Legislature(2025 - 2026)ADAMS 519

02/20/2025 01:30 PM House FINANCE

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01:35:26 PM Start
01:37:15 PM HB69 HOUSE BILL NO. 69
02:26:17 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ HB 69 EDUCATION FUNDING: INCREASE BSA TELECONFERENCED
Moved HB 69 Out of Committee
+ Presentation: Education Funding by Alexei TELECONFERENCED
Painter, Director, Legislative Finance Division
+ Bills Previously Heard/Scheduled TELECONFERENCED
HOUSE BILL NO. 69                                                                                                             
                                                                                                                                
     "An Act relating to education funding; and providing                                                                       
     for an effective date."                                                                                                    
                                                                                                                                
1:37:15 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  REBECCA HIMSCHOOT,  SPONSOR, introduced  the                                                                    
PowerPoint  presentation  "HB  69 Base  Student  Allocation"                                                                    
dated February 20, 2025 (copy on file).                                                                                         
                                                                                                                                
Co-Chair  Foster  noted   that  Representative  Andi  Story,                                                                    
Representative  Justin Ruffridge,  and Representative  Julie                                                                    
Coulombe were in the audience.                                                                                                  
                                                                                                                                
Representative Himschoot continued on  slide 2 and explained                                                                    
that HB  69 addressed  two objectives: to  restore education                                                                    
funding  to the  level in  2011 and  to inflation-proof  the                                                                    
funding.  She  stated  that the  bill  began  by  inflation-                                                                    
proofing the  current base  student allocation  (BSA), which                                                                    
was the  starting point for  the education  funding formula.                                                                    
She explained that  the bill then added  $1,000, followed by                                                                    
an additional  inflation-proofing in FY  27 and  an increase                                                                    
of $404. In FY 28,  the bill continued to inflation-proof by                                                                    
adding another $404, followed by continued inflation-                                                                           
proofing each year thereafter without further additions.                                                                        
                                                                                                                                
Representative Himschoot stated that  the targeted amount of                                                                    
$1,808 aimed to  restore the purchasing power of  the BSA to                                                                    
its 2011  level. She  noted that  2011 represented  the last                                                                    
year  in which  districts were  able to  achieve "the  most"                                                                    
with the funding that had  been invested. She explained that                                                                    
the presentation  would cover how  schools had  changed, the                                                                    
barriers  presented  by  the   current  funding  level,  the                                                                    
effects  of  underfunding,   what  inflation-proofing  would                                                                    
achieve,  and a  reminder of  the constitutional  obligation                                                                    
related to education.                                                                                                           
                                                                                                                                
Representative  Himschoot added  that she  had worked  as an                                                                    
educator  for  approximately 30  years  in  both formal  and                                                                    
informal settings. She had met  with at least 1,000 families                                                                    
and often  encountered families who were  not fully prepared                                                                    
for  the  demands  of parenting,  whether  due  to  personal                                                                    
struggles,  the  need  to  work   multiple  jobs,  or  other                                                                    
factors. However,  she emphasized that  she had never  met a                                                                    
family that  did not  love their  children. She  stated that                                                                    
the  same   principle  applied  to  those   working  in  the                                                                    
legislature,  as she  believed that  everyone was  trying to                                                                    
achieve the best outcomes for Alaska's children.                                                                                
                                                                                                                                
1:40:09 PM                                                                                                                    
                                                                                                                                
Co-Chair Foster  noted that  Representative Dan  Saddler was                                                                    
also in the audience.                                                                                                           
                                                                                                                                
Representative Himschoot continued to  slide 3 and explained                                                                    
that  it illustrated  the mistaken  assumption that  schools                                                                    
had not changed from 1940 to  2025. She stated that the year                                                                    
1940  had  been  selected  at random,  as  the  presentation                                                                    
sought to compare schools from  approximately 100 years ago.                                                                    
She  noted  that  although   classrooms  looked  similar  in                                                                    
structure,  one fundamental  element  had  not changed:  the                                                                    
relationship  between teacher  and  student. She  emphasized                                                                    
that the  relationship remained the most  significant factor                                                                    
in  student  learning,  apart  from  the  influence  of  the                                                                    
student's family.                                                                                                               
                                                                                                                                
Representative  Himschoot continued  to slide  4 and  stated                                                                    
that  while  that  core  relationship  between  student  and                                                                    
teacher had not  changed between 1940 and 2025,  it would be                                                                    
naïve  to assume  that schools  had remained  the same.  She                                                                    
explained   that   modern   schools   featured   significant                                                                    
technological  resources  that  prepared  students  for  the                                                                    
future. She  noted that the  presence of fine  arts programs                                                                    
engaged   even  reluctant   learners   and  enhanced   brain                                                                    
development  through  creative expression.  Modern  students                                                                    
also participated  in science, technology,  engineering, and                                                                    
math  (STEM)  programming  that  prepared  them  for  future                                                                    
opportunities. Modern classrooms  included students speaking                                                                    
world languages, including  heritage languages, and students                                                                    
learning  languages as  part of  their  core education.  She                                                                    
emphasized  that   career  and  technical   education  (CTE)                                                                    
programs did not exist 100  years ago. The programs included                                                                    
16 different  pathways, ranging  from medical  licensing and                                                                    
culinary arts to welding and  small engine repair. She noted                                                                    
that  all  of  the  programs  cost  money  to  operate.  She                                                                    
cautioned   against  underestimating   the  value   of  what                                                                    
occurred in classrooms or the  cost of providing educational                                                                    
opportunities.                                                                                                                  
                                                                                                                                
Co-Chair Foster recognized  that Representative Bryce Edgmon                                                                    
had joined the audience and thanked him for attending.                                                                          
                                                                                                                                
Representative  Himschoot proceeded  to slide  5 and  stated                                                                    
that  it illustrated  the funding  problem currently  facing                                                                    
schools. She referred to the  far-right column of the chart,                                                                    
which  showed  that inflation  had  increased  by nearly  40                                                                    
percent  between 2011  and the  present  day. She  explained                                                                    
that the adjacent  column displayed the increase  to the BSA                                                                    
over  the same  time  period,  which had  been  less than  7                                                                    
percent. She stated  that the total increase  in dollars had                                                                    
been $380.                                                                                                                      
                                                                                                                                
1:43:32 PM                                                                                                                    
                                                                                                                                
Representative Himschoot  continued to  slide 6  and relayed                                                                    
that  the figures  referred to  funding within  the BSA  and                                                                    
that that there  was a difference between  BSA increases and                                                                    
one-time funding.  She explained  that one-time  funding did                                                                    
not reach  the classrooms  directly. School  districts often                                                                    
did not  receive finalized budget information  until the end                                                                    
of June,  sometimes within  a week of  the new  fiscal year.                                                                    
She stated that the timing  made it difficult for schools to                                                                    
determine  how  many teachers  could  be  employed or  which                                                                    
programs could be  maintained. She described the  delay as a                                                                    
failure in the state's funding policy.                                                                                          
                                                                                                                                
Representative Himschoot  stated that school  districts were                                                                    
in  a difficult  position. Every  district was  grateful for                                                                    
one-time funding  and would use  it appropriately,  but some                                                                    
districts might have  to refill fund balances  that had been                                                                    
drained  to  retain  educators  or  to  purchase  new  phone                                                                    
systems  or  curriculum  materials.  She  stated  that  such                                                                    
funding could  not be used  to negotiate contracts.  She had                                                                    
attended budget  subcommittees and  she often  asked whether                                                                    
agencies  had negotiated  with their  bargaining units.  She                                                                    
shared that  the typical  response was  that there  had been                                                                    
negotiations,  and that  the  agreements typically  included                                                                    
salary increases around 2.5 percent  or 3 percent. She noted                                                                    
that the increases were then  funded by the legislature. She                                                                    
explained that  school districts, on the  other hand, funded                                                                    
similar  salary increases  for  educators  through the  BSA,                                                                    
which  was  the  money  that  districts  received  from  the                                                                    
legislature. She  emphasized that  school districts  did not                                                                    
have the ability to raise revenue independently.                                                                                
                                                                                                                                
Co-Chair  Foster  acknowledged that  Representative  Jubilee                                                                    
Underwood  had  joined  the audience  and  thanked  her  for                                                                    
attending.                                                                                                                      
                                                                                                                                
Representative  Bynum remarked  that he  had heard  repeated                                                                    
comments over the past several  weeks about one-time funding                                                                    
not going into the classroom.  He stated that his experience                                                                    
had been different.  When funding was not  increased or when                                                                    
one-time  funding   had  not   yet  been   approved,  school                                                                    
districts  would often  issue  pink slips  for teachers  and                                                                    
announce  plans   to  lay  off  staff.   He  explained  that                                                                    
districts  would also  propose  eliminating music  programs,                                                                    
sports  programs, and  CTE  programs.  Once the  legislature                                                                    
approved  one-time   funding,  the  districts   would  often                                                                    
retract  the pink  slips  and, in  some  cases, restore  the                                                                    
programs. He asserted  that the programs and  staff cuts had                                                                    
directly impacted  classrooms, which he had  observed in his                                                                    
own district. He asked  whether Representative Himschoot had                                                                    
reviewed  practices  across  multiple districts  or  if  the                                                                    
issue she described was unique to a particular district.                                                                        
                                                                                                                                
Representative  Himschoot  responded  that  it  was  a  good                                                                    
question and  that there was  a difference between  what was                                                                    
cut and  what was kept.  She stated that when  districts had                                                                    
nothing left to cut,  they eventually began cutting programs                                                                    
in the  classroom. She assumed that  all districts initially                                                                    
sought to cut  programs outside the classroom  and would try                                                                    
to  continue   using  outdated  textbooks  and   make  other                                                                    
sacrifices. She stated that some  districts might attempt to                                                                    
lower  the   temperature  in  classrooms  to   save  energy,                                                                    
although there was a statute  that required classrooms to be                                                                    
kept  at   certain  temperatures.  After   eliminating  non-                                                                    
essential expenses,  districts then began  cutting essential                                                                    
programs   and,   in   some  cases,   begun   cutting   core                                                                    
instructional  services. She  referenced slide  6 and  noted                                                                    
that  there were  years when  no one-time  funding had  been                                                                    
allocated.  She   explained  that   in  2021  and   2022,  a                                                                    
significant  amount  of  COVID-19-related funding  had  been                                                                    
distributed  and the  legislature  had used  the funding  to                                                                    
stabilize  its  own  budget without  fully  considering  the                                                                    
effect on school  districts. The districts had  been able to                                                                    
weather  the situation  temporarily, but  the impact  of the                                                                    
lack of support was now being felt.                                                                                             
                                                                                                                                
1:48:03 PM                                                                                                                    
                                                                                                                                
Representative   Bynum  stated   that  in   his  experience,                                                                    
districts  negotiated contracts  such  as  rates for  health                                                                    
insurance independently of whether  revenue had been secured                                                                    
through  the state,  federal grants,  or  other sources.  He                                                                    
understood  that hiring  decisions were  often made  without                                                                    
regard to  available funding.  After the  COVID-19 pandemic,                                                                    
schools in  Ketchikan had faced tremendous  pressure because                                                                    
contracts had  been established without  guaranteed revenue.                                                                    
He asked if there had  been seen similar situations in other                                                                    
districts around the state.                                                                                                     
                                                                                                                                
Representative   Himschoot  responded   that  Representative                                                                    
Bynum had described  the problem she was  trying to address.                                                                    
She stated that districts had  to make commitments and could                                                                    
not simply eliminate an entire  grade level, particularly in                                                                    
rural  areas. She  remarked  that a  district  either had  a                                                                    
third grade or it did not,  and those decisions could not be                                                                    
made after contract  negotiations in July. By  that time, it                                                                    
would  be difficult  or impossible  to hire  a teacher.  She                                                                    
explained that the process had  been painful during her time                                                                    
on the bargaining team in  her district. Any increase to her                                                                    
own compensation meant  a cut somewhere else  in the budget.                                                                    
She thought that most school  boards wanted to pay educators                                                                    
more but  felt they could  not do so under  uncertain budget                                                                    
conditions.  She  stated  that   even  with  the  inflation-                                                                    
proofing proposal  she had introduced  in the  bill, budgets                                                                    
would  remain limited.  However,  districts  would at  least                                                                    
know in  advance what the funding  would be, even if  it was                                                                    
not as much as was desired.                                                                                                     
                                                                                                                                
1:50:01 PM                                                                                                                    
                                                                                                                                
Representative   Himschoot  continued   on  slide   7  which                                                                    
detailed  the impacts  of flat  funding and  the uncertainty                                                                    
caused by  unpredictable budgeting. She began  by describing                                                                    
the impacts on urban districts and used the Matanuska-                                                                          
Susitna Valley  (Mat-Su) as an  example. She  explained that                                                                    
in Mat-Su,  the cost of  insurance since 2011  had increased                                                                    
by  more   than  100   percent,  transportation   costs  had                                                                    
increased  by more  than 60  percent, and  energy costs  had                                                                    
increased by more  than 50 percent. The  increases varied by                                                                    
district.                                                                                                                       
                                                                                                                                
Representative Himschoot  continued to slide 8  and detailed                                                                    
the impacts  in a rural  district like Sitka.  She explained                                                                    
that  insurance  costs  in  Sitka had  risen  by  nearly  80                                                                    
percent, transportation  costs by more than  90 percent, and                                                                    
energy costs  by more than  1,000 percent. She  continued to                                                                    
slide 9  and relayed that  in very remote districts  such as                                                                    
Bering Strait, the cost trends differed again.                                                                                  
                                                                                                                                
Representative   Himschoot  stated   that  the   differences                                                                    
illustrated  why  the  BSA  was an  effective  way  to  fund                                                                    
schools. She explained that it  provided local school boards                                                                    
the   flexibility   to   meet  needs   specific   to   their                                                                    
communities. Although  she had discussed fixed  costs, local                                                                    
boards  could  also  make programmatic  decisions  based  on                                                                    
their priorities.  For example, if 1,000  immigrants arrived                                                                    
in  Mat-Su,  the  local   board  might  allocate  additional                                                                    
funding  to support  English language  learners. In  her own                                                                    
district of Sitka, community  stakeholders participated in a                                                                    
decision-making process during a  period of limited funding.                                                                    
The locally  elected school  board and  stakeholders decided                                                                    
to  increase class  sizes in  two grade  levels in  order to                                                                    
afford  counselors   in  all  five  school   buildings.  She                                                                    
emphasized  that  while  some  expenses  could  be  adjusted                                                                    
locally, fixed costs  were outside of local  control and the                                                                    
costs applied regardless of student enrollment.                                                                                 
                                                                                                                                
Representative  Allard asked  if there  was a  slide on  the                                                                    
Anchorage School District (ASD).                                                                                                
                                                                                                                                
Representative Himschoot responded in the negative.                                                                             
                                                                                                                                
Representative  Allard  stated  that  ASD  was  the  largest                                                                    
school  district  in  the  state, and  she  thought  it  was                                                                    
important to include  it in the presentation.  She asked how                                                                    
an increase to the BSA could  be justified when ASD had lost                                                                    
3,000 students,  but its budget  had increased to  nearly $1                                                                    
billion.   She   noted   that  districts   could   generally                                                                    
anticipate  future funding  based on  past allocations,  yet                                                                    
Anchorage's budget had continued to increase.                                                                                   
                                                                                                                                
Representative   Himschoot  responded   that  she   had  not                                                                    
included a  slide for  Anchorage because  she had  chosen to                                                                    
illustrate one  urban, one rural,  and one  remote district.                                                                    
She acknowledged that she had  selected her home district as                                                                    
one  of the  examples.  Although  districts generally  could                                                                    
predict  a  minimum  level   of  funding,  school  budgeting                                                                    
differed from family or state  budgeting. She explained that                                                                    
school  districts sought  to  invest  all available  funding                                                                    
into the  classroom and into  the education of  children. If                                                                    
the  minimum   funding  amount  was  insufficient   to  meet                                                                    
increasing  fixed costs,  districts would  be forced  to cut                                                                    
program offerings  unless there was  an increase in  the BSA                                                                    
or an infusion of one-time funding.                                                                                             
                                                                                                                                
Representative  Allard  asked  if  Representative  Himschoot                                                                    
believed that  65 or 70 percent  of the income from  the BSA                                                                    
should be directed into the classroom.                                                                                          
                                                                                                                                
Representative Himschoot replied  that Alaska previously had                                                                    
such a statute  on the books, and she had  studied the issue                                                                    
but did not have the  information with her. She relayed that                                                                    
the  statute was  repealed  for  several reasons,  including                                                                    
that districts were  generally unable to meet  the demand of                                                                    
the 70 percent  to 30 percent threshold. She  added that the                                                                    
requirement   had  resulted   in  concerns   about  creative                                                                    
budgeting to meet the standard  rather than allocating funds                                                                    
based on actual need.                                                                                                           
                                                                                                                                
Representative   Allard   understood   that   Representative                                                                    
Himschoot had  served on the  State Board of  Education when                                                                    
the statute was repealed,  and that Representative Himschoot                                                                    
did  not agree  with  the statute.  She  stated that  school                                                                    
districts previously  had the ability to  apply for waivers.                                                                    
She asserted  that accountability was lost  when the statute                                                                    
was repealed  and stated  that Representative  Himschoot had                                                                    
led the effort as a member of the board.                                                                                        
                                                                                                                                
Representative Himschoot  confirmed that  she had  served on                                                                    
the  board at  the time.  She explained  that the  board had                                                                    
accepted   the  recommendation   from   the  Department   of                                                                    
Education  and Early  Development  (DEED) and  that she  had                                                                    
been one of five voting members on a seven-member board.                                                                        
                                                                                                                                
1:55:11 PM                                                                                                                    
                                                                                                                                
Representative  Himschoot   continued  on  slide   10  which                                                                    
detailed the impact  of school funding failing  to keep pace                                                                    
with  inflation. She  described the  current situation  as a                                                                    
crisis  that was  both real  and immediate.  She noted  that                                                                    
many individuals in  the room had family  members or schools                                                                    
directly  impacted by  a loss  of  funding. In  the face  of                                                                    
inflation,   flat  funding   constituted   a  reduction   in                                                                    
purchasing power.                                                                                                               
                                                                                                                                
Representative  Galvin  recalled  that the  primary  concern                                                                    
when the  70 percent to  30 percent funding  requirement was                                                                    
repealed was  that rural districts were  struggling with the                                                                    
escalating costs  of transporting energy and  diesel fuel to                                                                    
school buildings.  She noted that  many rural  districts had                                                                    
required  waivers  and that  the  board  had determined  the                                                                    
statute was  unworkable under  the circumstances.  She added                                                                    
that  the   issue  had  been  less   pronounced  for  larger                                                                    
districts such as Anchorage.                                                                                                    
                                                                                                                                
Representative Jimmie  stated that  she had  recently spoken                                                                    
with  students from  her district,  including students  from                                                                    
the  Qugcuun Memorial  School,  the  Lower Kuskokwim  School                                                                    
District, and the Kashunamiut  School District. She reported                                                                    
that students described the loss  of teachers due to housing                                                                    
shortages,  resulting in  students being  taught via  iPads,                                                                    
which was  limiting. She  shared that  a school  in Tuluksak                                                                    
was leaking  fuel, yet students continued  to attend school.                                                                    
Some  students  attended school  in  snow  pants because  of                                                                    
broken  windows  or  shifting school  structures  that  were                                                                    
built in the 1960s,  and many schools lacked extracurricular                                                                    
activities  other than  physical sports  such as  basketball                                                                    
and cross-country. She asked if  other districts were having                                                                    
similar issues.                                                                                                                 
                                                                                                                                
Representative  Himschoot responded  that  similar types  of                                                                    
issues  were being  reported across  the  state. She  shared                                                                    
that  in her  home district  of Sitka,  schools had  shifted                                                                    
from  offering  electives  to assigning  students  to  study                                                                    
halls because two  or three classrooms could  be overseen by                                                                    
a  single teacher  in a  study  hall. Many  schools had  cut                                                                    
music programs,  which was particularly startling  because a                                                                    
substantial number  of professional musicians had  come from                                                                    
her  community of  8,000  residents.  Some individuals  were                                                                    
currently  performing in  world-class orchestras.  The lower                                                                    
elementary  music program  that had  launched such  a legacy                                                                    
had  now  been  cut.  She  emphasized  that  the  cuts  were                                                                    
affecting programs  that enriched  schools across  the state                                                                    
and that  cuts in  her own  district had  gone so  deep that                                                                    
there was discussion about school  closures. She stated that                                                                    
in  her   community,  closing  a  school   meant  closing  a                                                                    
community.                                                                                                                      
                                                                                                                                
1:59:28 PM                                                                                                                    
                                                                                                                                
Representative Himschoot  continued on  slide 11  and stated                                                                    
that  the flat  funding that  districts had  received amidst                                                                    
years of cumulative inflation had  caused a "perfect storm."                                                                    
She  explained that  schools were  competing nationally  for                                                                    
certified teachers and that on  the first day of the current                                                                    
school year, 600 classrooms lacked  a certified teacher. She                                                                    
continued  to  slide  12  and   relayed  that  one  creative                                                                    
solution had  been to  hire emergency  certificate teachers,                                                                    
who might  one day become excellent  educators. However, she                                                                    
noted  that like  most professions,  teaching improved  with                                                                    
experience.  She  would  be concerned  if  many  individuals                                                                    
teaching in  classrooms had not completed  student teaching.                                                                    
Often,  the issuance  of a  teaching certificate  marked the                                                                    
beginning  of  an   individual's  teaching  experience.  She                                                                    
emphasized  that learning  to  become a  teacher required  a                                                                    
mentor  teacher. She  believed she  became a  decent teacher                                                                    
not  in her  first or  second year  of teacher,  but in  her                                                                    
third, fourth, and fifth year.                                                                                                  
                                                                                                                                
Co-Chair Foster  noted that Representative  Rebecca Schwanke                                                                    
was in the audience.                                                                                                            
                                                                                                                                
Representative   Himschoot   noted    that   scarcity   bred                                                                    
innovation,  and  school   districts  had  begun  recruiting                                                                    
experienced and certified teachers  from overseas as soon as                                                                    
COVID-19  pandemic  restrictions  allowed. She  stated  that                                                                    
slide 12 reflected those international hires.                                                                                   
                                                                                                                                
Representative  Himschoot   continued  to  slide   13  which                                                                    
offered more detailed  information about inflation proofing.                                                                    
She thought inflation proofing  would provide districts with                                                                    
stability  and  predictability.  She  acknowledged  that  it                                                                    
might  not  offer the  increases  districts  wanted, but  it                                                                    
would  offer   the  increases  the  districts   needed.  The                                                                    
approach would also allow the  legislature to direct funding                                                                    
in  a  more deliberate  manner  rather  than debating  basic                                                                    
educational obligations. There  was a constitutional mandate                                                                    
to establish and  maintain a system of  public education and                                                                    
inflation  proofing could  allow the  legislature to  target                                                                    
additional funds  toward programs it prioritized.  The final                                                                    
bullet   point   on   the  slide   addressed   the   state's                                                                    
constitutional  obligation.   She  relayed   that  inflation                                                                    
proofing  was currently  used in  ten other  states, all  of                                                                    
which had  adopted it within  the past decade.  The proposed                                                                    
bill based  the calculation on  the average of three  of the                                                                    
past  four  fiscal years,  which  would  be applied  to  the                                                                    
current BSA.  She reiterated that  one-time funding  did not                                                                    
always  reach the  classroom directly.  If a  district could                                                                    
find  and hire  a  certified and  experienced educator,  the                                                                    
funds  might support  the classroom.  However,  it was  more                                                                    
often the  case that  one-time funds  were used  to backfill                                                                    
expenses   that   districts   had  already   incurred.   She                                                                    
emphasized  that  district  budgets   were  composed  of  80                                                                    
percent  to  85  percent  personnel,  meaning  cuts  usually                                                                    
affected staff. Consequently, districts  often had to rehire                                                                    
individuals  who they  had already  notified  of job  losses                                                                    
with the  one-time funding.  She expressed  appreciation for                                                                    
the  committee's   time  and  stressed  the   importance  of                                                                    
following  the  constitutional  requirement to  fund  public                                                                    
education.  She added  that the  BSA uplifted  all types  of                                                                    
schools,   including   correspondence,   neighborhood,   and                                                                    
charter schools.                                                                                                                
                                                                                                                                
Co-Chair  Foster recognized  that  Representative Bill  Elam                                                                    
had joined the audience earlier.                                                                                                
                                                                                                                                
Representative  Stapp  appreciated the  time  Representative                                                                    
Himschoot  had  spent  on  the  bill.  He  thought  she  had                                                                    
consistently  emphasized the  urgency of  legislative action                                                                    
on the issue. He noted that  he had a few questions for DEED                                                                    
regarding the  cost of the  bill and  the inflation-proofing                                                                    
mechanism.                                                                                                                      
                                                                                                                                
2:06:06 PM                                                                                                                    
                                                                                                                                
HEATHER HEINEKEN, DIRECTOR OF  FINANCE AND SUPPORT SERVICES,                                                                    
DEPARTMENT   OF  EDUCATION   AND   EARLY  DEVELOPMENT   (via                                                                    
teleconference),  asked   if  Representative  Stapp   had  a                                                                    
specific question.                                                                                                              
                                                                                                                                
Representative Stapp  confirmed that he did.  He referred to                                                                    
the previously  published fiscal note  2 from DEED  (copy on                                                                    
file)  [OMB component  2804, control  code VytxP]  and noted                                                                    
that  the first  year appropriation  for the  bill would  be                                                                    
$325  million, with  the second  year  adding $173  million,                                                                    
followed  by   $144  million,  and  then   $51  million  for                                                                    
inflation   proofing.  He   asked   if   the  amounts   were                                                                    
cumulative, meaning  that by FY 27,  the appropriation would                                                                    
total $500 million more than current levels.                                                                                    
                                                                                                                                
Ms. Heineken  responded that his interpretation  was correct                                                                    
and added that updated fiscal notes were forthcoming.                                                                           
                                                                                                                                
Representative Stapp  asked for  confirmation that  the same                                                                    
cumulative  approach applied  to the  fiscal note  from DEED                                                                    
with OMB  component 1060 (copy on  file)[control code pKFNU]                                                                    
for Mt. Edgecumbe High School in Sitka.                                                                                         
                                                                                                                                
Ms. Heineken responded in the affirmative.                                                                                      
                                                                                                                                
Representative Stapp stated that  the main issue surrounding                                                                    
the bill was  the cost, which would be nearly  $1 billion in                                                                    
additional  state contributions.  He thought  Representative                                                                    
Himschoot had  articulated the challenges faced  by teachers                                                                    
quite clearly. He did not  see any way the legislature could                                                                    
meet the obligations  required if the bill were  to pass due                                                                    
to its  fiscal limitations.  He asked  what type  of revenue                                                                    
measures  the House  Majority intended  to propose,  or what                                                                    
type  of cuts  it planned  to offer,  in order  to meet  the                                                                    
financial obligations  of the bill.  He understood  that the                                                                    
bill was a caucus priority for the majority.                                                                                    
                                                                                                                                
Representative    Himschoot     addressed    "Representative                                                                    
Stappasaurus."   She   expressed   appreciation   that   the                                                                    
committee was addressing the issue.                                                                                             
                                                                                                                                
Representative  Johnson  interjected.  She stated  that  she                                                                    
hoped  decorum  would be  maintained  in  the House  Finance                                                                    
Committee.                                                                                                                      
                                                                                                                                
Representative  Himschoot  apologized  for  the  remark  and                                                                    
continued  her  response.  She  stated  that  when  a  child                                                                    
entered an  Alaskan school of  any kind, the  child deserved                                                                    
the  opportunity to  become whatever  they wished  to be  in                                                                    
life.  She stated  that the  legislature  had an  obligation                                                                    
under the  constitution to make education  available so that                                                                    
children  could pursue  their goals.  She acknowledged  that                                                                    
difficult decisions lay ahead  and appreciated the question.                                                                    
Every person  in the  state deserved  high-quality education                                                                    
and the legislature needed to find a solution.                                                                                  
                                                                                                                                
Representative Stapp  commented that the state  did not have                                                                    
the money and  he could not support the bill  without a plan                                                                    
to  cover  the  cost.  He was  interested  in  hearing  what                                                                    
proposals  the  majority would  bring  forward  to fund  the                                                                    
bill, but  reiterated that he  could not support  it without                                                                    
more  information.  He  acknowledged  the bill  was  a  high                                                                    
priority for the  majority and stated his  intention to move                                                                    
the bill from committee.                                                                                                        
                                                                                                                                
Representative Stapp MOVED to REPORT  HB 69 out of committee                                                                    
with individual recommendations  and the accompanying fiscal                                                                    
notes.                                                                                                                          
                                                                                                                                
Co-Chair Foster asked whether there was any objection.                                                                          
                                                                                                                                
2:11:05 PM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
2:11:39 PM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                
Representative Allard  OBJECTED. She clarified that  she did                                                                    
not  object  to moving  the  bill  forward in  general.  She                                                                    
stated that  her objection was  based on not having  heard a                                                                    
clear explanation  of how  the revenue  to support  the bill                                                                    
would  be generated,  especially as  that cost  continued to                                                                    
increase with inflation.                                                                                                        
                                                                                                                                
Representative Allard WITHDREW the OBJECTION.                                                                                   
                                                                                                                                
Co-Chair  Foster  confirmed  that  the  objection  had  been                                                                    
withdrawn  and   asked  whether   there  were   any  further                                                                    
objections.                                                                                                                     
                                                                                                                                
Co-Chair Josephson  OBJECTED for discussion. He  stated that                                                                    
he would soon  remove the objection. He  expressed hope that                                                                    
if  the  bill  were  calendared  on  the  House  floor  with                                                                    
sufficient   committee   support,  negotiations   with   the                                                                    
administration  could   continue  in  order  to   achieve  a                                                                    
successful outcome.                                                                                                             
                                                                                                                                
Co-Chair Josephson WITHDREW the OBJECTION.                                                                                      
                                                                                                                                
2:12:56 PM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
2:15:24 PM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                
Representative Bynum OBJECTED for discussion.                                                                                   
                                                                                                                                
Representative Bynum stated that  he had many thoughts about                                                                    
the  bill,  as  well  as  about  the  broader  condition  of                                                                    
education. He emphasized  that it was a "money  bill," not a                                                                    
policy bill.  He thought Representative Stapp  had raised an                                                                    
important  point  regarding  the  financial  nature  of  the                                                                    
proposal. He stated  that the discussion needed  to focus on                                                                    
how to fund the bill. He  viewed the bill was a $2.9 billion                                                                    
expenditure  over the  next five  years and  noted that  the                                                                    
state currently  did not  have the  revenue to  support that                                                                    
level  of spending.  Education was  critically important  to                                                                    
his district  and the funding  issues at hand  were serious.                                                                    
He reiterated that he had  numerous questions about the bill                                                                    
and how the  legislature would reach a point  where it could                                                                    
address  all aspects  of  education in  a  holistic way.  He                                                                    
stated that funding was an  essential part of those efforts.                                                                    
He expressed  skepticism that the  bill in its  current form                                                                    
would   achieve  its   goal.  He   acknowledged  that   many                                                                    
discussions  had already  occurred and  that the  discussion                                                                    
would  continue.   He  wished  to  participate   in  further                                                                    
conversations but did  not intend to hold up  the process if                                                                    
progress  could   be  made   toward  solutions   for  school                                                                    
districts in a timely manner.                                                                                                   
                                                                                                                                
Representative Bynum WITHDREW the OBJECTION.                                                                                    
                                                                                                                                
2:17:50 PM                                                                                                                    
                                                                                                                                
Representative Johnson OBJECTED for discussion.                                                                                 
                                                                                                                                
Representative Johnson  acknowledged that there  appeared to                                                                    
be  a desire  to move  the bill  forward quickly,  which she                                                                    
thought was hasty  rather than prudent. She  did not believe                                                                    
she could effectively  slow the process but  wanted to share                                                                    
her perspective.  There were limited options  available when                                                                    
attempting  to  increase  the state's  unrestricted  general                                                                    
fund  (UGF)  spending by  $1  billion,  particularly in  the                                                                    
context of  a $5  billion state budget.  There were  only so                                                                    
many sources from which the  state could obtain funding. She                                                                    
asserted  that the  proposal  effectively  meant taking  the                                                                    
Permanent Fund  Dividend (PFD) from  "every man,  woman, and                                                                    
child,"  including  those  attending school  and  those  who                                                                    
relied  on  the  dividend  to  heat  their  homes,  purchase                                                                    
clothing, or buy food.                                                                                                          
                                                                                                                                
Representative  Johnson   added  that   alternative  revenue                                                                    
measures could include oil taxes,  a personal income tax, or                                                                    
a   sales  tax.   However,  the   legislature  had   already                                                                    
considered  similar  measures  and  the  associated  revenue                                                                    
targets were difficult to reach.  She thought that examining                                                                    
the  issues in  isolation was  not responsible.  Although an                                                                    
idea might  seem worthwhile  on its  own, the  House Finance                                                                    
Committee did  not function  as a  single-subject committee.                                                                    
She emphasized  that the committee was  also responsible for                                                                    
funding   roads,   social   services,  the   Department   of                                                                    
Corrections  (DOC),  the  Department  of  Natural  Resources                                                                    
(DNR), and other priorities. While  she would like to direct                                                                    
substantial  funding  to  many of  her  preferred  projects,                                                                    
doing so would  not be fiscally prudent  or responsible. She                                                                    
stated that she would not stop the process from proceeding.                                                                     
                                                                                                                                
Representative Johnson WITHDREW the OBJECTION.                                                                                  
                                                                                                                                
Co-Chair Schrage OBJECTED for discussion.                                                                                       
                                                                                                                                
Co-Chair Schrage  acknowledged that paying for  the bill was                                                                    
a  legitimate concern.  However,  he thought  that the  more                                                                    
important questions  should be  how to  set students  up for                                                                    
success, meet  the schools'  needs, and  how to  ensure that                                                                    
Alaska   maintained  an   adequate   education  system.   He                                                                    
emphasized the  importance of ensuring  a bright  future for                                                                    
Alaskan  families and  stressed  that  the legislature  must                                                                    
work  with the  administration  to develop  both policy  and                                                                    
funding  to achieve  its goals.  He added  that if  the cost                                                                    
exceeded current  resources, it  would be necessary  to find                                                                    
new  funding rather  than "shortchange"  students. The  bill                                                                    
was  only  one  step  in the  legislative  process  and  the                                                                    
conversation  was far  from over.  He thought  the committee                                                                    
understood the  fiscal impact of  the bill well  and content                                                                    
and fiscal implications were well understood.                                                                                   
                                                                                                                                
Co-Chair Schrage  shared that he  had some  hesitation about                                                                    
bypassing  the   full  committee  process  and   not  taking                                                                    
testimony, but noted that the  House Education Committee had                                                                    
already undertaken extensive work on  the issue, both in the                                                                    
current  and prior  legislative sessions.  He remarked  that                                                                    
thousands of  families, teachers, students, and  parents had                                                                    
weighed in during the process,  and that the legislature had                                                                    
received  invited  testimony  throughout. He  stressed  that                                                                    
legislators were  already well informed on  the issue. While                                                                    
he  had  some  reservations, considering  the  robust  prior                                                                    
process, the understanding of the  bill, and the urgency, he                                                                    
felt  more comfortable  moving the  bill quickly.  He stated                                                                    
that continued collaboration would  be essential to meet the                                                                    
expectations of Alaskans. The current  state of education in                                                                    
Alaska  was unacceptable  and the  legislature  must act  to                                                                    
improve the  future for the  state's youth.  He acknowledged                                                                    
that the  bill in its  current form  would not be  the final                                                                    
product  and  that  further  work   would  be  required.  He                                                                    
recognized  the   urgency  created  by   approaching  school                                                                    
district budget  deadlines and stressed the  need to provide                                                                    
school  districts  with  certainty. He  thanked  the  bill's                                                                    
sponsor for introducing the  bill and thanked Representative                                                                    
Stapp for prompting action.                                                                                                     
                                                                                                                                
Co-Chair Schrage WITHDREW the OBJECTION.                                                                                        
                                                                                                                                
2:23:18 PM                                                                                                                    
                                                                                                                                
Representative Galvin  OJBECTED for discussion.  She thought                                                                    
it  was   important  to  ask   what  would  happen   if  the                                                                    
legislature failed  to fund the  bill and the state  did not                                                                    
set children up for success.  She asked when the legislature                                                                    
would  stop  prioritizing  the  price  of  oil  over  making                                                                    
decisions based  on what children needed.  She admitted that                                                                    
the  situation was  frustrating and  acknowledged that  many                                                                    
conversations about revenue still  needed to take place. She                                                                    
expressed   that   she    looked   forward   to   additional                                                                    
discussions.                                                                                                                    
                                                                                                                                
Representative  Galvin  noted  that   it  was  important  to                                                                    
understand  what  it meant  to  operate  under a  structural                                                                    
deficit and  wondered if the public  understood the concept.                                                                    
She asked how  the state would work together  to resolve the                                                                    
deficit. There were many long-term  decisions that needed to                                                                    
be addressed  as soon as  possible and  she did not  want to                                                                    
continue having  the same conversation. She  appreciated the                                                                    
work of  the bill's sponsor and  recognized that significant                                                                    
additional  work was  ongoing. All  members wanted  to reach                                                                    
consensus and celebrate the achievement together.                                                                               
                                                                                                                                
Representative Galvin WITHDREW the OBJECTION.                                                                                   
                                                                                                                                
2:25:11 PM                                                                                                                    
                                                                                                                                
Co-Chair Foster  asked if there were  any further objections                                                                    
to  reporting   the  bill  out.   There  being   NO  further                                                                    
OBJECTION, it was so ordered.                                                                                                   
                                                                                                                                
HB  69 was  REPORTED out  of committee  with five  "do pass"                                                                    
recommendations,  four "do  not  pass" recommendations,  one                                                                    
"amend"   recommendation,   and  one   "no   recommendation"                                                                    
recommendation, and  with two new  fiscal impact  notes from                                                                    
the Department  of Education and  Early Development  and one                                                                    
new  zero   fiscal  impact  note  from   the  Department  of                                                                    
Education and Early Development.                                                                                                
                                                                                                                                
Co-Chair Foster reviewed the meeting agenda for the                                                                             
following day.                                                                                                                  
                                                                                                                                

Document Name Date/Time Subjects
HB 69 HFIN LFD - BSA Foundation Presentation 2-20-25.pdf HFIN 2/20/2025 1:30:00 PM
HB 69
HB 69 Public Testimony Rec'd by 022025.pdf HFIN 2/20/2025 1:30:00 PM
HB 69
HB 69 Public Testimony Pkt 2.pdf HFIN 2/20/2025 1:30:00 PM
HB 69