Legislature(2007 - 2008)HOUSE FINANCE 519
02/20/2007 01:30 PM House FINANCE
| Audio | Topic |
|---|---|
| Start | |
| HB120 | |
| HB1 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 1 | TELECONFERENCED | |
| += | HB 120 | TELECONFERENCED | |
| + | TELECONFERENCED |
HOUSE 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.
REPRESENTATIVE CARL GATTO, SPONSOR, explained that the bill,
which in the current form, increases the base student
allocation (BSA) by $1 to $5381 dollars. The version is not
meant to represent the total increase needed, but rather,
providing a number to serve as a placeholder for
deliberation.
1:59:56 PM
Representative Gatto continued, including the Teachers
Retirement System (TRS) shortfall in the formula allows
local districts to increase their portion of education
funding by placing TRS in the formula and funding at least
70% of education money, then placing funds to the classroom
becomes more difficult. Either way, there will be
repercussions.
2:01:09 PM
Representative Hawker discussed whether to place retirement
contributions into or out of the formula. If retirement
contributions were placed inside the formula, funds will not
be allocated in the same proportion as the existing
liabilities.
2:02:47 PM
EDDY JEANS, DIRECTOR, EDUCATION SUPPORT SERVICES, DEPARTMENT
OF EDUCATION AND EARLY DEVELOPMENT, highlighted the
Department's fiscal notes and offered to answer questions of
the Committee.
2:04:17 PM
JAMIE STACKS, (TESTIFIED VIA TELECONFERENCE), PRIBILOF
SCHOOL DISTRICT, stressed that the small-rural school
districts need the Public Employees Retirement System (PERS)
and TRS to be funded outside of the base student allocation
(BSA). She requested that the BSA be increased a minimum of
$600 per student. A cost differential of 50% indicated in
the Institute of Social and Economic Research (ISER) study
would also be of benefit to small, rural districts. That
funding would add no new staff or programs, maintaining the
status quo.
Representative Gara understood that the amount proposed by
Ms. Stacks would provide only 50% of the ISER study amounts
and that the PERS/TRS would be outside of that, leaving the
district at a "hold-even" point. Ms. Stacks replied
correct.
2:07:04 PM
JOE BANGHART, (TESTIFIED VIA TELECONFERENCE),
SUPERINTENDENT, IDITAROD AREA SCHOOL DISTRICT, MCGRATH,
echoed sentiments of Ms. Stacks. He added that the Iditarod
School District opposes rolling the unfunded liability of
the PERS/TRS into the foundation formula. The impact of not
receiving the increase and freezing the BSA at the present
level would have a dangerous economic result. Lack of
increased funding is of great concern. During the FY05/06
calendar year, the average fuel increase was 40% and is
expected to continue up. It will affect all the communities
because there will also be higher fuel costs for the pupil
transportation & for heating facilities. He pointed out
that some families are moving from these areas because of
the economy, but the buildings still must be maintained.
The increase this year is estimated to be a 20% increase.
Mr. Banghart explained that viable intervention programs
also increase the school districts budgets. He stated he
could demonstrate that what the districts are doing is
actually helping their children through those interventions.
Some of these kids have demonstrated over a 30 point average
increase. To maintain that level of student growth and
extra classes, video conferencing has become essential.
Mr. Banghart recommended basic support for the teachers.
The current starting teacher salary in their district is $36
thousand dollars per year, which is embarrassing to offer a
contract to someone when they could be getting a starting
salary of $42 thousand dollars a year in the lower 48
states. The district must have at least $500 dollars added
to the basic BSA in order to maintain current programs.
2:13:01 PM
SUE HULL, (TESTIFIED VIA TELECONFERENCE), FAIRBANKS NORTH
STAR BOROUGH SCHOOL BOARD, FAIRBANKS, hoped to be able to
eliminate the school district's current "cut-list" and be
able to prepare children for the work that they will need to
enter employment and college after school. In order to do
that, technology areas must be expanded, career tech preps
and drop-out prevention reform for the middle and high
schools. She pointed out that Alaska schools need the
opportunity to confront the challenges that are currently
present; to do that, Ms. Hull urged that the dollar amount
significantly be raised on the BSA and fund the PERS/TRS
outside the formula.
2:15:31 PM
MARGO WARNING, JUNEAU SCHOOL BOARD, JUNEAU, commented on the
concerns of the Juneau School District, resulting from low
funding over the past few years. Most of the funds have
gone into the retirement system, increased fuel costs and
special education programs. She emphasized the importance
of funding the retirement system outside the formula. The
main priority for the Juneau District is increasing the BSA
with combined full-funding of the area cost differential.
Since SB 36 was enacted, every dollar has been reduced,
imposing vast restrictions on Juneau's ability to provide
quality education for students. Ms. Warning urged full
funding.
2:18:09 PM
BILL BJORK, PRESIDENT NEA-ALASKA, JUNEAU, noted he
represents 13,000 members statewide. Mr. Bjork pleaded for
a substantial increase to the BSA. The National Education
th
Association (NEA) is confident that the 25 Legislature does
have the necessary resources to address such concerns. He
reviewed the numbers:
· 130,000 students in Alaska's K-12 schools
· The current BSA is $5380
· Inflation rate is 3%, so to stay even with inflation,
it will take about $29 million dollars per year
· Alaska is about $600 million dollars behind in funding
schools
· He proposed funding the deficit over a period of seven
years
Mr. Bjork urged that the PERS/TRS be funded outside the BSA.
He mentioned concerns with pupil transportation,
particularly in the urban districts & area cost
differentials. He urged that legislators re-examine the way
Alaskan schools are funded in order that the students can be
prepared to meet the standards set forth through regulation.
Co-Chair Meyer asked if the PERS/TRS was funded out side of
the formula, would NEA still propose the $115 million dollar
increment. Mr. Bjork said yes and added that the dilemma of
funding it from inside the BSA mean the dollars do not
necessarily go where the costs are incurred. He stated that
the $573 dollar increase on the BSA would be a "help" in
closing that funding gap.
Vice Chair Stoltze commented on the many requests his office
receives to repeal SB 141, which creates the new retirement
system. He inquired the biggest issue for NEA members. Mr.
Bjork replied that school funding is the biggest issue as
that determines whether a child has the opportunity to
learn. The PERS/TRS concern is another big concern. He
noted that they do not support the defined contribution
system, which is not in the best interest for the State of
Alaska or the members of NEA.
Co-Chair Meyer clarified that SB 141 was the change from the
defined benefit program to the defined contribution program.
Vice Chair Stoltze advised that the retirement issue is the
number one concern brought forward by teachers.
2:26:46 PM
Representative Hawker mentioned exploring the TRS concern
separate from the BSA, which he supports. He claimed it is
the only solution for the situation, noting the consequence
of the 5% increase each year. Teacher's contributions this
year are approximately 54%, consisting of two components:
· "Past sins" problem, and
· The cost of those now in the system to make a normal
retirement.
Representative Hawker advised that 40%+ relates to paying
off the past service liability. He noted the increase to
the BSA over the past couple legislative sessions. A large
portion of that increase was necessary from the increased
contributions to the retirement system, driven by past
service liability.
2:30:31 PM
Representative Hawker commented that if the State embarked
on a path of taking full responsibility for funding the
PERS/TRS outside the BSA that would place more funds in the
classrooms. Mr. Bjork noted that regarding the TRS/PERS
shortfall, his comments had been directed toward the FY07/08
portion and was not looking at the entire increase. Mr.
Bjork acknowledged that it could free-up funding for
instruction.
Representative Hawker believed it should reduce the base
student allocation, assuming that all past service liability
had been addressed.
Representative Hawker added, it is important to address how
the money would flow to do the work. He hoped to see a
reduction to the BSA, improving the school district
position. Mr. Bjork agreed that every aspect of school
funding should be on the table and discussed. Co-Chair
Meyer agreed.
2:33:44 PM
Representative Gara voiced concerned just increasing the
base student allocation rather than compensating for pupil
transportation costs. He recommended possibly returning to
a full reimbursement system. He asked how the school
districts fare given the new system for student
transportation costs. Mr. Bjork replied that the impact to
pupil transportation has been in the urban school areas
because of the extensive bus transportation patterns and
that the impact has been substantial.
Co-Chair Meyer requested that Representative Gara not move
toward a separate area of discussion, rather keeping the
discussion on the foundation formula. Representative Gara
stated that he was discussing "education" funding.
2:36:36 PM
Representative Gara hoped to see a budget, which could
reduce class sizes & return cut programs. He asked if the
$573 dollar BSA proposal would leave schools at a status
quo. Mr. Bjork stated that the $573 dollar number was
determined by adding 3% inflation to the current level and
then looking at adequacy in school funding. The State is
now approximately $600 million dollars behind from the last
two decades. He proposed that amount be addressed over
th
seven years; 1/7 would be approximately $86 million
dollars. The $29 million dollars allows a status quo
budget.
2:38:41 PM
MARY FRANCIS, EXECUTIVE DIRECTOR, ALASKA COUNCIL OF SCHOOL
ADMINISTRATORS, (ACSA), spoke in support of an increase to
the BSA. She addressed termination concerns resulting from
flat funding. School districts have been preparing multiple
budgets because they do not know what the funding will be
until very late in the school year. She observed that
school programs are being eliminated due to a lack of
funding.
The Association supports area cost adjustments as proposed
by the ISER study. Ms. Francis emphasized that PERS, TRS
and fuel costs have eaten away at classroom dollars. The
Association has not taken a stand on a specific BSA amount,
but supports numbers proposed by the [Senate].
MARY HAKALA, COORDINATOR, GREAT ALASKA SCHOOLS, JUNEAU,
spoke in support of additional school funding. She pointed
out that the Great Alaska Schools is made up of many people
statewide. She stressed that equity in the cost
differential is needed. There has been a growing gap in the
minimum required local effort. Inflation and pupil
transportation have also been a factor. There will be a
$200 million dollar deficient with the Governor's proposal;
$500 thousand will be used for pupil transportation. Ms.
Hakala spoke to the cap and stressed the need for solutions
to infuse money into the classroom.
2:48:58 PM
In response to a question by Representative Thomas, Ms.
Hakala spoke to the change in statute altering the minimum
required local contributions, varying from community to
community. She observed that Juneau is at the cap of the
maximum allowed to contribute; there are very few schools
contributing at that cap. There is also a minimum local
contribution, which she recommended be discussed. Ms.
Hakala acknowledged that different communities have various
purchasing power & that equity should be attempted.
2:51:53 PM
CARL ROSE, EXECUTIVE DIRECTOR, ASSOCIATION OF ALASKA SCHOOL
BOARDS, presented members with a list of six issues, which
the Association believes are the big "rock" issues.
· BSA increase to $5,810
· District cost factor, increasing it to the levels
recommended by the 2005 ISER Report
· Retirement costs
· Vocational Education - recognizing the importance of a
dependable funding stream for Voc-Ed outside the 20%
block grant for special education
· Intensive Need Students, addressing the problems caused
by inadequate formula funding, post-enrollment
transfers and conflicting state regulations defining
intensive needs
· Early or forward funding - appropriating foundation
thth
funds & PERS/TRS costs by March 16 (60 day) or
setting aside sufficient funds in FY08 to forward fund
FY09 education budget
2:58:35 PM
In response to a question by Representative Foster, Mr. Rose
noted that in 1986, a Blue Ribbon Commission addressed the
over identification of special education. The
recommendation was for 18.5%, later increased to 20%.
Representative Foster mentioned the lack of vocational
education programs in his area. Mr. Rose agreed.
3:00:38 PM
PEGGY COWAN, SUPERINTENDENT OF SCHOOLS, JUNEAU BOROUGH
SCHOOLS, CITY & BOROUGH OF JUNEAU, discussed the increase in
school funding. She observed that class sizes have
decreased and there has been a lack of books and other
necessary support aids. She provided members with a handout
of the school's legislative priorities; she noted that PERS
and TRS had not been included in the calculations. (Copy on
File).
Superintendent Cowan urged full funding for district cost
factors and that communities want additional funding to
close the achievement gap, workforce development and reduced
class sizes.
3:03:43 PM
Representative Gara inquired about the Juneau class size.
Ms. Cowan responded that at the primary school level, class
size averages 22 students, grades 3-5 averages 25, middle
school at about 31 and high school average is in the low
30's. She pointed out that progress had been made in class
size over the past two years. The Board had prioritized
that issue. The funding formula is different than the
actual class size.
3:05:34 PM
Representative Joule referred to the high statewide drop out
rate. He asked if those students are counted back in when
they return. Ms. Cowan stated that the school districts
would "embrace" any student back in and acknowledged that
they would generate additional funds, offset by the need for
additional teachers. She observed that students tend to
drop out as the school year progresses; some are lost during
the summer and then again early in the first semester.
3:08:59 PM
In response to a question by Co-Chair Meyer regarding Alaska
History, Mr. Jeans noted that the School Board had adopted a
mandatory requirement for that course at the high school
level.
3:09:30 PM
Representative Thomas reiterated questions regarding the
local contribution cap. Mr. Jeans explained that the
effects of SB 174 passed in 2001, requires that as property
values of each community increase, the Department of
Education and Early Development is only allowed to count 50%
of that growth, which is not the full value as counted by
the State assessor. The cap is 4 mills. The amount varies
from 4 mills in many small, first class cities. In areas
that are growing, only a portion of their increased property
value is counted and they are required to contribute
something less. The extreme would be the Mat-SU Borough,
which is required to collect a 2.8 mill levy to support
education.
Representative Bill Thomas asked was the State assessment or
the Senate bill adjustment required.
3:12:47 PM
In response Mr. Jeans explained that the cap is 4 mills but
the difference is in the calculated educational value.
Prior to 2001, the full value was accounted, but now only
the educational full value is calculated.
3:13:50 PM
Representative Gara questioned how much was being lost in
pupil transportation. Mr. Jeans offered to provide that
information, noting that statewide, expenses are exceeding
the grant amount by a little over $2 million dollars.
3:14:49 PM
Representative Gara observed that under the current system,
some school districts get more for their student
transportation needs than needed & some receive less than
their actual expenses. Mr. Jeans replied that was a fair
assumption.
Representative Gara thought that the Railbelt districts will
not do well under the new contracts & would receive less
than their expense. Mr. Jeans explained that the Railbelt
districts being Anchorage, Fairbanks, & Kenai, all entered
into the new contracts that took affect this year and have
made money under the new program for the last three years,
but will have to go into reserves for this current year.
Some of those districts have reserves, but others have
transferred savings into operations. He did not know the
estimated amount for the current year.
3:17:00 PM
In response to Representative Nelson, Mr. Jeans explained
that pupil funding is outside of the foundation program and
that the affects of SB 174 were within the foundation
formula.
HB 1 was HELD in Committee for further consideration.
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