Legislature(2001 - 2002)
04/20/2001 02:05 PM Senate HES
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* first hearing in first committee of referral
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+ teleconferenced
= bill was previously heard/scheduled
CSHB 203(FIN)-SPECIAL APPROP: SCHOOL DIST. COST FACTORS
REPRESENTATIVE PEGGY WILSON, sponsor, explained that CSHB
203(FIN) appropriates money to Legislative Council for a study of
school district cost factors. The current formula has a design
error. It tracks expenses as opposed to the actual costs of
providing an education in each school district, which has
resulted in flawed district cost factors. Failure to precisely
measure differential costs across the state has resulted in
inequitable funding. Alaska has a constitutional obligation to
provide a full education to all students. The challenge inherent
in this mission is to account for Alaska's diverse geography and
cultural and economic conditions. CSHB 203(FIN) proposes that an
independent study be done at a cost of $350,000.
VICE-CHAIR LEMAN said he agrees with the need for good
information and he does not believe the current geographic
differentials are accurate, but he believes the information
should be based on the cost of operating schools and not on
incidental costs. Any study should be designed so that the data
can be updated every two years, as mandated by SB 36.
REPRESENTATIVE WILSON agreed it is important to design the study
so that DOEED can update the information every two years.
Number 447
MR. CARL ROSE, Association of Alaska School Boards (AASB), stated
support for CSHB 203(FIN). He noted that many people have
lingering concerns about SB 36, one being the information used to
develop the foundation formula. The McDowell study of 1996 was
expenditure based and many believe schools were inadequately
funded at that time. The funding task force recommended no
change to the foundation formula until the state could come up
with empirical data on which to underwrite the change. The task
force felt to change the foundation formula without a good set of
indices would further exacerbate the problem. The AASB identified
the need for such a study in its A+ document. He pointed out the
AASB has a dues formula that contains factors so that during
times of financial prosperity, dues can be reduced and vice
versa. He suggested that using 2002 as the timeframe to complete
the product is too short and will produce a poor product. He
would like to see the study in place very soon and if the study
lasted until 2003, the legislature would have another year's data
to consider. He stated the need for this bill is more important
since SB 36 is in place. The district cost factors used now are
very questionable
MR. DARROLL HARGRAVES, Council of School Administrators, stated
support for CSHB 203(FIN) because of the low confidence level in
the current chart of accounts set in statute, which he believes
is inadequate.
MR. EDDY JEANS, School Finance Manager, DOEED, stated support for
CSHB 203(HES). DOEED believes a study needs to be done and
completed by January 15, 2003 instead of 2002. Requiring the
study to be done in a very compressed time frame will produce a
product that does not serve the state's needs. He requested that
CSHB 203(FIN) be amended to change the date from 2002 to 2003. He
stated he spoke with Representative Wilson about that amendment.
She would like to do a little bit of research before supporting
it.
VICE-CHAIR LEMAN suggested requiring a draft study to be
completed by January 1, 2002 and to then have a comment period.
MR. JEANS said DOEED requested amended language on the House side
that would have required Legislative Council to work in
consultation with DOEED to develop the contract for the study.
DOEED intends to work with the school districts to make sure they
buy into the product before it goes out for bid. That way, DOEED
will be asking the contractor to measure the items that the
school districts feel are truly driving the difference in costs
between districts. He said he doesn't believe a good request for
proposals (RFP) could be crafted in less than two months and that
development needs to be done on the front end.
VICE-CHAIR LEMAN agreed. He asked Mr. Jeans if he is satisfied
with the information the state is collecting on the costs of
running school districts and whether DOEED has the ability to
compare districts from that information.
MR. JEANS stated that two additional positions were approved
under SB 36. He now has two internal auditors working for DOEED
that review school district audited financial statements on an
annual basis. DOEED has also done an extensive review and
revision of the uniform chart of accounts adopted by the state
board of education in December. That chart of accounts will take
effect in July so it will be at least one year before the results
are in. He believes the new chart of accounts will get the
expenditure data in line. DOEED is not suggesting that this cost
model be developed based on audited financial statements for
expenditures because districts spend what they get. If they are
not getting sufficient funds, they must cut in certain areas.
DOEED wants to look at the actual costs of providing an education
in the various communities. Fuel costs and consumption varies
greatly among districts. The contractor needs to identify those
indices that DOEED can update regularly.
VICE-CHAIR LEMAN said he agrees but would be careful about
interpreting too much from the costs unless a common base can be
found to determine comparable deliveries in communities. He
announced he would hold CSHB 203(FIN) and adjourned the meeting
at 3:32 p.m.
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