Legislature(1997 - 1998)
05/07/1997 09:09 AM Senate HES
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
SENATE HEALTH, EDUCATION & SOCIAL SERVICES COMMITTEE
May 7, 1997
9:09 a.m.
MEMBERS PRESENT
Senator Gary Wilken, Chairman
Senator Loren Leman, Vice Chairman
Senator Lyda Green
Senator Jerry Ward
MEMBERS ABSENT
Senator Johnny Ellis
COMMITTEE CALENDAR
HOUSE JOINT RESOLUTION NO. 29
Supporting an increase in federal funding for prostate cancer
research.
- MOVED HJR 29 OUT OF COMMITTEE
HOUSE CONCURRENT RESOLUTION NO. 18
Declaring 1997 to be observed as the 80th Anniversary of the
University of Alaska Fairbanks and recognizing the vital role
played by the University of Alaska Fairbanks.
- MOVED HCR 18 OUT OF COMMITTEE
HOUSE BILL NO. 158
"An Act relating to attendance at a public school on a part-time
basis."
- MOVED HB 158 OUT OF COMMITTEE
HOUSE BILL NO. 256 am
"An Act relating to calculation of the default rate for purposes of
the student loan program and to regulation of postsecondary
educational institutions; and providing for an effective date."
- MOVED HB 256 am OUT OF COMMITTEE
SENATE BILL NO. 142
"An Act relating to formation of and taxation in regional
educational attendance areas; and providing for an effective date."
- MOVED SB 142 OUT OF COMMITTEE
SENATE BILL NO. 193
"An Act relating to a limitation on administrative expenditures of
school districts; and providing for an effective date."
- MOVED SB 193 OUT OF COMMITTEE
SENATE BILL NO. 182
"An Act relating to the establishment and operation of charter
schools."
- MOVED SB 182 OUT OF COMMITTEE
PREVIOUS SENATE COMMITTEE ACTION
HJR 29 - No previous Senate action to record.
HCR 18 - No previous Senate action to record.
HB 158 - No previous Senate action to record.
HB 256 - No previous Senate action to record.
SB 142 - No previous Senate action to record.
SB 193 - No previous Senate action to record.
SB 182 - No previous Senate action to record.
WITNESS REGISTER
Representative Elton
State Capitol
Juneau, Alaska 99801-1182
POSITION STATEMENT: Prime Sponsor of HJR 29.
Representative Dyson
State Capitol
Juneau, Alaska 99801-1182
POSITION STATEMENT: Prime Sponsor of HB 158.
Sharylee Zachary, Home Schooling Parent
PO Box 1531
Petersburg, Alaska 99833
POSITION STATEMENT: Supported HB 158.
Carl Rose, Executive Director
Association of Alaska School Boards
36 W. 11th Street
Juneau, Alaska 99801
POSITION STATEMENT: Discussed the issue of local control.
Opposed SB 142.
Larry Wiget, Director
Government Relations
Anchorage School District
4600 DeBarr Road
Anchorage, Alaska 99519
POSITION STATEMENT: Opposed HB 158.
Eddy Jeans, Manager
School Finance Section
Department of Education
801 W 10th Street, Suite 200
Juneau, Alaska 99801-1894
POSITION STATEMENT: Supported HB 158.
Discussed SB 142.
Jan Levy, Assistant Attorney General
Human Services Section
Department of Law
PO Box 110300
Juneau, Alaska 99811-0300
POSITION STATEMENT: Discussed the legality of HB 158.
Linda Sharp, Mother
PO Box 190051
Anchorage, Alaska 99517
POSITION STATEMENT: Endorsed HB 158.
Representative Davis
State Capitol
Juneau, Alaska 99801-1182
POSITION STATEMENT: Prime Sponsor of HB 256.
Deborah Craig, Director
Institutional Relations
Alaska Commission on Postsecondary Education
3030 Vintage Park Boulevard
Juneau, Alaska 99801-7109
POSITION STATEMENT: Discussed the fee schedule.
Senator Torgerson
State Capitol
Juneau, Alaska 99801-1182
POSITION STATEMENT: Prime Sponsor of SB 142.
Pat Poland, Director
Division of Municipal & Regional Assistance
Department of Community & Regional Affairs
333 W 4th, Suite 220
Anchorage, Alaska 99501
POSITION STATEMENT: Discussed SB 142.
Glen Marunde
Box 192
Tok, Alaska 99780
POSITION STATEMENT: Requested that SB 142 be withdrawn.
Jerry Jernigan
Box 785
Tok, Alaska 99780
POSITION STATEMENT: Discussed concerns with SB 142.
Paul Smith
Box 559
Tok, Alaska 99780
POSITION STATEMENT: Discussed the Tok situation.
Patricia Hutchinson
Box 233
Tok, Alaska 99780
POSITION STATEMENT: Opposed SB 142.
Roger Jacobson
Box 813
Tok, Alaska 99780
POSITION STATEMENT: Opposed property taxes.
Al Weinberg
Kashunamiut School District
Single Site Schools Consortium
300 Hermit Street #12
Juneau, Alaska 99801
POSITION STATEMENT: Discussed SB 142.
Senator Ward
State Capitol
Juneau, Alaska 99801-1182
POSITION STATEMENT: Prime Sponsor of SB 182.
ACTION NARRATIVE
TAPE 97-48, SIDE A
HJR 29 FUNDING FOR PROSTATE CANCER RESEARCH
Number 001
CHAIRMAN WILKEN called the Senate Health, Education & Social
Services Committee (HES) to order at 9:09 a.m. and announced that
HJR 29 would be the first order of business before the committee.
REPRESENTATIVE ELTON , Prime Sponsor, explained that HJR 29 would
request that President Clinton increase funding for prostate cancer
research. The resolution was suggested by a friend who has been
diagnosed with prostate cancer and is being treated. Over 330,000
men are diagnosed each year with prostate cancer. Currently, over
nine million American men suffer from prostate cancer and 48,000
die each year from prostate cancer. Representative Elton discussed
the signature drive by the National Prostate Cancer Coalition which
hopes to present President Clinton with its signatures on Father's
Day this year.
SENATOR GREEN commented that the single focus of HJR 29 was
troublesome because there are many diseases that could use help
with research funding.
SENATOR WARD moved to report HJR 29 out of committee with
individual recommendations and accompanying fiscal notes. Without
objection, it was so ordered.
CHAIRMAN WILKEN announced HCR 18 as the next order of business
before the committee. Chairman Wilken pointed out that HCR 18 is
sponsored by Representative Davies who is in House Finance and his
assistant had an emergency, therefore Chairman Wilken offered
HCR 18 to HES. HCR 18 simply recognizes the 80th anniversary of
the University of Alaska-Fairbanks and its significance to the
university system as well as the Interior of Alaska.
SENATOR LEMAN moved to report HCR 18 out of committee with
individual recommendations. Without objection, it was so ordered.
HB 158 RIGHT TO ATTEND SCHOOL ON PART-TIME BASIS
Number 119
CHAIRMAN WILKEN introduced HB 158 as the next order of business
before the committee.
REPRESENTATIVE D YSON , Prime Sponsor of HB 158, commented that
Alaska is enlightened about alternative education which is due in
part to Alaska's widely scattered population. Alaska has one of
the strongest correspondence school systems. A couple of years
ago, Alaska included a provision for part-time students in
regulation. Schools that accept part-time students are reimbursed.
For example, a school would be reimbursed 25 percent of a full-time
student for a student that takes one hour. The reimbursement
progresses so that when a student takes four hours, the school
receives full-time credit towards the foundation formula.
Representative Dyson informed the committee that Sitka, Mat-Su, and
Fairbanks schools do a good job with alternative education.
Anchorage has chosen as a matter of policy not to work with
alternative education such as home school, correspondence, and
private school students. Representative Dyson informed the
committee that when the regulations were written the State Attorney
General anticipated that every school district would make some
provisions. Therefore, the enabling regulations were made
permissive not compulsory. HB 158 would require that every school
district accept part-time students. Representative Dyson stated
that the Alaska Constitution says that the Legislature is required
to provide educational opportunities for all qualified students.
HB 158 is an anti-discrimination bill. The State Board of
Education endorsed HB 158 unanimously.
Number 177
SENATOR LEMAN said that this issue has been worked on for several
years. Senator Leman noted that this issue was first brought to
his attention with the Blomfield case which eventually went to
court. The court concluded that legislation was necessary on this
issue. Senator Leman stated his support.
SHARYLEE ZACHARY , Petersburg Home Schooling Parent, informed the
committee that when she wanted to access the public school library
for age related materials for her home schooled children, she was
told that it was policy that home schoolers could not use the
library. Since that time, Ms. Zachary has discovered that there
are no written policies. Part-time schooling is also unavailable
in Petersburg. Ms. Zachary said that in a discussion with a
teacher she found out that teachers had voted down allowing part-
time students. The teachers opposed part-time schooling because
the teachers felt that students who are goofing off would be
allowed to participate in extra curricular activities due to the
student's part-time schooling. Ms. Zachary understood that
concern, but noted that there can be safeguards to avoid such. Ms.
Zachary informed the committee that there are families in
Petersburg who have expressed interest in part-time schooling. Ms.
Zachary supported HB 158 as it would enhance communication between
those in the public school and those home schooling.
Number 248
CARL ROSE , Executive Director of the Association of Alaska School
Boards, informed the committee that due to his travel commitments
he did not have an opportunity to testify in House HESS. The issue
is local control. School boards are locally elected to oversee
public schools and the delivery of public education. Mr. Rose said
that no one in Alaska understands what it takes to educate 48,000
students with a $360 million budget which is the situation in
Anchorage. This is not a statewide problem, this is a concern with
the decision of Anchorage. Anchorage has determined that it wants
to preserve its right to local determination. Mr. Rose requested
that the committee consider the elected school board members and
their role of being accountable for the Anchorage system. Mr. Rose
reiterated that this is not a statewide issue, most school
districts have decided to accommodate many of the aforementioned
needs. Mr. Rose stated that local determination is important. The
association is concerned with a statewide policy that would
circumvent the local school board. Mr. Rose requested that the
committee consider the authority of the school board and the plight
that the board faces. There has been almost a flat level of
funding for almost the last 10 years while the responsibility of
local school districts has been increased.
SENATOR LEMAN said that he was a proponent of local control, but
the Anchorage School District receives hundreds of thousands of
dollars from state funding. An overall policy that addresses
issues that go beyond local control is necessary. Senator Leman
stated that he had tried to work with the Anchorage School District
who is wrong. Senator Leman believed that the Legislature had no
choice but to make the better policy.
CARL ROSE emphasized that the local school board is held
accountable to the local electorate and the ballot box can be used
to express concerns. Mr. Rose reiterated his request that the
committee review the local school board's local determination and
authority.
CHAIRMAN WILKEN noted that the committee packet included an opinion
from Mike Ford, Legislative Legal Services, regarding HB 158. Mr.
Ford and Ms. Levy, Assistant Attorney General, are present to
answer any questions.
Number 314
LARRY WIGET , Director of Government Relations for the Anchorage
School District, opposed HB 158. Mr. Wiget said that the district
views this as a local control issue as expressed by Mr. Rose.
There will be testimony that will state that HB 158 does not have
any constitutional problems. Mr. Wiget informed the committee that
the district's attorney had been asked if HB 158 does have an issue
of constitutionality. That attorney indicated that the Sheldon
Jackson case and a case in Montana would lead the district to
believe that there is an issue of constitutionality of providing a
direct benefit to private educational institutions. Mr. Wiget
believed that there would be court challenges on this issue, but
the Anchorage School District will not lead such a charge. Mr.
Wiget pointed out that if a private school educated student comes
to the public school to take courses such as computers, chemistry,
and physics then the private school does not have to offer those
courses. Therefore, that provides a direct benefit to a private
school educated student.
Mr. Wiget informed the committee that he viewed this issue
administratively by trying to ensure that the public school
students are not discriminated against in the process of trying to
provide an education to part-time students. The Anchorage School
District is the largest school district in the state. Currently,
there are 2,000 private school and home school students in the
Anchorage area. Mr. Wiget recognized the burden of those students
trying to take courses within the district and the kind of courses
those students want to take, often the more expensive courses.
Allowing students to pick and choose from the public school
curriculum could ultimately weaken the public school system. In
conclusion, Mr. Wiget reiterated that the Anchorage School District
opposes HB 158. Currently, the law does allow for a school
district to choose whether to allow students to enroll on a part-
time basis. The Anchorage School District chooses not to allow
part-time students at this time. Mr. Wiget noted that even the
current law has the possibility of being challenged
constitutionally.
EDDY JEANS , Manager of School Finance in DOE, clarified that
current regulations allow part-time attendance. School districts
must develop a policy allowing students to attend on a part-time
basis. Districts can be discriminatory in some nature, for
instance, a part-time student would not be allowed to take a class
that would replace a full-time student; full-time students have
preference for classes. The State Board of Education does support
HB 158.
Number 376
JAN LEVY , Assistant Attorney General for the Department of Law,
informed the committee that Representative Dyson had requested that
she testify whether the Department of Law saw any legal problems or
issues with HB 158. This issue was reviewed closely a few years
ago when the State Board of Education contemplated adopting part-
time regulations. At that time, the department determined that
nothing in statute or the constitution required a part-time policy
to be established nor was there anything that prohibited such. Ms.
Levy said that analysis would remain the same for HB 158. Ms. Levy
was aware of the suggestion that the bill may violate the
constitution due to the prohibition of any payment of public money
for direct benefit of a private school. The department was told
that there would be a challenge upon the adoption of the
regulations, but no such challenge has occurred. Ms. Levy stated
that the department believes that such a challenge could be
defeated and that HB 158 is constitutionally sound.
LINDA SHARP , a mother of two children in public school, endorsed
HB 158. Due to the failure of the public school system, many have
turned to home schooling and private schooling. Ms. Sharp
indicated the need to have the best choices for all families in
Anchorage in order that the most resourceful families choose the
Anchorage School District first. This is a step in the right
direction.
SENATOR WARD moved to report HB 158 out of committee with
individual recommendations and accompanying fiscal notes. Without
objection, it was so ordered.
HB 256 POSTSECONDARY SCHOOLS: REGULATION & LOANS
Number 406
CHAIRMAN WILKEN introduced HB 256 am as the next order of business
REPRESENTATIVE DAVIS , Prime Sponsor, said that HB 256 should look
familiar in that it identifies a fee that does not cover the cost
of the service provided. Currently, the Postsecondary Education
Commission authorizes the postsecondary education institution in
Alaska to operate in the state. Postsecondary Education currently
has a flat $100 fee to authorize the institutions to operate which
generates about $2,000 per year. HB 256 would authorize the
commission to establish fees that will come closer to meeting the
$100,000 annual expense to operate the program. HB 256 authorizes
the adoption of regulations in statute that will adjust the annual
fees for authorization of postsecondary institutions.
Representative Davis acknowledged that there may be some concern
regarding the regulations and Deborah Craig is present to speak to
that. HB 256 does not specify the amount of fee to be charged.
Representative Davis noted that there was an amendment on the House
floor which addressed a clarification in Section 1 resulting from
legislation passed last year relating to postsecondary education
and the default rate on student loans. The department did not
object.
DEBORAH CRAIG , Director of Institutional Relations for the
Commission on Postsecondary Education, informed the committee that
she had been an administrator of a postsecondary education
institution for the past seven years. Her current position as
director is new to her. Ms. Craig emphasized that she took the
task of establishing a fair fee schedule very seriously due to her
knowledge of what that could do to a small school. The school Ms.
Craig administered was very small and primarily funded by grants.
Ms. Craig noted that the packet should include a sample fee
schedule. After polling 25 states regarding each state's fee
structure, Ms. Craig reviewed what other states were doing. Most
states established a percentage of the tuition revenues that were
generated and then charged that percentage. Sometimes a maximum
and a minimum were established. This is what Ms. Craig is
proposing. Ms. Craig said that the proposal would be established
in regulation and school owners and administrators would be invited
to meet and provide input on the proposal. This process would take
a number of months before implementation would occur.
Ms. Craig emphasized that the fee structure would establish
minimums and maximums in order to avoid discouraging schools from
doing business. If the fee schedule was set at three percent of
the tuition revenue, that could result in a large fee for larger
schools; a fee similar to accrediting fees on a regional and
national basis. A maximum fee of $2,500 would be established. If
a school has a tuition revenue of $100,000 a year, which over 60
percent of Alaska's schools do, the fee would be $3,000 based on 3%
of revenue; but the fee would be capped to $2,500. HB 256 would
have a small impact on the smaller schools and a positive impact on
the larger schools. HB 256 will not make the commission totally
self-supporting; that would require fees so high that it would
prohibit schools from doing business in Alaska. With regards to
the concern that HB 256 would impact small schools, Ms. Craig
pointed out the reality that requires the commission to tighten its
budget and generate fees for services. This fee structure is
intended to move agency towards self-sufficiency while not
discouraging schools from doing business in Alaska.
SENATOR GREEN asked if this fee structure would encourage anyone to
alter the tuition revenue. DEBORAH CRAIG said that the fee
structure might encourage some to manipulate the reporting of the
fee revenues. However, Ms. Craig informed the committee that the
commission has an audit review process that is separate from the
authorization process. The audit review process audits schools for
Alaska student loan participation and therefore, have oversight
over the management of the Alaska student loan which is of primary
concern. Ms. Craig explained that the current fee of $100 is set
in statute. HB 158 would establish those fees in regulation. The
schedule in the committee packet was a proposed fee schedule based
on research from other states.
CHAIRMAN WILKEN inquired as to the wishes of the committee.
SENATOR GREEN moved to report HB 256 am out of committee with
individual recommendations and accompanying fiscal notes. Without
objection, it was so ordered.
SB 142 REGIONAL EDUCATIONAL ATTENDANCE AREAS
Number 528
CHAIRMAN WILKEN announced that SB 142 was the next order of
business before the committee.
SENATOR TORGERSON , Prime Sponsor, read the following Sponsor
Statement into the record:
This legislation will (1) reduce school administration expenses by
consolidation and (2) provide equity in local funding for Alaska's
schools.
Consolidation: There are three types of school districts in
Alaska: 19 Regional Education Attendance Areas (REAAs) which serve
the unorganized borough, 18 first class city districts which are
located in the unorganized borough, and 15 borough and home rule
municipality districts. This bill would consolidate the 18 REAAs
into 16 REAAs. This bill does not affect the city districts or the
borough districts.
The estimated savings through consolidation are shown on the
attached spread sheet, entitled REAA Consolidation Savings, and
total some $1.6 million. The consolidation will conform to the
Model Borough Boundaries, as established by the Model Borough
Boundary Report(MBBR).
The Division of Legislative Audit issued a report May 11, 1992,
titled Potential for Administrative Savings from School District
Consolidation. The letter of transmittal from that report, dated
June 3, 1992, sets out one of the reasons for this bill.
"We conservatively estimate that consolidation could reduce
school administrative costs by $5.3 million. Our estimates
represent potential savings that may be generated from
economies of scale realized from the consolidation of 39
school districts and Rural Education Attendance Areas that
currently operate in the State's unorganized borough."
While this bill does not completely consolidate the districts (it
does not affect the City Districts), there are still savings to be
realized through the concept of consolidation of the REAAs.
The concept of utilizing the MBBR for these boundaries is a
familiar one, and was used by the previously mentioned Legislative
Audit Report, where they noted that REAAs were established in
response to the Alaska Supreme Court Molly Hootch decision in 1975
and stated in a foot note that "It should be noted that the factors
specified in the formation of the REAAs (transportation,
communications, language, culture, and socio-economic factors) are
similar to the factors identified in the constitution as serving a
basis for boroughs: population, geography, economy, transportation
and other factors."
The report also noted that REAAs were intended to be a transitional
form of government necessary to deliver education to the children
in the unorganized areas. As a validation of the report's use of
the MBBR for the consolidation, the report stated that:
"Since the transition of REAAs to boroughs is the next most
logical phase in Alaska's regional local government structure,
we have based our school consolidation analysis on these
projected boroughs."
Equity: Residents living in incorporated areas (borough and city
districts) are currently required to contribute for education, but
residents in the unincorporated areas (REAAs) are not.
* 92% of Alaska's population live in boroughs and are required to
pay a local contribution--they receive 79% of State foundation
formula;
* 8% of the population pay no taxes and receive 21% of the state's
foundation formula.
The Borough and City school districts are required to provide local
contributions for the operation of the schools and so have taxing
authority. The REAAs do not provide local contributions nor do
they have taxing authority. This bill will remedy that inequity,
by requiring a local contribution from the REAAs, through the
authority of the Legislature via this bill. The estimated local
contribution is shown on the attached spread sheets REAA Local
Contribution.
As required by the bill, the state assessor performs the functions
necessary to collect the taxes levied under this bill. The
Department of Community and Regional Affairs shall then develop a
proposed method of levying and collecting the taxes, and prepare
draft legislation for submittal to the Legislature by January 1,
2000.
Number 570
Senator Torgerson noted the following technical changes. He
directed the committee to page 2, line 4 where "January 1, 1999"
should read "January 1, 2000" and on line 19 "January 1, 2000"
should read "January 1, 1999". Senator Torgerson said that the
approximate value in the REAAs has already been determined by the
state assessor who has a fiscal note for about $300,000. That
$300,000 would allow the state assessor to do a more defendable
appraisal using each area as a block. Then the Department of
Community & Regional Affairs would hold meetings to determine which
taxing method would be appropriate. Senator Torgerson emphasized
that the same taxing methods, laws, and regulations available to
the organized boroughs and cities would also be available to the
current REAAs. Therefore, it would not necessarily be a property
tax. There are four boroughs that do not have a property tax.
With regard to the comments that REAAs are poor and that Indian
country or Native allotments that are not taxable, Senator
Torgerson said that he had some of those type areas in his
district.
TAPE 97-48, SIDE B
If it is not taxable in one entity then it is not in rural Alaska.
Senator Torgerson reiterated the estimated $3.1 billion in
untaxable entities, a large portion of which is oil and gas
property.
SENATOR WARD moved to adopt Senator Torgerson's suggested technical
amendments.
Page 2, line 4:
Delete "January 1, 1999"
Insert "January 1, 2000"
Page 2, line 19
Delete "January 1, 2000"
Insert "January 1, 1999"
Hearing no objection, the amendment was adopted.
SENATOR LEMAN asked if there was a map of the current REAAs and the
new REAAs as suggested. SENATOR TORGERSON said that he had a map
in his office. The Model Borough Boundary suggested that some
areas be annexed into existing areas which the Local Boundary
Commission will have to revisit.
CHAIRMAN WILKEN asked if the intent is to provide a sort of menu
from which the unorganized areas can choose how the area would
contribute to the education needs. SENATOR TORGERSON noted that he
has a list from the state assessor which lists the taxing
structures that are available. SB 142 says that the provisions of
29.45.0101 through 29.45.500 apply to the regional areas as well as
to the organized areas. Senator Torgerson said that he could
provide the committee with a list of those items that can be taxed.
Number 560
PAT POLAND , Director of the Municipal & Regional Assistance
Division, gathered from Senator Torgerson's comments that he
intends property taxation to be one of the options. Mr. Poland
stressed that a property tax in an unorganized borough is not
administratively feasible. The problems with administration would
cost more than the revenue generated from the property tax. With
regard to the Model Borough Boundaries adopted in 1995, some
circumstances have changed and it may be appropriate for SB 142 to
allow the Local Boundary Commission to revisit those boundaries.
Mr. Poland pointed out the following possible areas to be
revisited: Adak, Petersburg, and Wrangell.
GLEN MARUNDE , 35 year resident of Tok, pointed out that as stated
by Senator Torgerson the main purpose of SB 142 is to consolidate
school districts which is not mentioned in the title of the bill.
Mr. Marunde referred to Article X of the Alaska Constitution calls
for maximum local self government. In the unorganized borough,
local self government is doing quite well. Mr. Marunde discussed
the Legislature's attempts to tax the unorganized borough and end
its free ride. Whether an unorganized borough is receiving a free
ride is of considerable debate. Mr. Marunde informed the committee
that as of today, there are seven home rule cities, eight first
class cities, and 34 second class cities in the organized borough
of Alaska. Mr. Marunde said that there are many more cities in the
unorganized borough. In the unorganized borough, there are five
home rule cities, 13 first class cities, and 77 second class
cities. By far, cities in the unorganized borough out number those
in the organized borough.
Mr. Marunde stated that there are a number of flaws in SB 142. The
most serious flaw is located on page 2, lines 9-11 which says "The
state assessor shall assess the property, collect the taxes levied
under this section and deposit them in the general fund, and
perform the mandatory duties of a municipality, a board of
equalization, or a municipal official". Mr. Marunde inquired as to
the mayors and other municipal officials of the 77 second class
cities and the 13 first class cities in the unorganized borough who
also have property taxing authority as well. With the vote of the
people, second class cities can levy a five mill property tax. How
will the state assessor do his duty? SB 142 fails to deal with or
recognize the existing local governments with the taxing authority
in the unorganized borough. Mr. Marunde requested that the
committee withdraw SB 142. Mr. Marunde asked Mr. Van Sant if he
agreed with his assessment of SB 142. Mr. Marunde seemed to
believe that the amount of money to set up the tax structure seemed
low. How many people would be added to the assessor's office in
order to do the proper research and such?
Number 478
JERRY JERNIGAN , Tok resident, informed the committee that he had a
sincere interest in the welfare of Tok as well as Alaska. Mr.
Jernigan asked if it was a sound policy to remove money from
circulation in the local communities to place the money in the
general fund, thus removing the control of those funds from that
community? Local taxes should stay under the control of the
community and the local improvement projects. Mr. Jernigan
questioned the cost effectiveness of such a tax program. Mr.
Jernigan suggested that the constitution be followed; the state
shall fund education. One alternative is the Educational Endowment
Program. Mr. Jernigan said that Tok has a population that is not
large enough to support many activities such as those found in the
larger cities of Fairbanks and Anchorage. Due to the large cost of
construction and operation of the businesses in Tok, the businesses
would receive the brunt of the tax program and in many cases from
the gross profit. Mr. Jernigan pointed out that the tax would not
be passed on to the customers because those folks shop in Fairbanks
and Anchorage also. The businesses in the area would be severely
handicapped by such a tax.
CHAIRMAN WILKEN inquired as to the taxes that are paid in Tok.
JERRY JERNIGAN said that there are no taxes in Tok. The residents
of Tok do a lot of shopping in other communities which supports
those other communities.
CHAIRMAN WILKEN asked Mr. Jernigan if he believed that the people
of Tok should participate in the education of their children
financially. JERRY JERNIGAN believed that there is a reason for
the Alaska Constitution saying that Alaska should finance that
education. Mr. Jernigan reiterated the need to review other
alternatives such as the Education Endowment Fund.
CHAIRMAN WILKEN asked how Mr. Jernigan believed the residents of
Tok should participate in the education of their children. JERRY
JERNIGAN did not have an answer at the time.
Number 437
PAUL SMITH , Tok resident, informed the committee that he owns his
own business in Tok. With regard to the notion that communities
such as Tok have a free ride, Mr. Smith said that he created jobs
in Tok, and throughout the state. Mr. Smith noted that he has
developed two motels and the lumber for those came from Anchorage
and Fairbanks. If the idea is to tax, Mr. Smith suggested that a
statewide sales tax be imposed or perhaps an Education Endowment.
CHAIRMAN WILKEN informed Mr. Smith that he owned a business in
Fairbanks on which he paid over $10,000 per year on his property to
support education. Chairman Wilken asked Mr. Smith how that
compared with what he paid. PAUL SMITH said that as Chairman
Wilken knew, no taxes are paid in Tok. CHAIRMAN WILKEN recognized
that everyone pays business taxes.
PATRICIA HUTCHINSON , Tok resident, informed the committee that she
was an active volunteer of the Tok community. Ms. Hutchinson
opposed SB 142 and echoed previous comments regarding how well the
REAA is already working. If a tax is necessary to pay for schools
it should be levied, but it should be a just tax. SB 142 only
addresses taking money out of an already depressed area. Ms.
Hutchinson wondered if the committee knew what it is like to live
in the Bush. Ms. Hutchinson restated the previous comments
relating that Bush residents help support the economy of the larger
cities. Ms. Hutchinson asked the committee to vote against SB 142
which will be a hardship on the school system in Tok and will not
bring in funding to the schools. SB 142 will hurt a lot of poor
people, including senior citizens.
SENATOR TORGERSON clarified that senior citizens are exempt from
taxation up to $150,000 on the senior citizen's property. This is
a statewide exemption.
CHAIRMAN WILKEN asked Ms. Hutchinson if she owned a home in Tok.
Chairman Wilken informed everyone that he pays almost $2,000 in
taxes on his home in Fairbanks. PATRICIA HUTCHINSON said that she
had a log house and she does not pay taxes on it. Ms. Hutchinson
stated that she would be willing to pay taxes on her house, however
there are many in Tok who are not able to pay taxes. CHAIRMAN
WILKEN asked if Ms. Hutchinson would accept a tax other than a
property tax. PATRICIA HUTCHINSON said that a property tax is not
really being described either.
Number 339
ROGER JACOBSON , Tok resident, understood the need to pay for
education, but Mr. Jacobson opposed property taxes. Mr. Jacobson
suggested that the financing of education should be done through a
statewide sales tax which could apply to the sale of real estate as
well as portable items. The statewide sales tax could result in a
lower property tax for those currently paying a property tax. Mr.
Jacobson stated that those in the Bush have true ownership of the
land. What kind of county is it when a person's home can be
foreclosed upon through no fault of his/her own? Mr. Jacobson did
not believe that Alaska had to follow the course of the Lower 48
with regard to property taxes. Mr. Jacobson wanted all Alaskans to
experience true home ownership and if hard times come, the person's
home should not be taken by the city, the borough, the state or the
federal government for unpaid taxes. This is in contrast to the
home owners choice to place a lien on his or her home and the bank
can foreclose. The unorganized borough is one of the last places
where people truly own their homes. Will the Last Frontier be
destroyed?
CHAIRMAN WILKEN announced that time was running short and two bills
remained on the committee agenda. Chairman Wilken announced that
the committee would not get to SB 182.
SENATOR WARD interjected that SB 182 would be heard and moved out
today.
CHAIRMAN WILKEN restated that SB 182 would not be heard today, but
that he intended to meet tomorrow or Friday.
SENATOR WARD interjected that SB 182 would be reported out of
committee today.
CHAIRMAN WILKEN announced that the testimony on SB 142 would
continue.
CARL ROSE , Executive Director of the Alaska Association of School
Boards, opposed SB 142. Mr. Rose disagreed with some of the cost
savings projected by the 1992 study. With the issue of taxation,
there has been no mention of PL874 money and how that is
redistributed through the foundation to provide statewide
equalization. For quite some time that impact aid was viewed "in
lieu of local taxation." Mr. Rose was concerned with the notion
that the issue of taxation is not as of much concern as the
consolidation of local autonomy. Mr. Rose directed the committee
to Section 2, line 4 of SB 142 which is of concern. The
identification of the property, the survey and title, the
assessment and value, and the collection of the tax are of concern.
That is an expensive endeavor. Mr. Rose posed the following
option. The state assessor could review the schedules that involve
averaging. The assessor can take the communities that have tax
value and assess that tax value which is then divided by the
population which results in an average of per capita wealth. Mr.
Rose said that he would like to work on the issue of taxation, but
Mr. Rose believed that he was always reacting to a proposal.
With regard to the issue of the model boundaries and the first
class cities, Mr. Rose informed the committee that the City of
Skagway contributes about 52 percent to the local contribution for
schools. What happens to that first class municipality under the
new borough? Many other areas experience the same. Mr. Rose said
that he was not opposed to paying his fair share, but how will the
first and second class municipalities be addressed. If there is an
equitable way to extract taxes for the purpose of paying for
education, that should be reviewed. One option is the Educational
Endowment.
Mr. Rose was concerned with the purpose of consolidation. Mr. Rose
did not see the reformation of the REAAs saving the cost as
projected. The issue is of consolidation and local autonomy
collapsing. Mr. Rose stated that in most of the school districts
with local control, the school board is the locally elected
officials who represent the community. To consolidate will take
the decision-making elsewhere; the local schools will face
government off-site. In closing, Mr. Rose requested that the
association be allowed to work on this bill because not much
progress has been made due to the lack of opportunity.
Number 192
SENATOR TORGERSON appreciated Mr. Rose's comments. With regard to
the lack of opportunity to work on SB 142, Senator Torgerson noted
that he had similar legislation last year when the comments about
the lack of opportunity of involvement was mentioned as well. The
Association of Alaska School Boards has had ample time to work on
this issue and this is merely an excuse. Similar legislation was
introduced as a mandatory borough bill before Senator Torgerson was
a member of the Legislature and the same excuse was used then.
With regard to the PL874 money, that money was considered to be
local contribution; however the decrease of about $10 million in
PL874 has not been discussed. Senator Torgerson pointed out that
his district does not even receive PL874 funds any longer.
Senator Torgerson said that he had a problem with the 1992 study as
well. The study projected $5.2 million in savings while Senator
Torgerson projects a savings of $17.1 million. Currently, four
boroughs use this method of taxation of assessing and averaging a
block and it has held up in court. The Northwest Arctic Borough,
Denali Borough and the Lake & Peninsula utilize this method; this
is not a new concept.
CARL ROSE pointed out that the boroughs Senator Torgerson mentioned
have some property or resource value. Many of the REAAs that are
to be consolidated do not have that luxury. Mr. Rose reiterated
that he would like to work on SB 142, but he always seems to be
reacting.
Number 150
AL WEINBERG , representing Kashunamiut School District and the
Single Site School District Consortium, expressed concern with the
elimination of a few of the school districts. SB 142 undermines
local control. With respect to the LB&A report, that report found
that consolidation does not necessarily produce administrative cost
savings. The report reviewed the only district that had recently
consolidated, the Aleutians East Borough. The borough found some
administrative cost savings in the first year which did not
continue in the following years. The administrative savings of
$5.2 million from a statewide consolidation was a much broader
consolidation plan than SB 142. Mr. Weinberg said that
intuitively, one believes that administrative costs are smaller as
a percentage in larger entities. Often that is not the case. Mr.
Weinberg informed the committee that in 1986, the State of
Washington LB&A did a study of school districts in that state in
order to determine the percentage of administrative costs as a
percentage of the district's budget. The study reviewed a group of
large, medium and small school districts. The State of Washington
LB&A found that the largest school district in the state had the
highest percentage of administrative costs and one of the smaller
districts had the lowest percentage of administrative costs.
Consolidation does not necessarily reduce administrative costs.
With regard to taxation, Mr. Weinberg believed that tax payer
equity is a notable goal which SB 142 does not necessarily achieve.
Furthermore, Mr. Weinberg did not believe that tax payer equity
existed now either. Mr. Weinberg recognized that four boroughs do
not levy property tax as such, but of the many first class city
school districts - all do not levy property tax either. One of the
options that both boroughs and first class cities have is to
provide in kind service to the school district in lieu of the local
contribution requirement. There is a governmental entity in all of
those cases that could provide those services. In REAAs, there is
no areawide governmental entity that could provide in kind services
in lieu of local contribution. Mr. Weinberg pointed out that the
current required local contribution for city and borough school
districts is equivalent to a 4 mill levy, while SB 142 provides for
a 4.5 mill levy.
Number 087
EDDY JEANS , School Finance Manager for DOE, informed the committee
that currently there are 19 REAAs. The department's analysis of
SB 142 has determined that at a minimum, three of the REAAs would
consolidate into the existing REAAs: Alaska Gateway would
consolidate into Delta/Greely, Yupit School District into the Lower
Kuskokwim, and Kashunamiut School District into Lower Yukon. The
fiscal note from the department deals strictly with the foundation
program. The foundation program does not have a component that
provides additional funding for administrative costs. Therefore,
any realized administrative cost savings as a result of SB 142
would be an administrative cost savings at the local level for the
school district.
CHAIRMAN WILKEN asked if there were any questions. Hearing none,
Chairman Wilken inquired of the wishes of the committee.
SENATOR WARD moved to report SB 142 out of committee with
individual recommendations and accompanying fiscal notes. Without
objection, it was so ordered.
SENATOR WARD moved to report SB 182 out of committee with
individual recommendations.
CHAIRMAN WILKEN said that he recognized the motion as out of order
until it is determined if it is part of the Uniform Rules.
SENATOR WARD called for a roll call vote.
The committee took a brief at ease from 10:39 a.m. to 10:42 a.m.
CHAIRMAN WILKEN called the committee back to order and announced
that the meeting would be recessed to the call of the Chair to hear
the remaining bills. Chairman Wilken intended to move both bills,
but to allow the appropriate discussion. Senate HES was recessed
at 10:44 a.m.
TAPE 97-49, SIDE A
SB 193 ADMINISTRATIVE SPENDING LIMIT FOR SCHOOLS
CHAIRMAN WILKEN called the committee back to order at 12:55 p.m.
and introduced SB 193 as the next order of business. He noted that
the next committee of referral for SB 193 is Senate Finance.
Chairman Wilken said that he would entertain a motion.
SENATOR WARD moved to report SB 193 out of committee with
individual recommendations and accompanying fiscal notes. Without
objection, it was so ordered.
SB 182 CHARTER SCHOOL ESTABLISHMENT & OPERATION
CHAIRMAN WILKEN announced that SB 182 was the final order of
business before the committee.
SENATOR WARD , Prime Sponsor, explained that SB 182 would provide
another tool for the education system. SB 182 provides a choice
and strengthens the law by clarifying that charter schools are in
fact public schools. SB 182 establishes multiple ways of
establishing charter schools, provides for a local school board for
charter schools as well as a state school board for charter
schools.
CHAIRMAN WILKEN announced that in the interest of time, those on
teleconference were contacted regarding SB 182. Chairman Wilken
provided the committee with the following report from those on
teleconference. In Anchorage, seven people signed up to testify
each of which supported SB 182. Those in Anchorage were Linda
Sharp, Sara Schierhorn, Leo Albert, Fletcher Mitler, Dave Titus,
Mike Boots, and Karen Hare. Many of those folks will be sending
public opinion messages. In Mat-Su, Chris Cassler supported
SB 182. In Fairbanks, Bob Coghill was opposed to SB 182. In
Juneau, Carl Rose from the Alaska Association of School Boards,
Larry Wiget from the Anchorage School District, and John Cyr from
NEA-AK opposed SB 182. Nancy Buell from DOE stated that the
department did not have an official opinion, but did note concerns
that it would share with the Legislature. The department
questioned whether another board was necessary.
SENATOR WARD moved to report SB 182 out of committee with
individual recommendations and accompanying fiscal notes. Without
objection, it was so ordered.
There being no further business before the committee, the meeting
was adjourned at 1:00 p.m.
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