Legislature(2017 - 2018)SENATE FINANCE 532
04/02/2018 03:00 PM Senate FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| Regulatory Commission of Alaska Appointee Dr. Anthony Scott | |
| SB216 | |
| SB104 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
| += | HB 286 | TELECONFERENCED | |
| + | SB 216 | TELECONFERENCED | |
| += | SB 104 | TELECONFERENCED | |
| + | TELECONFERENCED |
SENATE FINANCE COMMITTEE
April 2, 2018
3:02 p.m.
3:02:17 PM
CALL TO ORDER
Co-Chair MacKinnon called the Senate Finance Committee
meeting to order at 3:02 p.m.
MEMBERS PRESENT
Senator Lyman Hoffman, Co-Chair
Senator Anna MacKinnon, Co-Chair
Senator Click Bishop, Vice-Chair
Senator Peter Micciche
Senator Gary Stevens
Senator Natasha von Imhof
MEMBERS ABSENT
Senator Donny Olson
ALSO PRESENT
Dr. Antony Scott, Appointee, Regulatory Commission of
Alaska; Jonathan King, Staff, Senator Natasha Von Imhof;
Heidi Teshner, Director, Finance and Support Services
Division, Department of Education and Early Development;
Mindy Lobaugh, Specialist, School of Finance and Facilities
Section, Department of Education and Early Development;
Paul Prussing, Director of Student Learning, Department of
Education and Early Development; Don Enoch, Special
Education Administrator, Department of Education and Early
Development.
PRESENT VIA TELECONFERENCE
Jim Anderson, Chief Financial Officer, Anchorage School
District; Dr. Mark Stock, Deputy Superintendent, Anchorage
School District.
SUMMARY
SB 104 EDUCATION CURRICULUM
SB 104 was HEARD and HELD in committee for
further consideration.
SB 216 SCHOOL FUNDING FOR CONSOLIDATED SCHOOLS
SB 216 was HEARD and HELD in committee for
further consideration.
CSHB 286(FIN) AM(BRF SUP MAJ FLD)(EFD FLD)
APPROP: OPERATING BUDGET/LOANS/FUNDS
CSHB 286(FIN) AM(BRF SUP MAJ FLD)(EFD FLD) was
SCHEDULED but not HEARD.
REGULATORY COMMISSION OF ALASKA APPOINTEE DR. ANTHONY SCOTT
^REGULATORY COMMISSION OF ALASKA APPOINTEE DR. ANTHONY
SCOTT
3:03:29 PM
DR. ANTONY SCOTT, APPOINTEE, REGULATORY COMMISSION OF
ALASKA, introduced himself. He gave a brief history of his
background and reason for desiring to serve on the
Regulatory Commission of Alaska (RCA).
Co-Chair MacKinnon wondered whether there was a bias or
conflict of interest, because of his thesis. Mr. Scott
replied that he did not believe had a bias against
industry. He stated that the Regulatory Commission made a
decision setting pipeline tariffs on the Trans-Alaska
Pipeline System (TAPS) in 2002. That decision was largely
echoed by the Federal Energy Regulatory Commission (FERC).
His master's thesis suggested that if standard regulatory
theories were applied, pipeline tariffs would result in the
range that both those regulatory bodies found appropriate.
the pipeline tariffs were settled after approximately eight
years of litigation. The tariffs were settled, the state
explained, in large part because FERC did not make a
decision. At the time, pipeline tariffs were still high, so
the state came to an agreement to set tariffs under an
automatic procedure.
3:07:37 PM
Senator von Imhof queried the potential merger of the power
companies. Mr. Scott replied that he could not speak too
much on the merger.
Senator von Imhof stated that she was somewhat familiar
with how Regulatory Commission of Alaska helped to oversee
the entire rail line. She wondered whether there was
infrastructure along the rail line, and whether it had
helped or hindered the economic value for the end user. Mr.
Scott replied that the infrastructure that was built was
largely confined to the generation side. He wanted to
separation the discussion, because the rail belt had two
different sets of business model issues. He shared that
there was not a good current business model for building
transmission in the rail belt. He noted that it may be a
historical accident. He explained that there was
substantial reliability on the legislature to provide
grants to help fund and underwrite transmission
infrastructure development.
Senator Micciche noted that the experience was largely
academic from a state perspective. He queried feelings
about how the board was at a period of time at the low side
of private sector experience. Mr. Scott responded that
having industry experience in the Regulatory Commission of
Alaska was beneficial, helpful, and useful.
3:15:51 PM
Senator Micciche wondered how that balance would occur with
a commission with less experience in the industry. Mr.
Scott responded that he had considered that issue. He noted
the need for increased exposure of staff and commissioners
on an informal basis to the day-to-day issues. He felt that
people could be better exposed to the operation of the
industry.
Co-Chair MacKinnon wondered whether the position had
changed from the original thesis related to tariffs. Mr.
Scott replied that his position about the TAPS settlement
methodology did not set rates consistent with standard
regulatory methodology had not changed.
Co-Chair MacKinnon wondered whether Mr. Scott "stood by"
his thesis. Mr. Scott replied that there were details
around appropriate rate of return that he realized was
wrong.
3:20:04 PM
Co-Chair MacKinnon asked whether the Regulatory Commission
of Alaska should have oversight over the state-owned
pipeline. Mr. Scott replied that the pipeline would be
preempted from having regulatory jurisdiction for tariffs.
Co-Chair MacKinnon wondered whether that was consistent
with a belief of what was right. Mr. Scott responded that
it was reasonable in the case of a natural gas pipeline
whose primary purpose was exports to Asia.
Co-Chair MacKinnon queried an opinion on the portion of gas
for instate use, and whether there should be involvement by
Regulatory Commission of Alaska. Mr. Scott replied in the
negative, because it was not consistent with the Natural
Gas Act. He did not see a huge need, given the depth of
expertise that had been developed, in setting rates for
natural gas pipelines for the Regulatory Commission of
Alaska to play any particular role in regulating intrastate
transport.
Co-Chair MacKinnon wanted more information about tariffs in
Alaska Gasline Development Corporation (AGDC), and any
issues about the state regulating itself. Mr. Scott replied
that he did not see a problem, because there were well-
established laws an precedents about how such pipelines
should be regulated. He felt that it was a matter of
regulators following the law and applying standard
practice.
Co-Chair MacKinnon asked what would occur should the
pipeline end at Nikiski, with a sales agreement at that
point. She wondered whether Regulatory Commission of Alaska
or FERC be involved in that scenario. Mr. Scott replied
that the pipeline tariffs would be regulated by FERC for
offtakes in Nikiski for instate use.
Co-Chair MacKinnon wondered if that was true for instate
use. Mr. Scott stated that the pipeline act recognized
federal preemption in that regard.
Senator Stevens queried the reason for leaving the
commission. Mr. Scott replied that he was recruited out of
the commission.
Co-Chair MacKinnon noted that the Cook Inlet Recovery Act
told Regulatory Commission of Alaska to diversify gas
supply contracts. She wondered whether there should be
changes to that agreement. Mr. Scott replied that he
supported the directive. He felt that diversifying the
contracts would be good for competition and consumers.
Vice-Chair Bishop MOVED to ADVANCE Dr. Antony Scott to a
Joint Legislative Session for consideration.
3:27:53 PM
AT EASE
3:35:46 PM
RECONVENED
SENATE BILL NO. 216
"An Act relating to the calculation of state aid for
schools that consolidate; relating to the
determination of the number of schools in a district;
and providing for an effective date."
3:35:46 PM
Senator Micciche MOVED to ADOPT the committee substitute
for SB 216, Work Draft 30-LS1483\N (Laffen 3/30/18).
Co-Chair MacKinnon OBJECTED for discussion.
SENATOR VON IMHOF, SPONSOR, explained the legislation. She
stated that the bill was created when the Anchorage School
District presented to the Anchorage legislators. She shared
that she was previously a member of the Anchorage School
Board. She stated that there was a school capacity study,
that found that there was migration and movement within the
Anchorage elementary schools that left some schools over
capacity and some schools under capacity. She noted that
there was some halting of state aid, so there were some
schools that delayed some renovation and reconstruction.
She stated that in the last fall the Anchorage School
District had done calculations to evaluate different
scenarios of consolidating older elementary schools with
excess capacity, and moving students to nearby elementary
school with excess capacity; and the hypothesis of closing
an elementary school. It was found that when there was a
school of approximately 250 students, there was a certain
school-size cost factor of the average daily membership
that was greater than moving students to a larger school.
It was found that the revenue did not exceed the costs
saved for closing that school. It was suggested that there
be an allowance for an adjustment in the intent of the
school.
3:40:07 PM
Co-Chair MacKinnon requested the changes in the committee
substitute. Co-Chair MacKinnon deferred to Mr. King.
3:40:24 PM
JONATHAN KING, STAFF, SENATOR NATASHA VON IMHOF, discussed
the Explanation of Changes (copy on file):
Page 3, line 14 and Page 5, lines 5, 9, 11, 12: All
references to "state aid" within subparagraphs (H) and
(I) are changed to read "basic need" to properly
define the section of statute that this bill is
affecting.
Page 5, lines 22-24: Section (M) is reworded to
clarify the information that would need to be
submitted by school districts to the Department of
Education to calculate the consolidation transition.
Instead of the more generic "appropriate calculations"
the bill specifies "schools and corresponding ADM."
Page 5: Section (N), which defined "community," was
deleted. This term is already appropriately defined in
the Department of Education's funding formula
regulations.
Co-Chair MacKinnon WITHDREW the OBJECTION.
3:43:00 PM
AT EASE
3:43:25 PM
RECONVENED
Mr. King discussed the presentation, "SB 216: School
Consolidation Transition" (copy on file). He looked at
slide 2, "Alaska's School Size Factor Adjustment." He
stated that the school size adjustment was a component of
the broader school financing calculation contained in AS
14.17.410, that adjusted the average daily membership based
upon the size of the school. He noted that moving from left
to right on the curve showed that the amount of adjustment
declined as the school increased in size. He stated that
every individual student counted less toward funding the
school. He shared that it incentivized districts to create
smaller schools and made a challenge for schools to
consolidate schools.
3:45:00 PM
Mr. King highlighted slide 3, "Effect of the School Size
Factor on Consolidation Example 1." The distribution of
dots was the distribution of schools within the Anchorage
School District. He noted that the left hand vertical axis
showed the school size factor, with was the multiplicative
factor used in determining school funding. The bottom
showed the actual enrollment as a proxy for average daily
memberships. He stressed that there was a downward sloping
curve, which meant that as the school grew there was a
smaller coefficient that was used in the funding formula.
Mr. King addressed slide 4, "What the Bill Does":
Section 1
Section 1 removes a disincentive to school
consolidation:
? Four-year transition period for consolidating
schools
? Years 1 and 2 preserve 100 percent pre-
consolidation per student funding.
? Year 3 provides standard funding plus 66
percent of pre/post difference.
? Year 4 provides standard funding plus 33
percent of pre/post difference.
? After Year 4 provide standard funding per AS
14.17.410.
Senator Micciche asked for a restatement of the last two
bullets. Mr. King replied:
? Year 4 provides standard funding plus 33
percent of pre/post difference.
? After Year 4 provide standard funding per AS
14.17.410.
3:50:21 PM
Mr. King highlighted slide 5, "What the Bill Does Not Do":
Section 1
The Bill does not:
? Change the school size formula (AS 14.17.450);
? Change state aid calculations (AS 14.17.410)
for any school or district that is not involved
in a consolidation;
? Encourage districts to build new schools for
the purposes of consolidating existing schools;
? Allow schools to reopen and reconsolidate
schools in order to take inappropriate advantage
of the consolidation transition.
Mr. King discussed slide 6, "What the Bill Does":
Section 2
Section 2 provides an incentive for single
community schools to fully utilize the capacity
of K-12 school buildings in rural Alaska.
? Corrects a provision in AS 14.17.905 where
communities with a single K-12 schools lose
funding when their average daily membership (ADM)
exceeds 425 even when the facility's capacity
exceeds 425.
Under the current provision, schools in this
circumstance are treated as 2 facilities when
their ADM is 425 and below, but when they reach
426 they are treated at one facility for funding
purposes. This switch lowers state aid by
hundreds of thousands of dollars and could
increase the incentive to build another facility
to recapture lost funding.
3:54:28 PM
Co-Chair MacKinnon queried information about slide 9. He
stated that it was an expected savings using a previous
example he noted that on slide 8 there was an example where
a district with a cost factor of 1 consolidates 5 schools
into 4 schools. The slide covered the total state aid and
the total savings attributable to the treasury associated
with consolidation. He explained that slide 9 showed that
if there were five schools totaling 1,720, the base year
would contribute $15.07 million in state aid to the local
school district. He shared that consolidating the schools
to four schools would result in state aid of $14.42
million.
Co-Chair MacKinnon wondered whether the model had been
stress tested on different sizes of schools with
consolidation numbers. Mr. King replied that slide 3 showed
an example of a stress test for a larger school. He noted
that the consolidation of two larger schools would save the
state approximately $1 million. He noted the stress test
for the elementary school showed a savings of between
400,000 and $600,000 per year depending on the original
size of the schools, and how many schools would be
distributing those children over.
3:59:00 PM
Senator Stevens wondered how the bill would benefit the
children. Mr. King replied that the finances matter, but
the primary purpose of the educational system was to
educate children. He noted that many of the elementary
schools had half-time or third-time special subject
teachers, who spent time shuttling between clusters of
schools. He felt that consolidating the schools would
result in that teacher being in residence at a single
school.
Senator Stevens wondered whether the districts had any
negative response to the legislation. Mr. King replied that
he had not heard any negative feelings, but stated that
there may be some in public testimony.
Senator von Imhof added that it would be a voluntary
program.
Senator Micciche surmised that there would be less dollars
for infrastructure, and more dollars in the classroom. Mr.
King agreed.
4:03:49 PM
JIM ANDERSON, CHIEF FINANCIAL OFFICER, ANCHORAGE SCHOOL
DISTRICT (via teleconference), stated that he had worked
closely with the sponsor. He shared that when there was an
initial examination of the declining student population,
there was a calculation. He shared that, currently, if a
school was closed for consolidation there was a significant
number of students who would need transportation. He noted
that taking students from one school would result with the
distribution among many schools. He noted that there would
be a loss of $500,000 dollars for any closed school.
Senator Stevens queried the impact on the Anchorage School
District. Mr. Anderson replied that that a consultant had
been hired to establish a plan. The initial brief to the
school board would be more than one school.
Senator Micciche requested a copy of that analysis on the
associated costs with school consolidation. Mr. Anderson
agreed to provide that information.
Co-Chair MacKinnon CLOSED public testimony.
4:08:42 PM
HEIDI TESHNER, DIRECTOR, FINANCE AND SUPPORT SERVICES
DIVISION, DEPARTMENT OF EDUCATION AND EARLY DEVELOPMENT,
stated that she had worked with the bill sponsor to provide
feedback. She felt that the conversations had been
incorporated into the committee substitute, and allowed for
the calculations to work for the districts.
Co-Chair MacKinnon queried a position on the bill. She
wondered whether school districts would benefit from the
policy. Ms. Teshner replied that Department of Education
and Early Development (DEED) was supportive of additional
tools for districts, and the bill was seen as an additional
tool to maximize their facilities.
Co-Chair MacKinnon queried the benefit of the bill for
rural communities.
4:10:29 PM
MINDY LOBAUGH, SPECIALIST, SCHOOL OF FINANCE AND FACILITIES
SECTION, DEPARTMENT OF EDUCATION AND EARLY DEVELOPMENT,
looked at Section 2, which was an unintended consequence.
She shared that originally the formula had initially an
adjustment of 750, so a community under 750 received the
appropriate adjustments for the single site. She shared
that when there was a change in 2001, there was the
possibility of a fix to a community, but there was not an
opportunity to revisit the issue. She shared that Hooper
Bay was part of that issue, so the language would put the
formula on a stronger track.
Co-Chair MacKinnon asked for more information about the
fiscal note.
Ms. Teshner explained the fiscal note.
Senator Micciche explained the fiscal note.
4:15:15 PM
Senator Micciche felt that the fiscal note had some
reflection of the reduced eventual payout from the state to
the districts. He wondered how that reduced funding would
be assessed, so there could be a philosophical
understanding of a reduction associated with consolidation.
Ms. Teshner replied that, because there was an unknown of
what schools would come forward, but there would be a
reduction in year three.
Senator Micciche wondered whether the primary purpose of
the bill was for consolidation to not adversely impact
school districts, but noted that there would be a reduced
costs to the state. Ms. Teshner replied in the affirmative.
Co-Chair MacKinnon announced that amendments would be due
the following day.
SB 216 was HEARD and HELD in committee for further
consideration.
SENATE BILL NO. 104
"An Act relating to the duties of the state Board of
Education and Early Development; and relating to
school curriculum."
4:19:29 PM
PAUL PRUSSING, DIRECTOR OF STUDENT LEARNING, DEPARTMENT OF
EDUCATION AND EARLY DEVELOPMENT, introduced himself.
DON ENOCH, SPECIAL EDUCATION ADMINISTRATOR, DEPARTMENT OF
EDUCATION AND EARLY DEVELOPMENT, introduced himself.
Co-Chair MacKinnon stated that there were some questions
about Individualized Education Programs (IEPs).
Senator Stevens wondered whether all IEPs were equally
valid. He was concerned about the possible savings of time.
He wondered whether a school district with an IEP would
want to change that IEP. He wondered whether an IEP would
be considered a finished absolute document. Mr. Enoch
replied that the IEP was transferrable from district to
district. He asserted that some districts had different
standards allowed for a district level. He stated that, at
that time, the district would have an abbreviated meeting
to address those small points. He noted that, because of
the differences in paperwork between districts, it was
slightly more labor intensive.
Senator Micciche noted it was an atmosphere-specific
document, because of the different specialties,
instructors, and setting. He felt that the document was a
"starting point" at a new school, when a child arrives at a
new district. Mr. Enoch replied that the IEP was designed
to be as flexible as necessary.
Senator Stevens queried the online advantages versus a 30-
page paper. Mr. Enoch replied that software companies had
developed ways to guide people through certain scenarios to
ensure compliance-accurate responses. The largest problem
for most teachers was the paperwork.
Senator Stevens wondered whether the state agencies dealt
with IEPs or whether the districts completely oversaw the
IEPs. Mr. Enoch replied that the IEPs were reviewed on a 4-
year rotation for all the small districts; and annually in
all the large districts.
4:24:20 PM
Senator von Imhof noted that it was a recommendation per
the performance review of DEED in 2016. She shared that it
was found that there were multiple software platforms
utilized by the 53 school districts across the state, and
it was found to be an inefficient system. The
recommendation was for a more standard software platform
initiated by DEED available to districts.
Co-Chair MacKinnon noted the document outlining the
benefits for parents, teachers, schools, districts, and the
state. She noted that parents had complete access to
student files at all time. She highlighted the benefits.
Senator Micciche explained the fiscal note.
4:31:07 PM
DR. MARK STOCK, DEPUTY SUPERINTENDENT, ANCHORAGE SCHOOL
DISTRICT (via teleconference) felt that it was appropriate
that all Alaskan students had the best curriculum materials
available within budget. He used a construction analogy to
explain the bill. He felt that the bill helped to ensure
the best infrastructure available. He hoped that there
would be realistic expectations.
Vice-Chair Bishop queried the monetary value to evaluate
the curriculum. Dr. Stock replied that the K-5 materials
were approximately $6 million. He furthered that millions
of dollars would be spent for implementation. He stated
that grant funds would be used to hire instructional
coaches to ensure that the materials were used properly.
Co-Chair MacKinnon CLOSED public testimony
SB 104 was HEARD and HELD in committee for further
consideration.
CSHB 286(FIN) AM(BRF SUP MAJ FLD)(EFD FLD)
"An Act making appropriations for the operating and
loan program expenses of state government and for
certain programs; capitalizing funds; amending
appropriations; and making supplemental
appropriations."
CSHB 286(FIN) AM(BRF SUP MAJ FLD)(EFD FLD) was SCHEDULED
but not HEARD.
Co-Chair MacKinnon discussed the following day's agenda.
ADJOURNMENT
4:37:37 PM
The meeting was adjourned at 4:37 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| SB 216 School Consolidation Presentation-Senate Finance.pdf |
SFIN 4/2/2018 3:00:00 PM |
SB 216 |
| SB 216 Sponsor Statement.pdf |
SFIN 4/2/2018 3:00:00 PM |
SB 216 |
| SB 216 Sectional Analysis-Sen Fin.pdf |
SFIN 4/2/2018 3:00:00 PM |
SB 216 |
| SB 104 SFIN Request - Special Education Plan Benefits.pdf |
SFIN 4/2/2018 3:00:00 PM |
SB 104 |
| SB 104 Position 3-18.pdf |
SFIN 4/2/2018 3:00:00 PM |
SB 104 |
| SB 216 Lower Yukon School District Support Letter.pdf |
SFIN 4/2/2018 3:00:00 PM |
SB 216 |