Legislature(2005 - 2006)HOUSE FINANCE 519
04/26/2005 01:30 PM House FINANCE
| Audio | Topic |
|---|---|
| Start | |
| HB13 | |
| HB53 | |
| HB275 | |
| SB67 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 13 | TELECONFERENCED | |
| += | HB 53 | TELECONFERENCED | |
| + | SB 67 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| = | HB 275 | ||
HOUSE BILL NO. 13
An Act relating to reimbursement of municipal bonds for
school construction; and providing for an effective
date.
Co-Chair Chenault MOVED to ADOPT work draft #24-LS0062\X,
Mischel, 4/26/05, as the version of the bill before the
Committee. There being NO OBJECTION, it was adopted.
REPRESENTATIVE CARL GATTO, SPONSOR, noted that HB 13 was
introduced to "take care of a fast growing community".
Every community in the State has school maintenance and
replacement needs; Mat-Su has needs for school construction
because of the growing student numbers.
HB 13 requests a 70/30 split for those construction costs.
The district would float bonds in hopes of getting approval.
Following a survey, the approval rating for the bonding was
approximately 80%. Since that time, the bill has gotten
"heavier". He stressed that the committee substitute just
adopted incorporates a substantial revision to the original
proposed HB 13. The intent of the original bill was to
build space for children. The bill now includes a major
revision of the funding formula and threatens the substance
of the bill.
Representative Gatto pointed out that a study was added
under the committee substitute. He stressed that SB 36
changed the method of funding from an instructional unit to
use of a formula. Mostly rural school districts suffered
under SB 36. That bill carried a "funding floor" providing
rural schools grant money and an adjustment was made for
those districts.
Representative Gatto challenged the model used for the air-
study. The problem is that study deals with facts, numbers
and observations and cannot be proven right. The study was
flawed. Because of those flaws, the Institute of Social and
Economic Research (ISER) commissioned a second one. The
current version of HB 13 resulted from that study and
propose money be redistributed.
1:53:33 PM
Representative Gatto acknowledged that some districts are
underfunded. HB 13 addresses redistribution of district
funds. He highlighted the districts that would not do well
under HB 13:
· Anchorage school district would loose $24 million
dollars;
· Mat-Su schools district would loose $3 million
dollars, and
· Fairbanks school district would loose $6 million
dollars.
1:55:21 PM
Representative Gatto noted that he spends a lot of time in
the classroom in his district and that he has a strong
association with his school district. He found it
astounding that there are classrooms with 35 students. He
believed that the ISER study would make situations worse.
The Mat-Su district is already very efficient, using 90% of
income for salaries, while other districts give only 65%.
Representative Gatto emphasized his concern that the ISER
study and the proposed legislation not be married as it is
unreasonable and unfair to penalized districts that are
crowded, while sending money to districts that are not. He
believed that crowding is the single most important issue in
the classroom.
1:58:19 PM
Co-Chair Meyer understood that the original bill did have a
70/30 change and that the proposed committee substitute did
include the ISER study. He requested that Co-Chair Chenault
address the changes.
Co-Chair Chenault apologized for "hi jacking" Representative
Gatto's bill. He noted for the record that he understands
the need for the Mat-Su school district and their expanding
population. He referenced the inequities in his own
district and agreed with the inequities resulting from SB
36. He pointed out that his own district suffers huge
concerns with the cut backs that have dramatically affected
the district. He added that his district has a nursing
option only one time per week; there are no kindergarten
aids, and that most of the schools have between 400-500
students. Co-Chair Chenault questioned how the inequity
problems could be fixed statewide.
2:02:17 PM
Co-Chair Chenault agreed that the proposed scenario is not
the right answer and stressed that every study has looked at
cost differentials; they are all are flawed. Everything has
been postponed and the school districts can no longer wait.
2:03:28 PM
Co-Chair Chenault agreed that taking money away from a
school district, forces that district to become more
efficient. Because his district has become so efficient,
they have been penalized. SB 36 is flawed.
2:07:14 PM
Co-Chair Chenault pointed out that the Kenai School District
is composed of both urban and rural schools. The time has
come to fix these problems and HB 13 is the beginning of
that fix. Legislators must come together to determine an
agreement regarding the issues.
2:08:35 PM
Co-Chair Chenault hoped that HB 13 could make it through the
House and Senate and become a vehicle for opening up
discussion on these issues.
2:09:02 PM
Co-Chair Meyer understood that the change made by Co-Chair
Chenault was to Section 3. Co-Chair Chenault said yes.
2:09:17 PM
Co-Chair Chenault acknowledged that the ISER report was
added to the original bill and he thought it would be the
fairest way to make a difference. It would provide a four-
year phase in beginning this year. It would:
· Help the State's budget process,
· Allows districts to determine their costs; and
· Allow time for legislative committees to determine
if the numbers were correct.
Co-Chair Chenault noted support for the original bill,
realizing there are other districts with similar concerns.
He emphasized that these statewide problems must be
addressed.
2:11:03 PM
EDDY JEANS, DIRECTOR, EDUCATION SUPPORT SERVICES, DEPARTMENT
OF EDUCATION AND EARLY DEVELOPMENT, noted that the total
cost of ISER proposed differential would be $82 million
dollars.
2:12:03 PM
Co-Chair Meyer understood that Anchorage would remain the
same for all four years. Mr. Jeans stated that Section 3
would phase in the cost differential recommended by ISER,
over a four-year period. Doing the phase-in, there would be
an annual cost of approximately $20 million dollars.
Anchorage is at zero because it acts as the baseline.
2:12:57 PM
Representative Hawker requested backup for the fiscal impact
to the individual schools districts. Mr. Jeans said it was
not available.
Representative Hawker asked the funding level base for the
$82 million dollars. Mr. Jeans replied it was based on
student allocation, A.S. 4576. Representative Hawker asked
the consequences of increasing that amount. Mr. Jeans
replied it would be approximately $90 million dollars.
2:14:07 PM
Representative Hawker inquired if there would be a hold
harmless for those communities close to the baseline factor
or would there be redistribution. Mr. Jeans stated that if
the cost differentials were implemented, without the fiscal
note being adopted, there would be redistribution based on
the A.S. 4576, prorating the student allocation down to
equal the differentials.
Representative Hawker questioned the cost to the Fairbanks
School district. Mr. Jeans said it would depend if there
were a full implementation or graduated scale.
Representative Hawker asked about the full implementation.
Mr. Jeans did not have that number available. The
redistribution, if held to A.S. 4576 appropriation level,
would have an adverse effect to the Anchorage, Fairbanks,
Mat-Su, Ketchikan and Juneau School Districts.
Representative Hawker stated for the record that he
associated himself with the frustrations recorded by Co-
Chair Chenault, however, proposing an approach as done by
the Chair, troubled him. Solving problems by taking money
from one school district and giving it to another is not a
good model.
2:16:13 PM
Co-Chair Chenault asked if the State continues to bump-up
the student base allocation, what would happen. Mr. Jeans
explained that the proposal would adjust the existing cost
differential by one quarter of the difference. That would
have an annual cost of approximately $20 million dollars.
The $20 million would be in addition to the $70 million
dollars currently being considered under HB 1 at the
discussed level. The total increase to schools in the
current year if both bills passed, would be approximately
$90 million dollars. All school districts would have
increased funding under that scenario.
2:18:02 PM
Co-Chair Chenault asked if school funding was increased next
year by $70 million dollars would all school districts
benefit. Mr. Jeans explained that the manner in which the
bill is currently structured, the adjustment would be built
into the base next year. If the Legislature elected to
increase the base student allocation, that would provide
additional resources to all school districts across the
State.
Co-Chair Meyer pointed out that SB 155 includes the 70/30
program. Mr. Jeans advised that SB 155 is a grant program.
Under the Department's school construction grant program,
there is a participating share. For the larger communities,
their local match is 30%. Similar rules apply, however, the
difference is, under SB 155, the State is providing for the
grant to 70%; under the debt reimbursement program, the
voters would need to approve the project for the bonds
issued.
2:21:32 PM
In response to a query by Representative Kelly, Mr. Jeans
understood that Kenai would experience a small drop.
2:22:42 PM
Representative Joule asked why the original bill language
had been deleted allowing for the Rural Education Attendance
Area (REAA) bonding. Co-Chair Chenault did not know.
Representative Joule voiced his concern with SB 155 and
major maintenance with comparison to HB 13, which allows
districts some construction costs. The contingency language
allows the REAA's to address new school construction. He
said he would address those concerns with an amendment.
2:25:03 PM
Representative Hawker raised concerns regarding the basis of
the numbers. He noted that the Legislative Budget Committee
(LBA) Committee had contracted for the air report. He
pointed out that he was disappointed with the flaws in the
ISER evaluation process. To determine the cost
differentials, ISER made a judgmental determination. The
reason that a teacher would accept a job in certain
locations is #5 on the teacher's lists.
Representative Gatto remembered the study, pointing out that
salaries were not #1. Representative Hawker pointed out
that was one of the driving factors in the ISER study. He
indicated he was troubled with the proposed numbers. He
believed that the closer the decision was to the
Legislature, the better that decision could be, looking for
equivalency to level the playing field.
2:30:35 PM
Representative Croft commented on the process that occurred
with passage of SB 36 seven years ago. He noted that he was
the only legislator from Anchorage or Fairbanks that voted
against SB 36. That bill, the education-funding formula,
was based on false information. The legislation concluded
that it cost no more to put a teacher in rural Alaska than
it does in Anchorage. That was and still is false. There
were other falsehoods in the premise of SB 36. The ISER
study asked the correct questions by asking how to get a
teacher out to the village area. The ISER puts the State
closer to the truth regarding those costs. To pretend that
it does not does cost more to have a teacher in rural Alaska
is not true and does an injustice to many of the students of
the State.
2:33:53 PM
Representative Hawker added that the ISER study based its
conclusions on questions. It was acknowledged in the ISER
report that they did not address whether additional funding
would result in the districts having additional personnel.
2:34:57 PM
Representative Kelly was concerned with what was happening
in Co-Chair Chenault's district but wanted to know that the
legislation would "make sense" regarding cost differentials.
2:37:36 PM
Representative Joule stated that he would have an amendment
regarding the contingent effect of the needed conforming
sections for appropriations in the REAA's.
HB 13 was HELD in Committee for further consideration.
AT EASE: 2:39:22 PM
RECONVENE: 2:43:45 PM
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