HOUSE BILL NO. 278 "An Act increasing the base student allocation used in the formula for state funding of public education; repealing the secondary student competency examination and related requirements; relating to high school course credit earned through assessment; relating to a college and career readiness assessment for secondary students; relating to charter school application appeals and program budgets; relating to residential school applications; increasing the stipend for boarding school students; extending unemployment contributions for the Alaska technical and vocational education program; relating to earning high school credit for completion of vocational education courses offered by institutions receiving technical and vocational education program funding; relating to education tax credits; making conforming amendments; and providing for an effective date." 8:38:59 AM Vice-Chair Neuman MOVED to ADOPT the proposed committee substitute for HB 278, Work Draft 28-GH2716\G, (Mischel, 3/31/14). Co-Chair Stoltze OBJECTED for discussion. DANIEL GEORGE, STAFF, REPRESENTATIVE BILL STOLTZE, discussed the work draft. He stated that version G replaced version N. He provided a sectional analysis. He began with section 1 where the governor's language was reinstated related to an opportunity to challenge for credit. He noted that sections 2, 3, and 4 reinserted provisions of existing statutes related to the high school graduation qualifying exam. 8:41:28 AM Mr. George continued with section 5, page 5, lines 29-30, which created an opportunity for charter school applicants to further appeal within 30 days to the state Board of Education and Early Development. Section 5, page 6, lines 6-8 related to a situation where a local school board that denied an application for a charter school, which was subsequently approved by the state board on appeal could operate the charter school. The section also removed a former subsection stating that the state board would operate a charter school as if the state board were a school district. Mr. George continued with section 6, page 6; lines 18-26 were added regarding charter school application appeals and timelines. He moved to section 7, page 7; lines 3-5 were amended to clarify that if the school district required lease payments by a charter school the district would negotiate a lease agreement with the charter school for an amount that did not exceed the true operational costs calculated. 8:42:42 AM Mr. George discussed section 8, page 7, where lines 12-14 were added to specify that a local school board shall provide a charter school with a report itemizing administrate costs retained by the local school board. Section 11, page 8, line 23 through page 9, line 7 inserted a new duty for the Board of Education and Early Development to report to the legislature recommendations for changes in the method of education spending by the state and school districts that resulted in improved efficiencies and in administration of public education in the state. He noted the removal of three sections: a section relating to school bond reimbursement program, a section relating to boarding school stipends and a section relating to student counts for charter schools. Co-Chair Stoltze added "it keeps them in without the increase." Mr. George continued with section 15; lines 21-27 were added relating to the public education fund and appropriations for the Teachers Retirement System (TRS). He continued with section 16, page 11, line 28 through page 14, line 3, which was inserted and related to unfunded liability and the teachers retirement cost adjustment. He noted page 14, line 1 included a change in the required local contribution from 45 percent to 40 percent of a district's basic need. Section 17, page 14, line 4-19 amended the school size table for purposes of calculating a schools Average Daily Membership (ADM) to determine state aide. Mr. George continued with sections 18, 19 and 20 on page 14; lines 20-28 were amended to reflect an increase in the Base Student Allocation (BSA) by $100 in addition to that of the governor's plan in the first year. Section 21, page 14, line 29 through page 15, line 15 was inserted relating to state aid to school districts and withholding for purpose of deposit into the teachers retirement trust fund. Sections 22, 23 and 24 on page 15, line 13 though page 16, line 16 were inserted relating to altering teacher tenure from 3 years to 5 years and subjecting tenure to review, and regarding loss of tenure rights. 8:45:51 AM Mr. George continued with sections 25, 26 and 27 on page 16 line 17 through page 17; line 19, which was inserted relating to pension benefits and employer contribution rates, transmitting funds for deposit in a teacher retirement trust fund and additional state contributions and the teacher's pension reserve fund. Section 28, page 17, lines-22 and 27 and page 18 were amended to reflect a three-year reauthorization of the Alaska Technical Vocational Education Program (TVEP) program and the allocations of TVEP funding present in existing statute. Section 30 was removed from the bill including subsection (h) relating to a 20 percent withholding penalty for failure to comply with new TVEP requirements. Mr. George continued with section 32; the option for a municipality to adopt by ordinance a partial or whole tax exemption for all or a portion of privately owned real property, rented or leased for use as a charter school was added. Sections 33, 34 and 35 relating to the establishment, trusteeship and management of the teachers' pension reserve fund and the duties of the Alaska Retirement Management Board were inserted. He stated that sections 36 through 46 related to the income tax education credit, mining business education credit, fisheries business education credit and fisheries resource landing tax education credit. Three changes were made to the tax credits, two of which were permanent and one of which would sunset in 2021 along with other tax credits. 8:48:19 AM Mr. George pointed out that section 48; page 33, line 25 relating to transfer or absorption of a federal agency school and teachers was repealed. Section 50 was removed; it included transition language related to the appeal of the high school graduation qualifying exam. Applicability language related to teacher tenure provisions in sections 22-24 was added. Section 51 addressed the effective date of transition language related to charter school applications filed with the local school board; it was amended from September to July 1, 2014. Section 53 directed the Department of Administration to present to the legislature a written proposal to implement a salary and benefits schedule for school districts. Sections 54 through 59 reflected the effective dates of various provisions of the act; notably the effective date of the act was changed from September to July 1, 2014. 8:49:53 AM Co-Chair Stoltze WITHDREW his OBJECTION. There being NO OBJECTION, it was so ordered. Version G was ADOPTED. He stated his intent for invited testimony related to some of the legislation's key provisions. He invited a vigorous amendment process. Representative Munoz asked if the administration would testify about the retirement portion of the CS. Co-Chair Stoltze replied in the affirmative. Representative Munoz requested invited testimony from the university. 8:51:22 AM Representative Gara asked if he could pose technical questions related to the bill's provisions. Co-Chair Stoltze denied Representative Gara's request. 8:51:47 AM Vice-Chair Neuman requested a written list of the changes made in the CS. Co-Chair Stoltze agreed. 8:52:07 AM AT EASE 8:52:18 AM RECONVENED Co-Chair Stoltze noted the deadline for amendments of 5:00 pm. 8:53:00 AM AT EASE 9:14:07 AM RECONVENED