Legislature(2017 - 2018)SENATE FINANCE 532

02/23/2018 09:00 AM FINANCE

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ SB 131 EDUCATION FUNDING; BUDGET TELECONFERENCED
Heard & Held
+ HB 287 APPROP: PUPIL TRANSPORTATION; EDUCATION TELECONFERENCED
Heard & Held
+ Bills Previously Heard/Scheduled TELECONFERENCED
                 SENATE FINANCE COMMITTEE                                                                                       
                     February 23, 2018                                                                                          
                         9:01 a.m.                                                                                              
                                                                                                                                
                                                                                                                                
9:01:12 AM                                                                                                                    
                                                                                                                                
CALL TO ORDER                                                                                                                 
                                                                                                                                
Co-Chair MacKinnon called the Senate Finance Committee                                                                          
meeting to order at 9:01 a.m.                                                                                                   
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Senator Lyman Hoffman, Co-Chair                                                                                                 
Senator Anna MacKinnon, Co-Chair                                                                                                
Senator Click Bishop, Vice-Chair                                                                                                
Senator Peter Micciche                                                                                                          
Senator Donny Olson                                                                                                             
Senator Gary Stevens                                                                                                            
Senator Natasha von Imhof                                                                                                       
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
None                                                                                                                            
                                                                                                                                
ALSO PRESENT                                                                                                                  
                                                                                                                                
Tim Lamkin, Staff, Senator Gary Stevens; Representative                                                                         
Paul Seaton, Sponsor.                                                                                                           
                                                                                                                                
SUMMARY                                                                                                                       
                                                                                                                                
SB 131    EDUCATION FUNDING; BUDGET                                                                                             
                                                                                                                                
          SB 131 was HEARD and HELD in committee for                                                                            
          further consideration.                                                                                                
                                                                                                                                
HB 287(brf sup maj fld)                                                                                                         
          APPROP: PUPIL TRANSPORTATION; EDUCATION                                                                               
                                                                                                                                
          HB 287(brf sup maj fld) was HEARD and HELD in                                                                         
          committee for further consideration.                                                                                  
                                                                                                                                
SENATE BILL NO. 131                                                                                                           
                                                                                                                                
     "An Act  relating to a separate  appropriation bill for                                                                    
     operating   expenses    for   public    education   and                                                                    
     establishing a  date by which  the bill must  be passed                                                                    
     by  the legislature  and  transmitted  to the  governor                                                                    
     each year;  relating to the budget  responsibilities of                                                                    
    the governor; and providing for an effective date."                                                                         
                                                                                                                                
9:02:17 AM                                                                                                                    
                                                                                                                                
SENATOR GARY STEVENS, SPONSOR, introduced the bill.                                                                             
                                                                                                                                
9:03:05 AM                                                                                                                    
                                                                                                                                
TIM LAMKIN, STAFF, SENATOR GARY  STEVENS, explained that the                                                                    
bill  would   early  fund  the  formula   program  that  was                                                                    
currently set  in statute. He  thought that the  creation of                                                                    
the formula  had been an  attempt to  depoliticize education                                                                    
funding in the state. He  noted that education had been very                                                                    
important to the  founders of the state and had  been one of                                                                    
the first major policy issues they put forward.                                                                                 
                                                                                                                                
9:04:48 AM                                                                                                                    
                                                                                                                                
Mr. Lamkin outlined the Sectional Analysis (copy on file):                                                                      
                                                                                                                                
     Section  1:  Requires the  governor  to  submit to  the                                                                  
     legislature  a separate  appropriation bill  for public                                                                    
     education,   formula    funding   for    schools.   The                                                                    
     legislature  is directed  to pass  and transmit  to the                                                                    
     governor by  April 1 a  bill making  appropriations for                                                                    
     formula funding for the following fiscal year.                                                                             
                                                                                                                                
     Section  2:  Is a  technical  change  to the  Executive                                                                  
     Budget  Act,   to  accommodate  the  provision   for  a                                                                    
     separate  appropriations   bill  for   formula  funding                                                                    
     public education.                                                                                                          
                                                                                                                                
     Section 3: The  effective date of the Is  July 1, 2018,                                                                  
     so a  separate appropriations bill for  formula funding                                                                    
     public  education would  be first  required for  the FY                                                                    
     2020 budget.                                                                                                               
                                                                                                                                
9:05:43 AM                                                                                                                    
                                                                                                                                
Co-Chair  MacKinnon  understood  that  the  concept  of  the                                                                    
legislation had been heard before.                                                                                              
                                                                                                                                
Senator Stevens said  that he had introduced it  in 2002 but                                                                    
that  at that  time districts  had not  been interested.  He                                                                    
hoped  that the  legislation would  be effective  in solving                                                                    
the issue of teachers in  the state receiving pink slips and                                                                    
the overall uncertainty faced  by school districts regarding                                                                    
funding for education.                                                                                                          
                                                                                                                                
9:06:44 AM                                                                                                                    
                                                                                                                                
Co-Chair MacKinnon  expressed concern that an  early funding                                                                    
of education appropriation bill could  be used to fund thing                                                                    
outside  of  education. She  was  also  concerned that  once                                                                    
education  was taken  care of  in the  basic formula,  there                                                                    
remained  the fight  for additional  money in  the Operating                                                                    
Budget.                                                                                                                         
                                                                                                                                
9:07:39 AM                                                                                                                    
                                                                                                                                
Co-Chair MacKinnon  asked how the school  at Mount Edgecumbe                                                                    
and pupil transportation would be addressed.                                                                                    
                                                                                                                                
Mr. Lamkin said  that the bill focused on  the statutes that                                                                    
pertained directly  to the foundation formula.  He said that                                                                    
opening the  formula to allow  for inclusion was not  out of                                                                    
the question but could be difficult.                                                                                            
                                                                                                                                
9:08:55 AM                                                                                                                    
                                                                                                                                
Senator Olson  asked about  early childhood  program outside                                                                    
of basic school funding. He  wondered whether the bill would                                                                    
affect teachers in early childhood education.                                                                                   
                                                                                                                                
Mr. Lamkin  reiterated that inclusivity of  programs outside                                                                    
of K-12 could be challenging but was not impossible.                                                                            
                                                                                                                                
SB  131  was  HEARD  and   HELD  in  committee  for  further                                                                    
consideration.                                                                                                                  
                                                                                                                                
9:10:40 AM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
9:12:38 AM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                
Co-Chair MacKinnon handed the gavel to Co-Chair Hoffman.                                                                        
                                                                                                                                
HOUSE BILL NO. 287(brf sup maj fld)                                                                                           
     "An Act making appropriations  for public education and                                                                    
     transportation  of  students;   and  providing  for  an                                                                    
     effective date."                                                                                                           
                                                                                                                                
9:13:21 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE PAUL SEATON, SPONSOR, offered a brief                                                                            
history on the genesis of the legislation.                                                                                      
                                                                                                                                
9:15:54 AM                                                                                                                    
                                                                                                                                
Representative Seaton discussed the presentation, "HB 287                                                                       
Pupil Transportation and Education: An Early and Stand-                                                                         
alone Appropriation Bill" (copy on file).                                                                                       
                                                                                                                                
Representative Seaton highlighted Slide 2, "HB 287-                                                                             
Comparison":                                                                                                                    
                                                                                                                                
     HB 287 - As Introduced                                                                                                   
                                                                                                                                
     Section  1 -  Appropriates  $50,853,100 for  Foundation                                                                  
     Program,  Boarding  Home  Grans,  Youth  in  Detention,                                                                    
     Special Schools, and Mt. Edgecumbe Boarding school.                                                                        
                                                                                                                                
     Section 2 - Sets out funding by agency.                                                                                  
                                                                                                                                
     Section  3 -  Sets  out funding  for appropriations  in                                                                  
     Section 1.                                                                                                                 
                                                                                                                                
     Section 4  - Appropriates  $1.2 billion  of CBR  to the                                                                  
     public education fund.  Appropriates an estimated $67.8                                                                    
     million from the SBR for student transportation.                                                                           
                                                                                                                                
     HB 287 - As passed by the house                                                                                          
                                                                                                                                
     Section 1 - Unchanged                                                                                                    
                                                                                                                                
     Section 2 - Unchanged                                                                                                    
                                                                                                                                
     Section 3 - Unchanged                                                                                                    
                                                                                                                                
     Section  4 -  $1.2 billion  of CBR  funding is  removed                                                                  
     from the bill.                                                                                                             
                                                                                                                                
     Without the CBR funding, the "estimated to be" of SBR                                                                      
     funding now needed for student transportation is $78.2                                                                     
     million.                                                                                                                   
                                                                                                                                
9:17:07 AM                                                                                                                    
                                                                                                                                
Representative Seaton  displayed Slide  3, "HB 287  - Intent                                                                    
of the bill":                                                                                                                   
                                                                                                                                
      • Stand-alone education appropriations bill.                                                                              
                                                                                                                                
        • Allow school districts to know their level of                                                                         
          state aid in advance of passage of the state                                                                          
          operating budget.                                                                                                     
                                                                                                                                
        • Avoid unnecessary teacher layoff notices.                                                                             
                                                                                                                                
        • Same level of funding as the Governor's request.                                                                      
                                                                                                                                
        • Use $1.2 billion from CBR and about $67.8 million                                                                     
          from SBR.                                                                                                             
                                                                                                                                
9:17:52 AM                                                                                                                    
                                                                                                                                
Representative  Seaton  addressed  Slide  4,  "K-12  Funding                                                                    
History  - All  Funds (FY15-19).  The slide  depicted a  bar                                                                    
graph  that listed  the  funding for  K-12,  broken down  by                                                                    
Mount Edgecumbe Boarding  School Facilities Maintenance, Mt.                                                                    
Edgecumbe  Boarding   School,  Special  Schools,   Youth  in                                                                    
Detention,  Boarding  Home   Grants,  Additional  Foundation                                                                    
Funding, Pupil Transportation, and Foundation Program.                                                                          
                                                                                                                                
9:18:49 AM                                                                                                                    
                                                                                                                                
Co-Chair MacKinnon noted  that the green chunk  on the first                                                                    
bar for  the FY 15  final budget was not  additional funding                                                                    
but  was one-time  money that  had been  distributed through                                                                    
the formula to create an equitable spread.                                                                                      
                                                                                                                                
Representative Seaton agreed.                                                                                                   
                                                                                                                                
9:19:57 AM                                                                                                                    
                                                                                                                                
Representative  Seaton  highlighted  Slide  5,  "End-of-Year                                                                    
Savings Balances  - FY 15-19.  The slide showed a  bar graph                                                                    
that end-of-year  savings balances for the  Statutory Budget                                                                    
Reserve and the Constitutional Budget Reserve (CBR).                                                                            
                                                                                                                                
9:20:45 AM                                                                                                                    
                                                                                                                                
Representative   Seaton   addressed   Slide   6,   "Earnings                                                                    
Comparisons  - CBR  and Permanent  Fund." The  slide offered                                                                    
earnings comparisons  of the  FY 17 earning  of the  CBR and                                                                    
the 10-year earning projection of the Permanent Fund.                                                                           
                                                                                                                                
9:21:27 AM                                                                                                                    
                                                                                                                                
Representative   Seaton  discussed   Slide  7,   "Effect  of                                                                    
Earnings  Rate  on  $1.2 Billion."  The  slide  reflected  a                                                                    
difference of $632  million in 10 years between  the CBR and                                                                    
the Permanent Fund.                                                                                                             
                                                                                                                                
9:21:58 AM                                                                                                                    
                                                                                                                                
Representative Seaton looked at Slide 8:                                                                                        
                                                                                                                                
     Education is one of the highest priority programs for                                                                      
     the   state   and    educators   are   shaping   future                                                                    
     generations.                                                                                                               
                                                                                                                                
     HB 287 reflects the importance of education to our                                                                         
     state.                                                                                                                     
                                                                                                                                
9:22:22 AM                                                                                                                    
                                                                                                                                
Co-Chair Hoffman said that  discussions about education were                                                                    
always  heated  and  that   every  legislator  claimed  that                                                                    
education was  a top priority.  He said that the  bill would                                                                    
be discussed during caucus.                                                                                                     
                                                                                                                                
9:22:54 AM                                                                                                                    
                                                                                                                                
Senator Stevens queried the dangers  of a live appropriation                                                                    
bill between the House and the Senate.                                                                                          
                                                                                                                                
Representative Seaton  said that it would  take agreement by                                                                    
both bodies to pass something.                                                                                                  
                                                                                                                                
9:24:09 AM                                                                                                                    
                                                                                                                                
Senator Micciche  hoped that the  legislature could  work to                                                                    
make Alaskans  feel more secure  in the financial  health of                                                                    
the state.                                                                                                                      
                                                                                                                                
9:25:11 AM                                                                                                                    
                                                                                                                                
Representative  Seaton stated  that he  was willing  to work                                                                    
with other  funding sources  for the bill  and was  eager to                                                                    
work with the Senate on a successful piece of legislation.                                                                      
                                                                                                                                
9:26:08 AM                                                                                                                    
                                                                                                                                
Co-Chair MacKinnon  noted that  there was an  assertion that                                                                    
$1 billion in  the CBR was adequate, which  she believed was                                                                    
debatable. She hoped  that a funding source  could be agreed                                                                    
upon  by both  bodies. She  believed  that a  draw from  the                                                                    
earnings  account should  not  happen  without a  structured                                                                    
draw.                                                                                                                           
                                                                                                                                
9:28:39 AM                                                                                                                    
                                                                                                                                
Vice-Chair   Bishop    expressed   appreciation    for   the                                                                    
legislation.                                                                                                                    
                                                                                                                                
9:28:56 AM                                                                                                                    
                                                                                                                                
Co-Chair Hoffman discussed housekeeping.                                                                                        
                                                                                                                                
HB 287(brf sup maj fld) was  HEARD and HELD in committee for                                                                    
further consideration.                                                                                                          
                                                                                                                                
ADJOURNMENT                                                                                                                   
9:29:32 AM                                                                                                                    
                                                                                                                                
The meeting was adjourned at 9:29 a.m.                                                                                          

Document Name Date/Time Subjects
SB 131 SenateEducationPublicTestimonyPiazza20180125.docx SFIN 2/23/2018 9:00:00 AM
SB 131
SB131_EarlyEdFunding_Sectional_VersionA.pdf SFIN 2/23/2018 9:00:00 AM
SB 131
SB131_EarlyEdFunding_SponsorStatement_VersionA.pdf SFIN 2/23/2018 9:00:00 AM
SB 131
SB131_EarlyEdFunding_HistoryOfBudgetPassage.pdf SFIN 2/23/2018 9:00:00 AM
SB 131
SB131_EarlyEdFunding_SupportLetters_Bundled.pdf SFIN 2/23/2018 9:00:00 AM
SB 131
HB 287 Summary of Changes.pdf SFIN 2/23/2018 9:00:00 AM
HB 287
HB 287 Sponsor Statement.pdf SFIN 2/23/2018 9:00:00 AM
HB 287
HB 287 Letters of Support.pdf SFIN 2/23/2018 9:00:00 AM
HB 287
HB 287 Support Letter.pdf SFIN 2/23/2018 9:00:00 AM
HB 287
HB 287 Support Spangler.pdf SFIN 2/23/2018 9:00:00 AM
HB 287
HB 287 Sen FIN 2-23-2018.pdf SFIN 2/23/2018 9:00:00 AM
HB 287
HB 287 Resolution Kenai.pdf SFIN 2/23/2018 9:00:00 AM
HB 287