Legislature(1995 - 1996)

02/28/1996 09:05 AM HES

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
txt
    SENATE HEALTH, EDUCATION AND SOCIAL SERVICES COMMITTEE                     
                       February 28, 1996                                       
                           9:05 a.m.                                           
  MEMBERS PRESENT                                                              
                                                                               
 Senator Lyda Green, Chairman                                                  
 Senator Loren Leman, Vice-Chairman                                            
 Senator Mike Miller                                                           
 Senator Judy Salo                                                             
                                                                               
  MEMBERS ABSENT                                                               
                                                                               
 Senator Johnny Ellis                                                          
                                                                               
 COMMITTEE CALENDAR                                                            
                                                                               
 SENATE BILL NO. 225                                                           
 "An Act relating to access to extracurricular school programs by              
 students who are not attending public schools."                               
                                                                               
 SENATE BILL NO. 188                                                           
 "An Act relating to reports of suspected child abuse or neglect,              
 and requiring that, as part of the investigation of the reports of            
 suspected child abuse or neglect, all official interviews with                
 children who are alleged to have been abused or neglected be                  
 videotaped."                                                                  
                                                                               
 SENATE BILL NO. 244                                                           
 "An Act relating to state foundation aid and supplementary state              
 aid for education; and providing for an effective date."                      
                                                                               
  PREVIOUS SENATE COMMITTEE ACTION                                             
                                                                               
 SB 225 - See Health, Education & Social Services minutes dated                
          2/5/96.                                                              
                                                                               
 SB 188 - See Health, Education & Social Services minutes dated                
          2/9/96.                                                              
                                                                               
 SB 244 - No previous action to record.                                        
                                                                               
  WITNESS REGISTER                                                             
                                                                               
 Diane Worley, Director                                                        
 Division of Family & Youth Services                                           
 Department of Health & Social Services                                        
 PO Box 110630                                                                 
 Juneau, Alaska 99811-0630                                                     
 POSITION STATEMENT:  Opposed SB 188.                                          
                                                                               
 Jayne Andreen, Executive Director                                             
 Council on Domestic Violence & Sexual Assault                                 
 Department of Public Safety                                                   
 PO Box 111200                                                                 
 Juneau, Alaska 99811-1200                                                     
 POSITION STATEMENT:  Discussed concerns with SB 188.                          
                                                                               
 Captain Shiley A. Warner                                                      
 Detective Division                                                            
 Anchorage Police Department                                                   
 4501 South Bragaw Street                                                      
 Anchorage, Alaska 99507-1599                                                  
 POSITION STATEMENT:  Opposed SB 188.                                          
                                                                               
 Shirley Holloway, Commissioner                                                
 Department of Education                                                       
 801 W 10th Street, Suite 200                                                  
 Juneau, Alaska 99801-1894                                                     
 POSITION STATEMENT:  Discussed funding in the quality framework.              
                                                                               
 Al Weinberg, Chairperson                                                      
 Single Site School District Consortium                                        
 985 Chevak, Alaska 99563                                                      
 POSITION STATEMENT:  Supported SB 244.                                        
                                                                               
 Carl Rose, Executive Director                                                 
 Association of Alaska School Boards                                           
 316 W 11th Street                                                             
 Juneau, Alaska 99801-1510                                                     
 POSITION STATEMENT:  Supported SB 244.                                        
                                                                               
 Willie Anderson                                                               
 NEA-Alaska                                                                    
 114 Seward Street                                                             
 Juneau, Alaska 99801                                                          
 POSITION STATEMENT:  Supported SB 244.                                        
                                                                               
 Eddy Jeans, School Foundation                                                 
 School Finance                                                                
 Department of Education                                                       
 801 W 10th Street, Suite 200                                                  
 Juneau, Alaska 99801-1894                                                     
 POSITION STATEMENT:  Reviewed the foundation formula, SB 244, and             
                      answered questions.                                      
                                                                               
                                                                               
  ACTION NARRATIVE                                                             
                                                                               
 TAPE 96-14, SIDE A                                                            
                                                                               
                                                                               
            SB 225 STUDENT ACCESS TO SCHOOL PROGRAMS                          
                                                                              
 Number 001                                                                    
                                                                               
 CHAIRMAN GREEN called the Senate Health, Education and Social                 
 Services (HESS) Committee to order at 9:05 a.m. and introduced                
  SB 225  as the first order of business before the committee.                 
 Chairman Green informed the committee that she had talked with                
 groups interested in working on that legislation over the interim.            
 Therefore, SB 225 was held.                                                   
                                                                               
                                                                               
           SB 188 VIDEOTAPE INTERVIEW OF ABUSED MINOR                         
                                                                              
 Number 028                                                                    
                                                                               
 CHAIRMAN GREEN introduced  SB 188  as the next order of business              
 before the committee.                                                         
                                                                               
 SENATOR MILLER moved that the CS be adopted in lieu of the original           
 bill.  The CS requires mandatory audiotaping while videotaping                
 would be utilized when possible, that is the only change in the CS.           
 Hearing no objection, the CS was adopted.                                     
                                                                               
 SENATOR SALO asked if more public testimony would be taken.                   
 CHAIRMAN GREEN replied yes.                                                   
                                                                               
 SENATOR MILLER pointed out that the next committee of referral is             
 the Senate Judiciary where the entire process would be followed               
 again.                                                                        
                                                                               
 CHAIRMAN GREEN informed the committee that two individuals at the             
 last hearing were not able to present their testimony and were told           
 they would be heard today.  If their testimony is not heard today,            
 Chairman Green ensured that their testimony would be heard in                 
 Senate Judiciary.                                                             
                                                                               
 DIANE WORLEY, Director of the Division of Family & Youth Services             
 (DFYS), said that she had reviewed CSSB 188(HES).  The department             
 maintains its opposition to the bill due to the mandatory aspect of           
 the bill.  The mandatory provision makes the implementation of the            
 bill unwieldy and practically impossible to implement in some parts           
 of the state.  Furthermore, the safety of children would be placed            
 in jeopardy if a taped interview was not possible and the                     
 investigation of the child abuse could not be continued.  She                 
 offered to answer any questions.                                              
                                                                               
 Number 078                                                                    
                                                                               
 SENATOR SALO indicated that requiring audiotaping rather than                 
 videotaping made the bill less wieldy.  DIANE WORLEY agreed, but              
 the bill continues to focus on videotaping as the primary mode of             
 recording when possible.  That focus on videotaping carries a large           
 fiscal note.  Ms. Worley pointed out that one of the goals of DFYS            
 is to do more audiotaping, but the mandatory aspect of the bill               
 could create problems in rural areas or when the recorder breaks              
 down.  The division fears that an investigation would have to be              
 stopped and the child be placed in danger because of the lack of              
 the audiotape.                                                                
                                                                               
 JAYNE ANDREEN, Executive Director of the Council on Domestic                  
 Violence & Sexual Assault, stated that the council has grave                  
 concerns with SB 188.  SB 188 creates difficulty when working with            
 the child in an abuse or neglect case, especially those persons               
 required to report the case or work with the child.  Ms. Andreen              
 informed the committee that often children will make a passing                
 comment or a direct disclosure during a group presentation or play            
 time.  The child needs to have a place where he/she feels safe                
 disclosing such information.  Stopping the process in order to                
 videotape the child, breaks down the process for the child.  Ms.              
 Andreen felt that this would actually circumvent the council's                
 ability to take care of children.                                             
                                                                               
 Number 128                                                                    
                                                                               
 SENATOR MILLER moved that CSSB 188(HES), version F, be moved out of           
 committee with individual recommendations.                                    
                                                                               
 SENATOR SALO objected.  She expressed concern with the possibility            
 that cases may be lost.  Perhaps, encouraging the department to               
 utilize more audio and videotaping without mandating it would be a            
 possibility.  Senator Salo expressed concern with the focus of the            
 trial turning to the technological aspects of the tape, as                    
 literature from other states who have moved in this direction has             
 indicated.  She hoped those issues would be reviewed in Senate                
 Judiciary.  Senator Salo removed her objection.                               
                                                                               
 CHAIRMAN GREEN noted that Lauree Hugonin was present and asked if             
 she would like to testify on SB 188 or she could testify in the               
 next committee, Senate Judiciary.  Ms. Hugonin decided to present             
 her comments in Senate Judiciary.                                             
                                                                               
 Number 170                                                                    
                                                                               
 SENATOR LEMAN said that he shared some of Senator Salo's concerns.            
 He wanted to ensure that the notes of the passing comments of the             
 initial disclosure could be maintained and kept as evidence.  That            
 concern could be addressed and worked on further in Senate                    
 Judiciary.                                                                    
                                                                               
 SENATOR MILLER agreed that was the intent.  Senator Miller believed           
 that everyone agreed on the direction of the legislation, sometimes           
 pressure on the department is needed in order to achieve that                 
 direction.  He was willing to work with the department.                       
                                                                               
 Hearing no objection, CSSB 188(HES) was moved from committee with             
 individual recommendations and accompanying fiscal notes.                     
                                                                               
 The following written testimony was submitted for the record:                 
                                                                               
 February 9, 1996                                                              
                                                                               
 Senator Lyda Green                                                            
 State of Alaska Senate                                                        
 State Capitol                                                                 
 Juneau, Alaska 99801-1182                                                     
                                                                               
 Dear Senator Green,                                                           
 I was present, and wishing to testify, during the Health, Education           
 and Social Services committee meeting today; however, I was not               
 given that opportunity.  I am now conveying to you my adamant                 
 opposition to the passage of Senate Bill 188.                                 
                                                                               
 I am currently Captain in charge of the Anchorage Police                      
 Department, Detective Division.  I have been a police officer for             
 20 years.  I am also secretary of the Steering Committee for the              
 Southcentral Alaska Chapter of the National Committee to Prevent              
 Child Abuse.                                                                  
                                                                               
 Senate Bill 188 signifies a giant step backward in the protection             
 of children who are sexually and physically abused.  This bill ties           
 the hands of law enforcement and will, if passed, prevent the                 
 investigation and prosecution of many child abusers.                          
                                                                               
 Currently, detectives of the Anchorage Police Department videotape            
 interviews with children who are victims of abuse.  That is, when             
 the children can be brought to the police department for the                  
 interview.  We have had situations where the child is so                      
 traumatized by the abuse that our only option was to interview the            
 child at the hospital, the school, the home, or the church.                   
 Forcing a child in under certain circumstances would be nothing               
 less than cruel on our part.  And to lose the ability to further              
 the investigation and presentation for prosecution is unthinkable.            
 If we have an adult victim of a physical or sexual assault we are             
 not videotaping them.  We are taking great care to afford them the            
 dignity they deserve and prevent them further trauma and                      
 humiliation by the system.  Why would we want something less than             
 that for the children?                                                        
                                                                               
 If there is a specific problem identified I would be infavor of               
 addressing that problem, through training, or supervision, or                 
 protocol.  I can tell you when a case comes in where a custody                
 battle rages we look very closely at why a person is reporting.  We           
 neither assume it is a false allegation, nor do we assume it is               
 genuine; but we do look at all possibile motives.  The percentage             
 of false reporting is very low in comparison to the genuine reports           
 of abuse we receive.  These cases are identified through an in-               
 depth, skilled and professional investigation.                                
 Whereas, I have no objection to an expedient investigation into               
 allegations of child abuse, I do object to potentially losing the             
 ability to investigate and send forward for prosecution cases where           
 the probable cause exists that a child has been abused - only                 
 because a videotaped session was not possible or practical.                   
                                                                               
 Whereas, on the face this bill appears to support the interest of             
 the children, in reality it will cause many great harm.  Please do            
 not pass SB 188.  I agree with all those who testified in                     
 opposition, today.  The best approach is the enhancement of                   
 training and the establishment of protocol.  Thank you.                       
                                                                               
 Sincerely Yours,                                                              
 Captain Shirley A. Warner                                                     
 Detective Division                                                            
                                                                               
                                                                               
          SB 244 CALCULATION OF STATE AID TO EDUCATION                        
                                                                              
 CHAIRMAN GREEN introduced  SB 244  as the next order of business              
 before the committee.                                                         
                                                                               
 Number 197                                                                    
                                                                               
 SHIRLEY HOLLOWAY, Commissioner of the Department of Education,                
 thanked the committee for the opportunity to discuss SB 244 with              
 the committee.  SB 244 is before the committee because Governor               
 Knowles is committed to ensuring that the school funding formula is           
 fair, equitable, accountable, and protects the partnership between            
 state, federal, and local dollars.  Secondly, SB 244 is before the            
 committee because the Federal Impact Aid Law has lowered the                  
 allowable disparity standard to 20 percent.  Commissioner Holloway            
 explained that in order for Alaska to consider the impact aid when            
 calculating the State's portion of school funding, Alaska would               
 have to meet the 20 percent federal disparity test in fiscal year             
 1996.  To meet that 20 percent federal disparity test, the                    
 department requested $1.2 million in supplemental funding, $500 per           
 instructional unit, for REAAs who are at the bottom of the                    
 disparity table.  If the disparity test is not met, Alaska would              
 face a cost of $35 million per year.  Commissioner Holloway pointed           
 out that prorating the $35 million in FY 98 would result in a                 
 deduction of $2,850 per instructional unit, otherwise the gap would           
 have to be filled with general funds.                                         
                                                                               
 Commissioner Holloway emphasized that the State Board of Education            
 is committed to revising the Alaska foundation program.  She noted            
 that some of the committee members had participated in a funding              
 task force which did not reach a consensus.  The task force did               
 recommend a minimalist approach to the State Board of Education and           
 encouraged the board to continue working on a more substantial                
 rewrite.  The board has a committee of the whole which is working             
 towards substantial changes to the foundation formula to be ready             
 for the next legislative session.                                             
                                                                               
 SB 244 is a short-term fix to the foundation formula.  SB 244                 
 addresses the disparity test by providing for the supplementary aid           
 to REAAs as well as offsetting the cost of the supplementary aid by           
 increasing the amount of impact aid deductible from REAAs from 90             
 to 95 percent.  Single site funding is also incorporated in the               
 formula under SB 244.                                                         
                                                                               
 Number 243                                                                    
                                                                               
 Commissioner Holloway pointed out that quality schools and quality            
 education is driven by the funding mechanism.  Therefore, a funding           
 strategy must be driven by a strong, well-articulated instructional           
 philosophy.  Commissioner Holloway emphasized that rewriting the              
 foundation formula is a complex task.  Commissioner Holloway said             
 that funding drives the standards approach.  She laid out the                 
 following points which create her "Four Legged Stool":                        
  * Efforts in the area of student standards and assessment of                 
    those standards should be continued and increased.                         
  * Family and parental involvement in schools should be                       
        increased.                                                             
  * Standards which drive the preparation of the educators or                  
    professionals with regards to how they are licensed and                    
    relicensed.                                                                
  * School based accreditation model is being reviewed under                   
        school standards.                                                      
 Commissioner Holloway emphasized that merely redistributing the               
 money does not address the issue of quality.  Tying quality to                
 money is important to consider.                                               
                                                                               
 Commissioner Holloway stated that the State Education Policy was              
 created in Alaska Statutes by the legislature.  The State Education           
 Policy says that the purpose of education is to ensure that all               
 students will succeed in their education and work, create                     
 worthwhile and satisfying lives for themselves, exemplify the best            
 values of society, and be effective in improving the character and            
 quality of the world around them.  In order for this policy to                
 become a reality, funding should be viewed in the quality                     
 framework.  In conclusion, Commissioner Holloway noted that many              
 staff members were present for other technical questions.                     
                                                                               
 Number 289                                                                    
                                                                               
 AL WEINBERG, Chair of the Single Site School District Consortium,             
 supported SB 244 for the reasons stated by Commissioner Holloway.             
 Mr. Weinberg emphasized support of the inclusion of the                       
 supplementary formula within the foundation formula which addresses           
 the adverse effects of the current formula on single site school              
 districts.  This would eliminate the need for small single site               
 schools to lobby for individual supplemental grants every year                
 which has been the practice since 1987.  The supplement accounts              
 for approximately 6-12 percent of the state aid for a single site             
 school.  Mr. Weinberg pointed out that without that supplemental              
 funding, the single site schools would face reductions in what                
 programs could be offered.                                                    
                                                                               
 CARL ROSE, Executive Director of the Association of Alaska School             
 Boards, supported SB 244.  He mentioned that early on the                     
 association had concerns that many were forming principle-based               
 opinions without realizing the impact of not meeting the disparity            
 standard.  Mr. Rose stated that the future of public education                
 requires a long-term approach, but in the short-term SB 244 is                
 essential.  Qualifying for impact aid in FY 98 is critical.  Mr.              
 Rose said that the association supported the bill, especially the             
 single site portion.  Many of the small school districts depend               
 upon the single site and the supplemental appropriations it                   
 receives.                                                                     
                                                                               
 Number 334                                                                    
                                                                               
 SENATOR SALO asked Mr. Rose what he felt was the main problem with            
 the current funding formula.                                                  
                                                                               
 CARL ROSE said that the formula was inadequate.  The way education            
 is delivered in Alaska is dollar driven.  Most school boards view             
 funding in terms of increments, $55,000 to $60,000 which is the               
 cost of a teacher with benefits.  Education means teachers; there             
 is a tremendous need for more teachers.  Mr. Rose pointed out that            
 many of the unfunded mandates drain off the money received to                 
 provide education which is obtained through regular instructional             
 dollars generated through K-12.  Regular instructional dollars are            
 spent on transportation, augment special education, etc.                      
 Practically every mandate without a fiscal note from the department           
 has a fiscal note at the local level.  Increased demands regarding            
 responsibility and accountability at the local level increases the            
 cost of local school districts which is not identified by the                 
 department.  Funding at the local level is inadequate in order to             
 maintain a quality education.  Many of the school districts have              
 reduced to bare minimums which is effecting the quality of                    
 education at the local level.                                                 
                                                                               
 SENATOR SALO asked if Mr. Rose was referring to the $61,000 unit as           
 being inadequate.  CARL ROSE replied yes.                                     
                                                                               
 Number 365                                                                    
                                                                               
 WILLIE ANDERSON, NEA-Alaska, supported SB 244.  Sections 1-3 are              
 short-term solutions.  The long-term solution is to rewrite the               
 instructional unit value in order to deal with the current                    
 disparity in Alaska.  Section 4, the single site provision, deals             
 with the long-term solution.  He urged the passage of SB 244 to the           
 Senate Finance committee.  Mr. Anderson reiterated that without               
 passing this supplemental funding, Alaska would face costs in                 
 excess of $35 million.  SB 244 addresses a necessity which is                 
 immediate.                                                                    
                                                                               
 SENATOR SALO asked Mr. Anderson what he felt was the main problem             
 with the existing foundation formula.  WILLIE ANDERSON explained              
 that when the formula was passed in 1986, the $60,000 per                     
 instructional unit was adequate at that time.  Since FY 87,                   
 inflation has eroded the dollar value of that instructional unit.             
 The legislature has not set an appropriate pace to increase the               
 instructional unit in order to accommodate those increased                    
 inflationary costs.  Mr. Anderson pointed out that school districts           
 have had to supplement that with local funding and cutting                    
 programs.  In short, the instructional unit is too low to meet the            
 current needs in Alaska.                                                      
                                                                               
 Number 412                                                                    
                                                                               
 EDDY JEANS, Division of School Finance for DOE, began his review of           
 the sectional analysis.  Section 1 of SB 244 would increase the               
 deductible impact aid for REAA school districts from 90 to 95                 
 percent.                                                                      
                                                                               
 CHAIRMAN GREEN requested that Mr. Jeans review what that impact               
 meant.                                                                        
                                                                               
 EDDY JEANS explained that the state's share of the foundation                 
 program would be reduced by approximately $1,018,348.  Section 2 of           
 SB 244 would allocate $500 per instructional unit to all REAAs                
 which would return funds to the REAAs without instructional units             
 attached to those funds.  Therefore, the value of the instructional           
 unit for REAAs would be increased.                                            
                                                                               
 CHAIRMAN GREEN asked if per adjusted unit referred to per                     
 instructional unit.  EDDY JEANS clarified that per adjusted unit              
 referred to all the instructional units (K-12 instructional units,            
 special education, bilingual vocational education) adjusted by                
 their area cost differentials.                                                
                                                                               
 CHAIRMAN GREEN asked if there was information illustrating the net            
 difference.  EDDY JEANS directed Chairman Green to the sheet                  
 attached to the fiscal note which specifies the effects of Section            
 1 and Section 2.  The general fund cost is projected to increase              
 about $223,827.                                                               
                                                                               
 Number 435                                                                    
                                                                               
 EDDY JEANS continued with the sectional analysis.  Section 3 of               
 SB 244 is a technical amendment to reference the instructional unit           
 tables for elementary and secondary students.  CHAIRMAN GREEN asked           
 why that would be necessary.  EDDY JEANS explained that Section 3             
 would amend the current reference which breaks out the allocation             
 of instructional units for K-12.  Currently, the foundation formula           
 has two sections under AS 14.17.041.  One of those sections is the            
 combined table for K-12 and the second section splits elementary              
 and secondary tables for instructional units.  This merely combines           
 those into a single reference under AS 14.17.041.  In response to             
 Chairman Green, Mr. Jeans stated that this change has no financial            
 impact.                                                                       
                                                                               
 Mr. Jeans pointed out that Section 4 of SB 244 places the single              
 site table into the foundation formula as a permanent solution.               
 The department felt that now is the time to move single sites into            
 the table as a permanent solution.                                            
                                                                               
 CHAIRMAN GREEN asked why that was not done previously.  JIM ELLIOT            
 stated that Dr. Nat Cole, an architect of the current program, had            
 said that the costs of the program had been underestimated.                   
                                                                               
 Number 467                                                                    
                                                                               
 SENATOR SALO believed that SB 244 is necessary and is a good                  
 temporary solution.  In order to adequately address the needs of              
 education in Alaska, more money placed on the unit value is                   
 necessary.  If $1,000 per unit was added for all schools in Alaska,           
 what would that cost Alaska?  EDDY JEANS said that it would cost              
 approximately $13 million.                                                    
                                                                               
 SENATOR SALO commented that in her time in the Legislature, she had           
 seen $13 million spent in areas far less important than education.            
 More could be done for education with a $1,000 increase on the unit           
 value.  She asked if disparity would be skewed if in addition to              
 this, an equal $1,000 was placed on the unit value.  EDDY JEANS               
 said that increasing the unit value would not adversely effect                
 disparity, but this fix is necessary in order to raise the lower              
 end of the school districts in the disparity computation.                     
                                                                               
 SENATOR SALO agreed that this was needed in order to temporarily              
 solve the problem.  She favored increasing the instructional unit             
 by $1,000.                                                                    
                                                                               
 Number 493                                                                    
                                                                               
 SENATOR LEMAN said that he heard Mr. Jeans refer to 12,700                    
 statewide total units on the chart, but the chart says 12,309; is             
 there an adjustment somewhere?  EDDY JEANS said that he was                   
 referring to                                                                  
 FY 97.  He believed that the committee may not have that                      
 information and he offered to provide that information.                       
                                                                               
 EDDY JEANS began a review of the briefing paper.  He informed the             
 committee that Alaska receives approximately $70 million in impact            
 aid funds of which $30 to $35 million is recognized in the                    
 foundation formula annually.  In FY 96, $35 million will be                   
 recognized and FY 97 is projected to recognize $30 million.  Mr.              
 Jeans explained that the Impact Aid Law was reauthorized in 1994              
 which lowered the disparity standard from 25 to 20 percent.  The              
 reauthorization also changed the year in which the disparity                  
 standard was measured to two years prior.  Before the                         
 reauthorization, disparity was measured at the end of the year.               
 Now the disparity must be measured for consideration in two years.            
 Therefore, in order for the department to continue to deduct impact           
 aid for FY 98 the 20 percent disparity must be met in FY 96.  Mr.             
 Jeans noted that the department has forwarded a supplemental                  
 request of $1.2 million, $500 per instructional unit to REAAs, in             
 order to meet the disparity for FY 96.  SB 244 would place that               
 allocation in law which would buy time while the foundation formula           
 is being rewritten.  SB 244 would take effect in FY 97 and would              
 have the same basic allocation.  Mr. Jeans projected that the 20              
 percent disparity would be met in FY 97 and Alaska would be                   
 eligible for impact aid in FY 99.                                             
                                                                               
 Number 526                                                                    
                                                                               
 CHAIRMAN GREEN asked if enough time had passed, since the                     
 reauthorization in 1994, in order to find anyone to be                        
 noncompliant.  EDDY JEANS said that reauthorization set the                   
 disparity standard at 25 percent which has always been met.  In               
 FY 98, the standard decreases to 20 percent.                                  
                                                                               
 CHAIRMAN GREEN asked if use of the disparity standard was                     
 widespread when the standard was 25 percent; were people found to             
 be noncompliant and removed from receiving impact aid?  EDDY JEANS            
 informed Chairman Green that only three states consider impact aid            
 in their foundation formula.  Mr. Jeans explained that states apply           
 to consider impact aid in their formulas and fall in and out of               
 compliance.                                                                   
                                                                               
 CHAIRMAN GREEN asked if there was a penalty for noncompliance.                
 EDDY JEANS stated that the penalty would be that the impact aid               
 could not be considered in the foundation formula which would                 
 create a $30 to $35 million gap.  That gap would require proration            
 of the instructional unit value or a supplemental legislative                 
 appropriation.  CHAIRMAN GREEN asked if the money still comes.                
 Where does the money go?  EDDY JEANS replied yes.  Mr. Jeans                  
 explained that the school districts apply for the impact aid and              
 receive it directly.  All but two school districts in Alaska,                 
 Skagway and Pelican, receive impact aid funds.                                
                                                                               
 Number 549                                                                    
                                                                               
 SENATOR SALO indicated that the benefit would be uneven.  EDDY                
 JEANS agreed.  The school districts receiving a lot of impact aid             
 funds would tend to receive a windfall if the unit value were                 
 prorated.  The larger municipalities, who contain the majority of             
 the instructional units, would be penalized the most by the                   
 proration of the unit value.  Mr. Jeans specified that he was                 
 speaking in general terms.                                                    
                                                                               
 SENATOR MILLER surmised that those districts receiving the most if            
 nothing changed would be the rural areas.  The rural areas would              
 receive the bulk of the money because of the nontaxable lands.                
 EDDY JEANS agreed that would be correct for the districts receiving           
 the bulk of the impact aid funds.                                             
                                                                               
 SENATOR SALO asked if Mr. Jeans was assuming that if the formula              
 was not fixed and Alaska lost the ability to deduct the impact aid,           
 Alaska would prorate the unit rather than the state providing the             
 $35 million.  EDDY JEANS said that he was not assuming either,                
 these are the options if the department is not allowed to consider            
 the impact aid.                                                               
                                                                               
 Number 570                                                                    
                                                                               
 SENATOR MILLER asked what the overall effect on the disparity test            
 would be if this portion did not pass and the money was redirected.           
 EDDY JEANS pointed out that the driving force here is the                     
 consideration of the impact aid funds.  If impact aid funds are               
 eliminated from the current formula, the federal disparity test               
 does not have to be met; however, one could assume that Alaska                
 would be in court over equity in funding due to the wide variances.           
                                                                               
                                                                               
 CHAIRMAN GREEN directed Mr. Jeans to page 3 of 3 in the "Disparity            
 Computations."                                                                
                                                                               
 TAPE 96-14, SIDE B                                                            
                                                                               
 CHAIRMAN GREEN asked Mr. Jeans to explain why there are several               
 districts that are above the top end.  EDDY JEANS explained that              
 the impact disparity standard allows the exclusion of the top five            
 richest districts, the top five percent, as well the bottom five              
 percent.  That is based on the method of allocating funds which is            
 the instructional unit method in Alaska.  Therefore, the top five             
 percent of instructional units is excluded.  Mr. Jeans informed the           
 committee that the foundation program has a provision for those               
 districts with extremely high property wells:  North Slope, Valdez,           
 and Unalaska.  Such districts are allowed to go beyond the 23                 
 percent limitation of basic need.                                             
                                                                               
 Number 578                                                                    
                                                                               
 SENATOR SALO asked if those districts would be limited to the four            
 mill.  EDDY JEANS stated that those three districts' required local           
 effort is 35 percent of the basic need from the prior fiscal year.            
 Additionally, those districts are allowed to contribute the                   
 equivalent of a 2 mill tax levy.  There is a limitation on their              
 local contribution.                                                           
                                                                               
 Mr. Jeans pointed out that the other districts at the top of the              
 chart, on page 2 of 2, are single site school districts that have             
 been receiving supplemental appropriations outside of the                     
 foundation formula as well as contributing at or very near their              
 local cap.  Those districts are Hoonah, Hydaburg, Wrangell,                   
 Skagway, Unalaska, and Kake.  Mr. Jeans specified that there are no           
 instructional units attached to the supplemental appropriations               
 which increases the unit value and therefore, those districts are             
 at the high end.  Assuming SB 244 passes and the single site table            
 is moved into the foundation formula, some of these single site               
 districts will fall below the high indicator because instructional            
 units would then be attached to the funds being allocated.                    
                                                                               
 In response to Senator Salo, Mr. Jeans named Kake and Skagway as              
 districts that would fall in the middle section once their dollars            
 are attached to the foundation formula.  Once the instructional               
 units are added to those districts, the value of their                        
 instructional unit would be less than Juneau.  The disparity would            
 probably not be changed, but more districts would be within the               
 range.                                                                        
                                                                               
 Number 541                                                                    
                                                                               
 CHAIRMAN GREEN asked if a single site district could receive                  
 funding from one of the other 64 categories and continue to qualify           
 for single site funding.  EDDY JEANS clarified that the disparity             
 test is run on all revenues received by school districts in the               
 school operating fund.  Therefore, the disparity test would include           
 all revenues reported by the school districts in their operating              
 fund which would include single sites.                                        
                                                                               
 SENATOR SALO said that Unalaska looks to be a district that is not            
 suffering.  Why is Unalaska on the single site list?  EDDY JEANS              
 noted that when providing supplemental aid to a group of districts            
 requiring additional aid, sometimes districts that do not need                
 additional funds are included.  Those districts are included                  
 because they meet the criteria set for single sites which seems to            
 be the case with Unalaska.  Mr. Jeans informed the committee that             
 the single site school districts have an ADM range of 1-900.  The             
 Unalaska school district has about 360 ADM.                                   
                                                                               
 CHAIRMAN GREEN inquired as to how the disparity test would be                 
 impacted by increasing the required local match to 5 mill.  EDDY              
 JEANS referred her to the "Disparity Computations."  Mr. Jeans                
 explained that the 4 mill requirement is contained within the                 
 $61,000 unit value; it is basically an allocation of revenue                  
 sources.  The unit value of the $61,000 determines basic need, the            
 total money that a district should receive.  The required local               
 effort is subtracted and 90 percent of the eligible impact aid is             
 deducted in order to determine the state allocation.  Simply, this            
 is an allocation of revenues, of resources.                                   
                                                                               
 CHAIRMAN GREEN asked if the required local contribution is                    
 increased and the excess local is decreased, could it be calculated           
 so that Alaska does not fall out of disparity as rapidly.  EDDY               
 JEANS said that the cap could be lowered and stay within disparity.           
 The department has the authority to reduce that cap through                   
 regulations.  Many districts did not like this option.  Mr. Jeans             
 explained that this would basically reduce the local contributions            
 in some districts which would lower their cap and the amount                  
 budgeted over that local cap would be returned to the municipality.           
                                                                               
 Number 486                                                                    
                                                                               
 SENATOR SALO thought that Chairman Green was referring to                     
 increasing the local cap which would place Alaska out of disparity.           
 EDDY JEANS clarified that increasing the local cap would increase             
 disparity.  The excess local cap causes disparity.  Page 3 of 3               
 illustrates that allowing the excess local contribution of 23                 
 percent creates disparity.                                                    
                                                                               
 CHAIRMAN GREEN acknowledged that Mr. Jeans had utilized all the               
 possible scenarios; there is nothing else that could be utilized?             
 EDDY JEANS was unaware of any other possibilities under the current           
 formula.                                                                      
                                                                               
 CHAIRMAN GREEN requested that Mr. Jeans explain why those districts           
 receiving additional funding for special education and Indian lands           
 do not count that income when determining disparity.  EDDY JEANS              
 informed the committee that through the Impact Aid Law, school                
 districts are awarded an additional 25 percent for students                   
 residing on Indian lands and an additional 50 percent for special             
 education students.  Those additional monies are added to the base.           
 The federal law and regulations of the Impact Aid Program excludes            
 those funds from being considered.  Mr. Jeans explained that the              
 deductible amount of impact aid must be measured in the formula as            
 part of the disparity standard, not the full amount.                          
                                                                               
 CHAIRMAN GREEN referred to the Budgeted Earnings Investments column           
 of the preliminary disparity test.  Those districts with zeros in             
 that column, does that mean there are no funds that receive                   
 interest?  EDDY JEANS said that those districts do receive earnings           
 on investments and other local revenues which are reflected in                
 column M on page 2.  Those monies are included in the disparity               
 computation.  Mr. Jeans pointed out that when the total revenues in           
 column R is divided by the instructional unit in column S, column             
 T illustrates that the REAAs have revenues in excess of $61,000.              
 That is why the disparity problem can be corrected with the $500              
 per instructional unit allocation to the REAAs.                               
                                                                               
 Number 433                                                                    
 CHAIRMAN GREEN noted that some districts still show nothing in                
 column M and H.  If that were required to be calculated, would it             
 make disparity less of a problem?  EDDY JEANS reiterated that those           
 revenues are included in the disparity test.  For that reason, the            
 disparity standard of 20 percent can be met with the $500 per                 
 instructional unit.                                                           
                                                                               
 SENATOR SALO noticed that some districts do not have the                      
 investments that a borough would.  EDDY JEANS agreed.  Those would            
 be central treasuries.                                                        
                                                                               
 CHAIRMAN GREEN asked if there is a process which would illustrate             
 that the department is working toward correcting the formula, if              
 SB 244 or anything similar did not pass.  Would Alaska then be                
 exempt from this?  EDDY JEANS believed that the Impact Aid Law                
 required a substantial rewrite of the foundation formula submitted            
 to the U.S. Department of Education for their review and approval             
 before current year data could be used to compute the disparity               
 test.  The State of Alaska would also have to ensure the U.S.                 
 Secretary of Education that the monies withheld would be refunded,            
 if Alaska failed the disparity test.                                          
                                                                               
 SENATOR SALO believed that Alaskan schools were placed in jeopardy            
 because the instructional unit had not been increased over time to            
 account for inflation.  If SB 244 is not passed, a big mess would             
 result.  Senator Salo felt it essential to at least deal with the             
 issues in SB 244.  She indicated that Senate Finance would be the             
 appropriate place to struggle further with this bill.                         
                                                                               
 CHAIRMAN GREEN said that she wanted to hold SB 244 for another                
 week.                                                                         
                                                                               
 SENATOR LEMAN indicated that he had some ideas that could be                  
 reviewed and would contact Mr. Jeans later.                                   
                                                                               
 There being no further business before the committee, the meeting             
 was adjourned at 10:14 a.m.                                                   
                                                                               

Document Name Date/Time Subjects