Legislature(1995 - 1996)
02/28/1996 09:05 AM HES
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
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.