 9:00:00 AM
HB 278
HB278 4 8 14 SFC K-12 Presentation.pdf SFIN 4/9/2014 9:00:00 AM
HB 278
HB278 Education Funding - Curran.msg SFIN 4/9/2014 9:00:00 AM
HB 278
HB278 I support a $400 increase in the base student allocation - Bemben.msg SFIN 4/9/2014 9:00:00 AM
HB 278
HB278 Education legislation - Alexander.msg SFIN 4/9/2014 9:00:00 AM
HB 278
HB278 Increasing and inflation-proofing the BSA - Banta.msg SFIN 4/9/2014 9:00:00 AM
HB 278
HB278 Please fund our public school teachers counselors and the Middle School Model of team teaching - Davis.msg SFIN 4/9/2014 9:00:00 AM
HB 278
HB278 Public Amendment - McMahon.msg SFIN 4/9/2014 9:00:00 AM
HB 278
HB278 Public School and School District Grading System - Byer.msg SFIN 4/9/2014 9:00:00 AM
HB 278
HB278 Public Testimopny - Murphy.msg SFIN 4/9/2014 9:00:00 AM
HB 278
HB278 Testimony Re Education - Reilly.msg SFIN 4/9/2014 9:00:00 AM
HB 278
HB278 Testimony regarding SB278 Education - Brooks.msg SFIN 4/9/2014 9:00:00 AM
HB 278
SB 278
HB278CS(FIN)am-DOLWD-CO-03-31-14.pdf SFIN 4/9/2014 9:00:00 AM
HB 278
HB278CS(FIN)am-EED-K12-4-8-14.pdf SFIN 4/9/2014 9:00:00 AM
HB 278
HB278CS(FIN)am-EED-PEF-04-08-14.pdf SFIN 4/9/2014 9:00:00 AM
HB 278
HB278CS(FIN)am-UA-SYSBRA-04-08-14.pdf SFIN 4/9/2014 9:00:00 AM
HB 278
HB278 Change to ASPI star rating to Letter Grade rating - Cunningham.msg SFIN 4/9/2014 9:00:00 AM
HB 278
HB278 Education Funding - Dudley.msg SFIN 4/9/2014 9:00:00 AM
HB 278
HB278W proposed actions affecting the CS for HB278 - Morley.msg SFIN 4/9/2014 9:00:00 AM
HB 278
HB 278 Public Testimony - Smith.msg SFIN 4/9/2014 9:00:00 AM
HB 278