Legislature(2001 - 2002)

03/28/2001 01:58 PM HES

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                    ALASKA STATE LEGISLATURE                                                                                    
      SENATE HEALTH, EDUCATION & SOCIAL SERVICES COMMITTEE                                                                    
                         March 28, 2001                                                                                         
                            1:58 p.m.                                                                                           
MEMBERS PRESENT                                                                                                               
Senator Lyda Green, Chair                                                                                                       
Senator Loren Leman, Vice Chair                                                                                                 
Senator Gary Wilken                                                                                                             
Senator Bettye Davis                                                                                                            
MEMBERS ABSENT                                                                                                                
Senator Jerry Ward                                                                                                              
COMMITTEE CALENDAR                                                                                                            
SENATE JOINT RESOLUTION NO. 21                                                                                                  
Urging the United States Congress to extend the authorization                                                                   
date for supplemental block grants to the State of Alaska under                                                                 
the Federal Temporary Assistance to Needy Families Program.                                                                     
     MOVED CSSJR 21 (HES) OUT OF COMMITTEE                                                                                      
SENATE BILL NO. 154                                                                                                             
"An Act relating to mental health treatment facilities; repealing                                                               
the termination date of the mental health treatment assistance                                                                  
program; and providing for an effective date."                                                                                  
     MOVED SB 154 OUT OF COMMITTEE                                                                                              
SENATE BILL NO. 1                                                                                                               
"An Act relating to the base student allocation used in the                                                                     
formula for state funding of public education; and providing for                                                                
an effective date."                                                                                                             
     HEARD AND HELD                                                                                                             
PREVIOUS COMMITTEE ACTION                                                                                                     
SJR 21 - No previous Senate committee action.                                                                                   
SB 154 - No previous Senate committee action.                                                                                   
SB 1 - See Community and Regional Affairs minutes dated 3/19/01.                                                                
WITNESS REGISTER                                                                                                              
Mr. Darroll Hargraves                                                                                                           
Executive Director                                                                                                              
Alaska Council of School Administrators                                                                                         
326 4th, Suite 404                                                                                                              
Juneau, AK  99801                                                                                                               
POSITION STATEMENT:                                                                                                           
Mr. Jim Nordlund                                                                                                                
Division of Public Assistance                                                                                                   
Department of Health &                                                                                                          
  Social Services                                                                                                               
PO Box 110601                                                                                                                   
Juneau, AK  99801-0601                                                                                                          
POSITION STATEMENT:  Supports SJR 21                                                                                          
Ms. Wendy Hall                                                                                                                  
Staff to Senator Pete Kelly                                                                                                     
Alaska State Capitol                                                                                                            
Juneau, AK  99801-1182                                                                                                          
POSITION STATEMENT:  Presented SB 154 for the sponsor                                                                         
Mr. Elmer Lindstrom                                                                                                             
Special Assistant                                                                                                               
Department of Health &                                                                                                          
  Social Services                                                                                                               
PO Box 110601                                                                                                                   
Juneau, AK  99801-0601                                                                                                          
POSITION STATEMENT:  Supports SB 154                                                                                          
Mr. Mike Powers                                                                                                                 
Fairbanks Memorial Hospital                                                                                                     
1650 Cowles                                                                                                                     
Fairbanks, AK                                                                                                                   
POSITION STATEMENT:  Supports SB 154                                                                                          
Mr. Carl Sanford                                                                                                                
Assistant Administrator                                                                                                         
Fairbanks Memorial Hospital                                                                                                     
1650 Cowles                                                                                                                     
Fairbanks, AK                                                                                                                   
POSITION STATEMENT:  Supports SB 154                                                                                          
Ms. Liz Lazaria (ph)                                                                                                            
Mental Health Unit                                                                                                              
Fairbanks Memorial Hospital                                                                                                     
1650 Cowles                                                                                                                     
Fairbanks, AK                                                                                                                   
POSITION STATEMENT:  Supports SB 154                                                                                          
Dr. Hopson                                                                                                                      
Fairbanks Memorial Hospital                                                                                                     
1650 Cowles                                                                                                                     
Fairbanks, AK                                                                                                                   
POSITION STATEMENT:  Supports SB 154                                                                                          
Mr. Garth Hamlin                                                                                                                
Chief Financial Officer                                                                                                         
Bartlett Regional Hospital                                                                                                      
Juneau, AK                                                                                                                      
POSITION STATEMENT:  Supports SB 154                                                                                          
Senator Robin Taylor                                                                                                            
Alaska State Capitol                                                                                                            
Juneau, AK  99801-1182                                                                                                          
POSITION STATEMENT:  Presented SB 94                                                                                          
Mr. Jim Holt                                                                                                                    
Fairbanks School District                                                                                                       
PO Box 71267                                                                                                                    
Fairbanks, AK  99707                                                                                                            
POSITION STATEMENT:  Supports SB 1                                                                                            
Mr. Jeff Walters                                                                                                                
Fairbanks School District                                                                                                       
PO Box 71267                                                                                                                    
Fairbanks, AK  99707                                                                                                            
POSITION STATEMENT:  Supports SB 1                                                                                            
Mr. David Jones                                                                                                                 
Finance Director                                                                                                                
Kodiak Island Borough School District                                                                                           
710 Mill Bay Rd.                                                                                                                
Kodiak, AK  99615                                                                                                               
POSITION STATEMENT:  Supports SB 1                                                                                            
Mr. Eddy Jeans                                                                                                                  
School Finance and Facilities Section                                                                                           
Department of Education &                                                                                                       
 Early Development                                                                                                              
801 W 10 St.                                                                                                                    
Juneau, AK  99801-1894                                                                                                          
POSITION STATEMENT:  Supports SB 1                                                                                            
ACTION NARRATIVE                                                                                                              
TAPE 01-28, SIDE A                                                                                                            
Number 001                                                                                                                      
CHAIRWOMAN  LYDA  GREEN  called the  Senate  Health,  Education  &                                                            
Social Services  Committee meeting to  order at 1:58  p.m. Present                                                              
were Senators  Leman, Wilken, Davis  and Green.   Chairwoman Green                                                              
asked Mr. Darroll Hargraves to present to the committee.                                                                        
               UPDATE ON LEGISLATIVE PRIORITIES OF                                                                          
         THE ALASKA ASSOCIATION OF SCHOOL ADMINISTRATORS                                                                    
MR.  DARROLL  HARGRAVES,  Executive  Director of  the  Council  of                                                              
School  Administrators,   informed   the  committee  that   school                                                              
superintendents from around the state  gathered in Juneau over the                                                              
weekend  to discuss various  pieces of  legislation and  education                                                              
policies.   He stated the [Governor's]  task force on  funding had                                                              
asked the  Department of Education  and Early Development  (DOEED)                                                              
to come up  with factors in statute  or from the state  level that                                                              
would  assure accountability  in Alaskan  schools.   As a  result,                                                              
DOEED   produced    a   two-page    document   entitled    "School                                                              
Accountability  in  Alaska"  that   describes  the  accountability                                                              
measures  that  rest upon  school  administrators.   In  addition,                                                              
school administrators,  teachers, and  parents want  their schools                                                              
to  be accountable.   Most  people  feel their  local schools  are                                                              
doing a good job.                                                                                                               
MR.  HARGRAVES informed  the  committee that  the  superintendents                                                              
didn't take  formal actions  during their  meeting but  they dealt                                                              
with three  broad topics: the  exit exam; teacher  recruitment and                                                              
retention; and funding. The superintendents  came to the consensus                                                              
that SB  133 is the  appropriate vehicle  to carry concerns  about                                                              
the  exit exam,  specifically  a delay  and  waivers.   Peripheral                                                              
issues surrounding  the exit exam are curriculum  and instruction.                                                              
The  superintendents would  like  to commend  the Alaskan  history                                                              
education curriculum  bill, HB 171, to the committee.   HB 171 has                                                              
been  thoughtfully  put  together  with  the input  of  a  lot  of                                                              
business  people in Anchorage.   Some  superintendents believe  it                                                              
could help the rural-urban divide in the state.                                                                                 
CHAIRWOMAN  GREEN  asked  if  legislation  would  be  required  to                                                              
implement an Alaska history curriculum.                                                                                         
MR. HARGRAVES said it would not require  legislation; however, the                                                              
two larger school  districts in the state have  been limping along                                                              
trying   to  get  it   started  and   both  superintendents   felt                                                              
legislation would  help.   He noted that  critics might  feel that                                                              
school superintendents  are  asking for  an unfunded mandate,  but                                                              
teaching a state's history is fairly  standard and often required.                                                              
CHAIRWOMAN GREEN remarked, "Don't we already have that?"                                                                        
MR.  HARGRAVES  said  it  is not  required  in  statute.    School                                                              
districts  have had  trouble with  Alaskan  materials and  Alaskan                                                              
texts.   The  Staff  Development   Network   now  has  a   teacher                                                              
preparatory course  for Alaska history.  DOEED  has indicated that                                                              
it could take this specific statute,  set up standards and put the                                                              
material into existing courses.                                                                                                 
MR. HARGRAVES  said AASA,  after serious  concerns in past  years,                                                              
has   endorsed  the   charter   school  legislation   before   the                                                              
MR. HARGRAVES said the topic of teacher  recruitment and retention                                                              
was   discussed   by  the   superintendents.   Alaska   has   been                                                              
experiencing  a tremendous problem  with teacher recruitment  and,                                                              
regarding the argument that the shortage  is site-specific, he met                                                              
with  the superintendent  of  the  Anchorage School  District  who                                                              
expects 200 teachers to retire in  Anchorage next year, aside from                                                              
15 other vacancies.   That number doesn't take  into consideration                                                              
the normal  attrition rate.   Principals have  told him  that they                                                              
can  go through  three-page lists  of teacher  candidates and  not                                                              
find one available candidate.                                                                                                   
MR. HARGRAVES said  a teacher shortage does exist.   Some measures                                                              
under consideration  by the Legislature  that might help  are loan                                                              
or  interest forgiveness  for  teachers.   The  [Governor's]  task                                                              
force on  education funding  suggested providing loan  forgiveness                                                              
for teachers who  are not even Alaskans.  He pointed  out that one                                                              
of the businessmen  on that task force observed  that when private                                                              
industry  has a  shortage of  workers,  it raises  the salary  and                                                              
announces  that  raise.    However,  teachers  have  fixed  salary                                                              
MR. HARGRAVES informed committee  members that the superintendents                                                              
spent a substantial  amount of time discussing  funding issues. It                                                              
is his belief  that superintendents, principals,  and teachers are                                                              
a  beleaguered  group  of  people in  Alaska,  simply  because  of                                                              
programs  and benefits  that have  been lost over  the years.  Two                                                              
decades ago, Alaska had the best  teacher retirement system in the                                                              
nation.  Today, that is not true.   When potential candidates look                                                              
into Alaska's  current teacher retirement system,  they invariably                                                              
find out that  other states are better.  In  addition, schools are                                                              
working with fewer staff.                                                                                                       
MR.  HARGRAVES  told  the  committee   that  the  AASA  recommends                                                              
increasing the  per student allocation  in the foundation  formula                                                              
by $200 this year and an additional  $200 for the next five years.                                                              
CHAIRWOMAN GREEN  asked if they  are recommending the  per student                                                              
allotment be increased by $1,000 over five years.                                                                               
MR. HARGRAVES said  that is correct.  He continued  by telling the                                                              
committee  that accountability  factors have  been established  in                                                              
statute.  When  one takes  into  account  that teachers  work  for                                                              
parents  and locally-elected  boards, the  AASA believes  the high                                                              
number of accountability  measures will require some  money.  This                                                              
year, Alaska school  districts have had the largest  fuel increase                                                              
costs in many years. The AASA has  calculated that a $200 increase                                                              
will exceed inflation by a little  bit. Regarding the debate about                                                              
funding the foundation formula and  other specified funds separate                                                              
from  the foundation  formula, AASA  strongly  favors putting  all                                                              
funding in the foundation formula.                                                                                              
There  being no  questions  for  Mr. Hargraves,  CHAIRWOMAN  GREEN                                                              
thanked him and announced the committee would hear SJR 21.                                                                      
          SJR 21-URGE EXTENSION OF FEDERAL TANF GRANTS                                                                      
MR. JIM NORDLUND,  Director of the Division of  Public Assistance,                                                              
Department of  Health and Social  Services (DHSS),  stated support                                                              
for SJR 21. This resolution supports  continuation of supplemental                                                              
grants  through   the  state's  Temporary  Assistance   for  Needy                                                              
Families  (TANF) program,  established  with the  creation of  the                                                              
federal welfare reform law that passed  in 1996. That law replaced                                                              
open-ended  entitlements to  states for  the AFDC  program with  a                                                              
block grant  program for  states.  The  amount of the  block grant                                                              
was  based on  the amount  of money  each state  had received  for                                                              
their AFDC  programs in  FY 1994, amounting  to $63.6  million for                                                              
Alaska.   The federal law also  provided that relatively  poor and                                                              
rapidly  growing  states  would   receive  a  2.5  percent  annual                                                              
increase to their  block grants amounts.  Alaska  is considered to                                                              
be a high growth state.                                                                                                         
MR.  NORDLUND  explained  that states  received  the  supplemental                                                              
increases  for four  years.  Alaska's  first block  grant in  1998                                                              
amounted to $68 million; that amount  has increased to $70 million                                                              
but it will decrease  to $63 million in October,  the start of the                                                              
federal fiscal year  [FY 02]. DHSS obligated $70  million and more                                                              
for cash assistance, child care and  other programs and  now faces                                                              
a $15 million  deficit.  Calculated into that deficit  is the $6.9                                                              
million that  will be lost from  federal sources. SJR  21 requests                                                              
Congress  to  continue  the supplemental  amount  at  the  current                                                              
year's level  for at least one  more year.  He  informed committee                                                              
members that  this approach has received  a great deal  of support                                                              
from the National Governors' Association,  the National Council of                                                              
State Legislatures, and other organizations.                                                                                    
CHAIRWOMAN  GREEN asked  if other state  legislatures have  passed                                                              
similar resolutions.                                                                                                            
MR. NORDLUND nodded affirmatively.                                                                                              
CHAIRWOMAN GREEN asked if a copy  of the resolution should also be                                                              
sent to President Bush.                                                                                                         
MR. NORDLUND said  he believes the omission of the  President as a                                                              
recipient was an oversight.                                                                                                     
CHAIRWOMAN GREEN offered  to accept a conceptual  amendment to add                                                              
the  President of  the United  States  and the  U.S. Secretary  of                                                              
Health and  Human Services  to the  list of recipients  [Amendment                                                              
SENATOR  LEMAN  so  moved  and,  with  no  objection,  the  motion                                                              
CHAIRWOMAN GREEN  asked if anyone  expected to use the  TANF funds                                                              
when welfare reform was initiated.                                                                                              
MR. NORDLUND said  he does not believe any of  the states expected                                                              
welfare reform to be as successful  as it has been. Caseloads have                                                              
dropped by over 50 percent. In the  initial years, the block grant                                                              
balances  built up and  DHSS was  advised by  members of  Congress                                                              
that the state should spend those  funds. Caseloads had dropped so                                                              
quickly that  the states  had not had  sufficient time to  gear up                                                              
and use the funds  to build up programs.  Alaska  has built up its                                                              
programs and  is now  dependent on  that money.   He noted  SJR 21                                                              
asks for  a one-year extension  but the  whole TANF program  is up                                                              
for reauthorization by Congress.                                                                                                
Number 1431                                                                                                                     
CHAIRWOMAN GREEN  asked if the  Legislature will know  anything by                                                              
next session.                                                                                                                   
MR.  NORDLUND   said  it  should   because  the  law  has   to  be                                                              
reauthorized by October.                                                                                                        
CHAIRWOMAN  GREEN said she  questions whether  the state  is doing                                                              
things it shouldn't  be with this money.  She  said sometimes good                                                              
things  happen when  people are  forced to  find new  ways to  run                                                              
MR. NORDLUND  said the  TANF program  is in  the process  of being                                                              
audited  and  it is  possible  the  audit  will determine  that  a                                                              
program, similar to  the Head Start program, should  not be funded                                                              
with TANF  money. He  suggested amending SJR  21 by removing  "the                                                              
Head Start Program,"  on page 2, line 12, and  changing $6,900,000                                                              
to $6,887,800 on page 1 line 15 [Amendment  2}.  He explained that                                                              
$6,887,800 is the exact number, while  $6,900,000 was an estimate.                                                              
SENATOR DAVIS moved to adopt Amendment 2.                                                                                       
There  being   no  objection,  CHAIRWOMAN  GREEN   announced  that                                                              
Amendment 2 was adopted.                                                                                                        
SENATOR LEMAN moved  CSSJR 21(HES) from committee  with individual                                                              
recommendations  and  its  zero  fiscal  note.    There  being  no                                                              
objection, the motion carried.                                                                                                  
The committee took up SB 154.                                                                                                   
        SB 154-REPEAL SUNSET OF MENTAL HEALTH ASSISTANCE                                                                    
MS. WENDY  HALL, staff to Senator  Pete Kelly, sponsor of  SB 154,                                                              
informed the  committee that  representatives from the  Department                                                              
of  Health and  Social Services  (DHSS) were  available to  answer                                                              
questions about the bill.  She then  read the following statement.                                                              
     The designated  evaluation and  treatment program  [DET]                                                                   
     is a critical component in a  continuum of mental health                                                                   
     services  in Alaska, particularly  for indigent  persons                                                                   
     with mental  illnesses who  are being civilly  committed                                                                   
     or met the criteria for civil  commitment.  Through this                                                                   
     program many  poor people with mental illnesses,  who do                                                                   
     not qualify  for Medicaid, are able to  receive services                                                                   
     in  community  hospitals  across the  state,  closer  to                                                                   
     their families  and local support systems.   Without the                                                                   
     DET  program, it would  be necessary  to transport  many                                                                   
     consumers in crises to the Alaska  Psychiatric Institute                                                                   
     [API] to receive evaluation and treatment sources.                                                                         
MS.  HALL explained  that  SB 154  repeals  the  sunset clause  in                                                              
CHAIRWOMAN  GREEN   clarified  that  Version  A   was  before  the                                                              
committee and said  this concept is part of an  ongoing discussion                                                              
about API, which she believes is a great idea.                                                                                  
Number 1668                                                                                                                     
SENATOR LEMAN asked  why the legislature put a sunset  date on the                                                              
bill in 1999.                                                                                                                   
CHAIRWOMAN GREEN thought it was done for financial reasons.                                                                     
MR.  ELMER LINDSTROM,  Special Assistant  to  the Commissioner  of                                                              
DHSS, recalled the sunset date was  included because the state had                                                              
received a  federal grant that was  non-continuing.  A  portion of                                                              
that grant  was earmarked for DET  costs, but the  Legislature was                                                              
aware that the federal  funds would not be available  in 2002.  In                                                              
the meantime, DHSS has located another  funding source to continue                                                              
the program.                                                                                                                    
CHAIRWOMAN GREEN asked Mr. Lindstrom to review the fiscal note.                                                                 
Number 1735                                                                                                                     
MR. LINDSTROM  said  the rules for  fiscal notes  have changed  so                                                              
that the  cost of an  entire program is  to be shown,  even though                                                              
the funds  might be  included in the  Governor's, House  or Senate                                                              
budget.   He thought, as of  yesterday, the DET program  was fully                                                              
funded in the Senate version of the operating budget.                                                                           
CHAIRWOMAN GREEN asked  for verification that SB 154  will have no                                                              
additional fiscal  impact, other than  the amount included  in the                                                              
operating budget.                                                                                                               
MR. LINDSTROM said it will not.                                                                                                 
Number 1833                                                                                                                     
MR. MIKE POWERS, administrator of  the Fairbanks Memorial Hospital                                                              
Denali  Center,  told  the  committee  that three  years  ago  the                                                              
hospital completed  a strategic  plan, of  which a major  platform                                                              
was  community  accountability.   Hospital  staff,  public  safety                                                              
officials, and  social service workers attended  planning sessions                                                              
and, as a community, identified psychiatric  program excellence as                                                              
a key effort.   The DET funds were instrumental  to the hospital's                                                              
ability to  offer its psychiatric  program.  About the  same time,                                                              
Senator  Kelly  introduced  legislation   allowing  limited  state                                                              
dollars  to four  communities  to  help protect  one  of the  most                                                              
vulnerable segments, the working-poor  mentally ill.  That funding                                                              
mechanism has proven to be very cost  effective - it has minimized                                                              
the  cost borne  by multiple  state agencies.  He urged  committee                                                              
members to support SB 154.                                                                                                      
MR. CARL  SANFORD, assistant  administrator at Fairbanks  Memorial                                                              
Hospital, informed  the committee that  two years ago he  was very                                                              
involved in the  mental health infrastructure at  the hospital and                                                              
around  the  state,  particularly  the transfer  of  mentally  ill                                                              
patients from  the Fairbanks community  to API for treatment.   At                                                              
that point  in time, the predominant  issue was open funding.   In                                                              
1999, 70  patients were transported  out of Fairbanks. In  2000, 5                                                              
to  7 individuals  were  transferred to  API  for care,  providing                                                              
dollar savings to  the public safety and correctional  sectors and                                                              
allowing  troopers  to remain  in  the  community.   In  addition,                                                              
patients  receive timely  access  to  care and  do  not delay  the                                                              
decision to seek care as often.                                                                                                 
MS. LIZ LAZARIA  (ph), nurse manager on the Mental  Health Unit at                                                              
Fairbanks Memorial Hospital, told  the committee she would like to                                                              
speak to  the personal side  of the benefits  of the  DET program.                                                              
One  patient in  the mental  health  unit is  a 23  year old  with                                                              
schizophrenia. It is very important  for the family to be involved                                                              
with the  treatment and follow-up  of this patient.   This patient                                                              
is likely  to be hospitalized  several times during  his lifetime.                                                              
The unit has  developed a treatment plan with  family members that                                                              
provides family  support. She urged  committee members  to support                                                              
SB 154.                                                                                                                         
CHAIRWOMAN  GREEN asked  Ms. Lazaria  whether  that patient  would                                                              
have been  transported  if the DET  program was  not available  in                                                              
MS. LAZARIA said  it is highly likely the patient  would have been                                                              
transferred to API as the patient  is on a 30-day commitment.  The                                                              
DET program supports keeping the patient in the community.                                                                      
DR. HOPSON, a  psychiatrist from Fairbanks, stated  support for SB
154.  As a  member  of the  medical  staff at  Fairbanks  Memorial                                                              
Hospital and  the medical  director of Mental  Health, one  of his                                                              
goals is  to support and direct  the development of an  acute care                                                              
mental health system, which provides  the highest level of care to                                                              
its patients and support to their families.                                                                                     
DR. HOPSON said  when treatment is delayed or a  mental illness is                                                              
untreated,  the  patient  may  decompensate   to  the  point  that                                                              
involuntary treatment through court  commitment is required.  That                                                              
process not  only adds costs  but may  require a longer  length of                                                              
treatment  due  to the  fact  that  he  or  she may  be  seriously                                                              
decompensated.  He believes that  passage of SB 154 will allow for                                                              
earlier interventions,  earlier hospitalizations,  shorter lengths                                                              
of  stay, and  less cost  to the  patient,  family and  taxpayers.                                                              
Earlier treatment  of patients, from a physician's  standpoint, is                                                              
the ultimate goal  and will provide the highest  quality of mental                                                              
health care in the Interior.                                                                                                    
MR. GARTH  HAMLIN, Chief  Financial Officer  at Bartlett  Memorial                                                              
Hospital, stated support for SB 154.                                                                                            
SENATOR LEMAN moved to pass SB 154  from committee with individual                                                              
CHAIRWOMAN GREEN  announced that with  no objection, SB  154 would                                                              
move  to its  next committee  of  referral. The  committee took  a                                                              
brief at-ease and then Chairwoman  Green handed the gavel to Vice-                                                              
Chair Leman and the committee took up SB 94.                                                                                    
                    SB  94-EDUCATION FUNDING                                                                                
SENATOR ROBIN TAYLOR,  prime sponsor of SB 94,  thanked Chairwoman                                                              
Green for her  help on SB 94  and on education issues  in general.                                                              
He noted a committee  substitute to SB 94 was  prepared that makes                                                              
major  changes  to  accommodate concerns  expressed  at  the  last                                                              
SENATOR DAVIS  moved to  adopt Version O  as the working  document                                                              
before  the  committee.  There  being  no  objection,  the  motion                                                              
SENATOR TAYLOR explained  that Section 1 of Version  O changes the                                                              
federal impact  aid deduction from 100  to 95 percent.   It adds a                                                              
provision  for a  specific allocation  for school  nurses so  that                                                              
those  districts without  a  school  nurse will  have  one in  the                                                              
future.    It  also adds  funding  for  vocational  education  but                                                              
changes  it  from  3 percent  of  specific  allocation  multiplied                                                              
against  the  formula to  2  percent,  with  the other  1  percent                                                              
allocated for  school nurses.   He stated  he has no  objection to                                                              
changing those numbers, but he believes  that vocational education                                                              
has been on the short end of the  stick and needs to be emphasized                                                              
and improved.   In addition,  he pointed  out none of  the schools                                                              
within his Senate district have a school nurse.                                                                                 
Number 2334                                                                                                                     
VICE-CHAIR LEMAN referred  to page 3, line 3, and  asked about the                                                              
special needs factor change from 1.20 to .20.                                                                                   
SENATOR TAYLOR  deferred to the drafters  for an explanation.   He                                                              
said that  Section 2 merely  makes the language  changes necessary                                                              
to  encompass Section  1.   A portion  of  Section 1  that was  of                                                              
concern to many  is that it would require the  North Slope Borough                                                              
to  pay  the  same  four  mil  minimum  level  that  other  school                                                              
districts  in the  state  currently pay  before  they receive  any                                                              
funding from  the State  of Alaska.   This would have  allowed for                                                              
significant  additional revenues  to  be redistributed  throughout                                                              
the formula  to assist  other districts.   Based on  conversations                                                              
and  testimony, he  reduced  that  from a  four  mil levy  maximum                                                              
requirement  to four  mils or  100 percent  of the  local cost  of                                                              
education,  whichever is  less.   Existing law  provides that  the                                                              
local community would have to pay  45 percent of the total cost of                                                              
education.  He stated:                                                                                                          
     So we've  changed it  from 45 to  the full 100  percent,                                                                   
     but not taken any additional  funds that would have been                                                                   
     generated.  This leaves you  short on the numbers within                                                                   
     these bills  for education funding by about  $21 million                                                                   
     of additional funding that would  have been available to                                                                   
     help make  sure no children  were left behind  any place                                                                   
     else  in the  state.   As I  said, Section  2 makes  the                                                                   
     changes necessary  to comply with Section 1.   Section 3                                                                   
     merely  adds  the changes  necessary  to provide  for  a                                                                   
     specific allocation for nurses.   Section 4 accommodates                                                                   
     both the  nursing and  vocational education and  changes                                                                   
     the words from 'product' to  'number.' I assume that's a                                                                   
     linguistic   change   that   was   necessary   for   the                                                                   
     Section 5  requires a biennial  study by the  Department                                                                   
     of Education  that will be submitted to  the legislature                                                                   
     and establishes parameters from  which the study must be                                                                   
     done.  It  says the Department of Education  already has                                                                   
     significant auditing  and numbers before it  on what the                                                                   
     cost  of education  is  and that  they  should use  then                                                                   
     specific aspects of consumer  price indexes and it lists                                                                   
     four  or  five different  methods  of  determining  that                                                                   
     In other words, do you have  to go out and find out what                                                                   
     it costs to  do business in that district?   What is the                                                                   
     cost   of  living,   the   cost  of   food,   utilities,                                                                   
     transportation?   Once they have done that  and achieved                                                                   
     those objective numbers, they  then establish the amount                                                                   
     of  area  cost differential  for  each  community  using                                                                   
     Anchorage as the base. It's  the way our current formula                                                                   
     works but  our current formula's never been  adjusted in                                                                   
     14 years  so, as a  consequence, even though  prices may                                                                   
     change, go up  or go down in a given community,  we have                                                                   
     no  way  of tracking  that  and  every time  we're  told                                                                   
     they're going to  do something about it -  we've sat now                                                                   
     as  a  legislature  for  three   years  waiting  for  an                                                                   
     adequacy  study to  be completed.   Well they  completed                                                                   
     the  adequacy  study  and  the   Governor's  Task  Force                                                                   
     reported to  this committee at  a very recent  hearing -                                                                   
     and all of the comments on area  cost differential were,                                                                   
     we can't  figure it  out and we  don't know what  it is,                                                                   
     but the  current system  is totally  broke on area  cost                                                                   
     differential  and,  as  a  consequence,   we  should  do                                                                   
     another study.  That will be  the fifth study since I've                                                                   
     been in the legislature with no changes."                                                                                  
CHAIRWOMAN  GREEN asked  Senator Taylor  if the  kind of study  he                                                              
envisions  can be  derived  at by  gathering  information that  is                                                              
currently available.                                                                                                            
SENATOR TAYLOR  said that is correct.   He noted that most  of the                                                              
information is available through  Alaska's Department of Labor and                                                              
is currently used  for labor contracts and other  state government                                                              
areas that  require a level  of objectivity  in the way  funds are                                                              
allocated for geographic differentials.                                                                                         
SENATOR LEMAN  pointed out the Consumer  Price Index (CPI)  is not                                                              
referenced  in  the  bill  and that  he  prefers  the  replacement                                                              
language because  the CPI tends  to overstate the  actual increase                                                              
in  costs by  as much  as 1.1  percent, according  to the  Michael                                                              
Boskin  (ph) study.    Part of  the  reason is  that  it does  not                                                              
account  for  changes  in  the  way  people  live  that  are  more                                                              
efficient.   He felt  if the CPI  is used,  that increase  will be                                                              
SENATOR TAYLOR said  DOEED has very good numbers;  it audits every                                                              
single  school district  every year.    It also  has, through  the                                                              
Department of  Labor and  federal entities, significant  objective                                                              
evidence to  turn to.   He agreed that  the CPI can  overstate the                                                              
increase, but it  is only 1 percent.  If that  is balanced against                                                              
the actual  expenditures,  he believes  DOEED can  come up  with a                                                              
truer  number  of  the  actual cost  that  would  not  require  an                                                              
increase  in   general  funds  but,   instead,  would   require  a                                                              
reallocation  of funds.    He felt  the  shifts  would be  subtle,                                                              
depending on the costs in each community,  and would be readjusted                                                              
every  two years.    He  pointed out  that  he selected  two  year                                                              
intervals  to provide  stability  for budgeting  purposes in  case                                                              
dramatic shifts occurred.  He stated  this approach is better than                                                              
one  that was  politically  set  14 years  ago  and  has not  been                                                              
changed since.                                                                                                                  
Number 2075                                                                                                                     
SENATOR WILKEN  disagreed that the  area cost differentials  (ACD)                                                              
have not been changed in 14 years.  He stated:                                                                                  
     Senator Taylor  now, twice, has discussed the  fact that                                                                   
     the  DCF  -  ACDs haven't  been  changed  in  14  years.                                                                   
     That's  not correct.   They  were changed  under SB  36,                                                                   
     under  the  McDowell  study.   The  McDowell  study  was                                                                   
     brought  about by  the  fact that  the  prior ACDs  that                                                                   
     Senator Taylor is speaking of  were built in 1984.  They                                                                   
     were  done  for  a  Department of  Labor  study.    They                                                                   
     sampled  19 of  our 40  election districts.   That  1984                                                                   
     study - the Legislature was  then under pressure in '85,                                                                   
     '86, and  '87, and when the  Legislature in '87  came up                                                                   
     with the formula  that we changed three years  ago, they                                                                   
     needed  - what  Senator Taylor  is talking  about -  and                                                                   
     that was some  sort of differential of living  - cost of                                                                   
     living across Alaska.  It took  that Labor study in 1984                                                                   
     and  they  brought  it  to the  bill  that  changed  the                                                                   
     formula  and  made it  an  instruction unit  formula  in                                                                   
     1987.   They then went further  than that and  they made                                                                   
     another adjustment at the committee  table, politically,                                                                   
     to gerrymander the ACDs to the  benefit of certain areas                                                                   
     of the state  and then we lived under that  system until                                                                   
     we changed the formula in 1997 or 1998.                                                                                    
     So,  to suggest  that  we haven't  done  anything in  14                                                                   
     years is  not quite correct.   When the Department  went                                                                   
     out, under  the McDowell study, the Department  went out                                                                   
     to study the  cost of living.  What they  found was that                                                                   
     across our 53 school districts  there simply was a basic                                                                   
     requirement of  accounting missing and that  was a chart                                                                   
     of accounts  that's uniform across the state  of Alaska.                                                                   
     That  surprised the  McDowell study  and they  expressed                                                                   
     their surprise in the study  and that has since launched                                                                   
     an effort over  the last three years for  the Department                                                                   
     to go out and, under regulation  now, to have in place a                                                                   
     chart  of  accounts so  that  we  can start  to  compare                                                                   
     across  districts so  that we  can do  what the  Senator                                                                   
     wants, and  that is  to figure out  what is the  cost of                                                                   
     education so  we can fairly compare 53  districts across                                                                   
     the state.   That process isn't ongoing and  I certainly                                                                   
     support  that and  I know Senator  Taylor  does too.   I                                                                   
     want to make sure that - we  haven't forsaken this issue                                                                   
     of ACDs  but we  have certainly  found that we  couldn't                                                                   
     rely  on the  data  we had,  nor could  we  rely on  the                                                                   
     accounting  system  that was  in  place since  1987  and                                                                   
     we're certainly trying to correct that.                                                                                    
SENATOR TAYLOR said  he agrees with Senator Wilken  except that he                                                              
disagrees that this  was a beneficial change to  every district in                                                              
the state.   He believes  that with a  new chart of  accounts that                                                              
will be  audited annually and  plowing in the additional  factors,                                                              
DOEED can determine what the numbers should be.                                                                                 
SENATOR WILKEN said, as everyone  knows from what was done with SB
36, that this isn't that big of a  project but it has to be valid.                                                              
He reminded Senator  Taylor that the McDowell  study verified that                                                              
80 percent  of the budgets  of school  districts across  the state                                                              
was used for  wages, salaries, and  benefits so that it  is the 20                                                              
percent that  has to  be quantified.   He pointed  out there  is a                                                              
difference between  the cost of living and providing  education in                                                              
an area.   For example,  some towns have 30  miles of road  so gas                                                              
costs are low compared to a town with 4,000 miles of road.                                                                      
SENATOR TAYLOR responded:                                                                                                       
     And I think all we're really  talking about is providing                                                                   
     within  the formula  a mechanized  way of  accomplishing                                                                   
     this and  having it  done by  the professionals and  not                                                                   
     done by  the politicians.  It  shouldn't wait for  us to                                                                   
     make a  decision here  and then  have that decision  get                                                                   
     structured politically.  These are kids.  They shouldn't                                                                   
     be left behind and they're going  to continue to be left                                                                   
     behind if we leave it up to  the legislature to do this.                                                                   
     That's why  my suggestion is, de-politicize  this.  Give                                                                   
     us  some objective  numbers.   And I  really don't  care                                                                   
     what the formula is as long  as it's a fair formula, and                                                                   
     [indisc.]  accordingly.  That's  what we've provided  in                                                                   
     this bill....                                                                                                              
Number 1838                                                                                                                     
CHAIRWOMAN GREEN  asked, "...are  both of these  ideas -  the part                                                              
that went on in  SB 36 and this type of (indisc.)  - are they both                                                              
impacted by  the same  idea that  we're not measuring  necessarily                                                              
what it costs  to live there but  we're measuring what  we have to                                                              
spend when we're there?"                                                                                                        
SENATOR TAYLOR said it is both and  that, in essence, they have to                                                              
look  at  what  is  truly  the  cost   of  education  within  that                                                              
community.  He pointed  out there  are  costs that  are unique  to                                                              
education and they  need to be tracked. He informed  the committee                                                              
that Commissioner  of Education Marshall  Lind ordered  all school                                                              
districts to  use the same  chart of accounts  in 1978 but  we are                                                              
just now getting there.                                                                                                         
SENATOR LEMAN asked how to compare  what is being delivered in one                                                              
district  with  another  because  different  districts  do  things                                                              
differently.   He pointed  out that  some districts offer  smaller                                                              
class  sizes  while  others  offer a  computer  station  for  each                                                              
student.  He  asked Senator Taylor  if it is his intent  that when                                                              
comparing from area  to area, equivalent delivery  of education is                                                              
SENATOR TAYLOR  said it is.   He repeated that he  firmly believes                                                              
DOEED has  the expertise to do  that today because  the department                                                              
has  specialists  who  know  what   it  should  cost  in  a  given                                                              
community.   He said he  has worked with  the Department  of Labor                                                              
and DOEED  to try  to come  up with  a series  of qualifiers  that                                                              
would provide objective numbers from  which to create a worksheet.                                                              
Number 1623                                                                                                                     
SENATOR  LEMAN pointed  out  another concern  is  that one  school                                                              
district may have a different policy  when it comes to negotiating                                                              
employee  contracts. For  example, if  employee contracts  account                                                              
for  80 to  85 percent  of  district costs,  would  there be  some                                                              
standardization  or oversight  of  that percentage.  He  cautioned                                                              
that if a district wanted to increase  its area cost differential,                                                              
it could just negotiate higher contracts.                                                                                       
SENATOR TAYLOR said  he has not attempted to address  that because                                                              
those decisions are left to local control.                                                                                      
SENATOR TAYLOR continued describing  SB 94. Section 6 provides for                                                              
a  declining  fund adjustment  to  allow  for  a gentle  slope  to                                                              
compensate for declining enrollments  in school districts that are                                                              
suffering from a  reduction in student population.   He maintained                                                              
that  the  foundation  formula  provides  well  for  increases  in                                                              
student population  but districts  "fall off  of cliffs"  if their                                                              
enrollment declines. The legislature  attempted to set percentiles                                                              
- a  school had  to lose more  than 10  percent of its  population                                                              
before  it got help.   That  number was  then reduced  to five  or                                                              
seven  percent.   He replaced  the percentage  with language  that                                                              
says if  school enrollment is  declining, the school  will receive                                                              
75 percent for  that phantom child the first year,  50 percent the                                                              
second year, and  25 percent the third.  That  would provide three                                                              
full years to adjust contracts with  educators.  He indicated that                                                              
he is flexible on those numbers but  his goal is to make a gentler                                                              
transition for schools.                                                                                                         
Number 1450                                                                                                                     
SENATOR LEMAN asked if that mechanism  will kick in if any decline                                                              
in enrollment occurs  because the bill says the decline  must be 4                                                              
percent or more.                                                                                                                
SENATOR TAYLOR said  his preference is to go to zero  percent.  He                                                              
continued explaining  the bill.  Section 7  sets the base  student                                                              
allocation.  His original bill included  a $210 increase.  Because                                                              
Senator Wilken, in  SB 1, had a $145 increase he  inserted $145 in                                                              
the committee substitute,  but at one point he was  going to leave                                                              
it  blank and  let the  committee  decide the  best  number.   The                                                              
Governor's bill increases  the allocation by $115.   He added that                                                              
the fiscal notes  increase the cost by $30 million  if no revenues                                                              
are collected  by requiring  a higher percentage  of pay  from the                                                              
rich tax-base  districts.   He explained that  if the  federal aid                                                              
impact  deduction was  at 100 percent,  about  $12 to $13  million                                                              
would be  added back into the  formula and reduce the  fiscal note                                                              
to about  $20 million.   He hoped for  a $50 million  increase but                                                              
because of the emotion surrounding  the North Slope Borough issue,                                                              
he modified that amount for the sake of agreement.                                                                              
SENATOR TAYLOR  then explained  that Section  8 contains  the same                                                              
language.  It  changes the threshold level on what  was called the                                                              
single site  argument -  it only  impacts two districts,  Wrangell                                                              
and Petersburg.   He noted that  is an arbitrary number  and there                                                              
should   probably  be   a  better   way   of  handling   declining                                                              
               SB   1-FOUNDATION FORMULA INCREASE                                                                           
CHAIRWOMAN GREEN  thanked Senator Taylor and asked  Senator Wilken                                                              
to present SB 1.                                                                                                                
SENATOR  WILKEN, sponsor  of SB  1,  said that  SB 1  is the  most                                                              
efficient bill  regarding school funding. It simply  increases the                                                              
student  dollar  amount.  He  feels  the case  has  been  made  by                                                              
constituents  that  increased  funding  is needed  for  many  good                                                              
reasons.  He asked that Jim Holt come forward and testify.                                                                      
MR. JIM  HOLT, Superintendent  of the  Fairbanks School  District,                                                              
informed the committee that he has  been with that school district                                                              
for  30  years. He  said  he  understands  the reluctance  of  the                                                              
Legislature to  open up  the formula in  SB 36.  The  complexities                                                              
described   by  Senator   Taylor  make   that  obvious.   He  also                                                              
understands  the  Legislature's  reluctance  to  tie  the  student                                                              
dollar to  a permanent  inflation factor  because the question  of                                                              
what  inflation factor  to use  continues.   He  noted that  grant                                                              
funding  allows the  Legislature  to target  specific  educational                                                              
issues, hold school districts accountable,  and not worry that the                                                              
additional  funding  is  being  spent   on  salaries  rather  than                                                              
students but  it has  become critical  that additional  funding be                                                              
placed in the student dollar.                                                                                                   
MR. HOLT  said no  matter what  numbers one  believes, the  bottom                                                              
line is that  inflation has eaten away at the  educational dollar.                                                              
If it cannot be  tied to some kind of factor that  takes that into                                                              
consideration,  the Legislature will  periodically need  to adjust                                                              
that amount.   For example, Fairbanks  has had the  second warmest                                                              
winter on record.  Even under those  conditions, the fuel oil bill                                                              
for the  school district cost $200,000  more this year  than last,                                                              
purely due  to inflation.  He cannot  use grant funds to  pay that                                                              
bill.   He  pointed out  that raising  property taxes  to pay  for                                                              
school bonds  is not  a well  received idea  by retirees  on fixed                                                              
incomes.  Likewise, all school superintendents  in this state have                                                              
been running their  districts on a fixed income for  almost all of                                                              
the last 12 years.  Every time there  is an increase in inflation,                                                              
fuel bills  or teacher salaries  increase and districts  can spend                                                              
less  on the  students.  He  asked legislators,  when  considering                                                              
additional funding  for education, that  all of that money  not be                                                              
put into quality  schools grants and learning  opportunity grants,                                                              
but to consider increasing the student dollar.                                                                                  
Number 963                                                                                                                      
SENATOR LEMAN said he disagrees that  the $200,000 increase in the                                                              
fuel bill  was due to  inflation.  Rather,  it was an  increase in                                                              
the  price  of fuel.    He noted  both  have  the same  effect  on                                                              
spending power.                                                                                                                 
SENATOR WILKEN  asked Mr. Holt to  describe to the  committee what                                                              
the learning opportunity grants fund.                                                                                           
MR. HOLT said  the quality school grant that the  Fairbanks School                                                              
District received  first was used  to offer summer school  for the                                                              
first  time  in  Fairbanks  in  about  20  years.    The  learning                                                              
opportunity  grants have  allowed the Fairbanks  district  to fund                                                              
special  programs, particularly  in  reading,  and hopefully  next                                                              
year in math, for elementary students who are unable to keep up.                                                                
MR. JEFF WALTERS stated support for  SB 1 and increases in funding                                                              
for education.   The  Legislature must  acknowledge losses  due to                                                              
inflation  over the  last  10 years.   He  said  employees in  his                                                              
district  are being squeezed  by inflation,  rising health  costs,                                                              
expectations of student performance  on the high school qualifying                                                              
exam and  more.  If  districts do not  get an increase,  they will                                                              
lose safety monitors on school buses,  supplies and equipment, and                                                              
the  pupil-teacher  ratio  will have  to  be  raised in  grades  4                                                              
through  12.  That  seems  counterproductive  in  light  of  state                                                              
mandated  exams.  In  addition,   attracting  and  retaining  high                                                              
quality teachers  is critically  important across  the state.   He                                                              
feels districts need a long range  solution to funding, not a stop                                                              
gap measure.                                                                                                                    
Number 806                                                                                                                      
SENATOR  LEMAN informed  Mr. Walters  that  the Legislature  fully                                                              
funded pupil transportation  so to draw any link  between SB 1 and                                                              
pupil transportation is a misrepresentation.                                                                                    
CHAIRWOMAN  GREEN  noted  that  crossover  on  budgets  can  cause                                                              
MR. DAVE JONES, Kodiak Island Borough  School District Director of                                                              
Finance, stated  support for SB 1.   He has calculated  the amount                                                              
of  state revenue  per student  for each  year since  1989.   With                                                              
quality  schools initiative  funds  and the  learning  opportunity                                                              
grants included, the Kodiak school  district is receiving $30 less                                                              
per student  than it  did in 1989.   Over  that same time  period,                                                              
inflation has increased over 30 percent.   In addition, fuel costs                                                              
have  increased 56  percent since  1990.   The  lack of  inflation                                                              
proofing has resulted  in severe cuts in Kodiak.   Over $1 million                                                              
has been  cut in the  last two fiscal  years and Kodiak  is facing                                                              
another $500,000 next year if it  receives no additional revenues.                                                              
Passage  of SB  1 will  eliminate the  need for  further cuts  and                                                              
might allow the district to reinstate  some of the programs cut in                                                              
recent years.                                                                                                                   
Number 677                                                                                                                      
CHAIRWOMAN  GREEN announced  that  both SB  94  and SB  1 will  be                                                              
scheduled in committee again next  week.  She pointed out that the                                                              
issue of supplemental equalization  has been discussed at the Mat-                                                              
Su school district.   She plans to  review that issue at  the next                                                              
meeting also.                                                                                                                   
MR.  EDDY JEANS,  School Finance  and  Facilities Section,  DOEED,                                                              
stated  support of  SB 1.   However,  he  suggested the  committee                                                              
consider  rolling the  learning opportunity  grants into  SB 1  as                                                              
part of  the ongoing funding formula  so that school  districts do                                                              
not have to lobby for that money every year.                                                                                    
CHAIRWOMAN GREEN asked if that creates a lot of work.                                                                           
MR. JEANS replied,  "It keeps it interesting, Madame  Chairman.  I                                                              
think you would remember the single  site issues that we debated -                                                              
single site  funding on an annual  basis for about 10 years."   He                                                              
pointed  out that money  is being  allocated to  districts  at the                                                              
same time  quality school  grants are  allocated.  The  allocation                                                              
methods  are a  little  bit different  but  the  monies are  being                                                              
targeted  for the  same purposes.   If  the money  is going  to be                                                              
allocated  to DOEED,  it would  prefer to  have the  money in  the                                                              
MR. JEANS said  that SB 1 and the learning opportunity  grants are                                                              
very close  to the funding  level recommended by  the [Governor's]                                                              
funding task force. The only thing  missing is about a 1.5 percent                                                              
annual increase for  the next five years, also  recommended by the                                                              
task force.                                                                                                                     
CHAIRWOMAN GREEN announced both bills  will be heard on Monday and                                                              
that  next Wednesday,  the  committee  will begin  discussing  the                                                              
State of Alaska's reliance on Medicaid.                                                                                         
SENATOR WILKEN asked if the committee will be discussing the                                                                    
competency exam again.                                                                                                          
CHAIRWOMAN GREEN said it would not.  She then adjourned the                                                                     
meeting at 3:28 p.m.                                                                                                            

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