Legislature(2021 - 2022)ADAMS 519
03/07/2022 01:30 PM House FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| HB166 | |
| HB177 | |
| HB272 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | HB 272 | TELECONFERENCED | |
| + | HB 273 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | HB 166 | TELECONFERENCED | |
| += | HB 177 | TELECONFERENCED | |
HOUSE BILL NO. 272
"An Act relating to education; increasing the base
student allocation; and providing for an effective
date."
2:05:05 PM
REPRESENTATIVE ANDI STORY, SPONSOR, reported that the base
student allocation (BSA) had been flat since FY 17, which
had put downward pressure on the states school districts.
She introduced the Power Point Presentation: "Base
Allocation for Student Excellence." Representative Story
began with slide 2: Bound by our Constitution:
Article 7 - Health, Education and Welfare
? 1. Public Education
"The legislature shall by general law establish and
maintain a system of
public schools open to all children of the State..."
Representative Story turned to slide 3, Basic Economic
Investment:
? As Alaska retains and attracts families, businesses,
prospective employers, potential residents look for
good
schools.
? Like other infrastructure, lack of support leads to
reduced
capacity.
? Alaska's aging workforce requires a stream of
graduates
Representative Story continued to slide 4, Sustains Basic
Student Services:
? Two-year bump in per pupil funding to help offset
inflation.
? Immediate partial relief for uncontrollable rising
fixed costs.
? Frees funds to sustain direct student service.
? Provides two-year predictability and mitigates lay-
off cycles
2:10:35 PM
Representative Story advanced to slide 5, Inflation is
Failing Our Students:
? Over the last decade overall BSA funding has been
adjusted by only a quarter of one percent per year.
? In that period, the inflation-adjusted value of BSA
funding dropped nearly ten percent, from $6,344 to
$5,695 in FY21 dollars.
Representative Johnson was unclear about slide 5. She asked
about the adjustment.
Representative Story deferred to Mr. Painter.
Mr. Painter responded that the amount reflected the
Anchorage CPI.
Representative Wool asked for an explanation of the bars on
the slide.
Mr. Painter indicated the red line represented the BSA.
Representative Wool He asked if any graph would reflect the
same point as the red line.
Mr. Painter indicated the legislature could set the BSA
through statute. He thought it was important to focus on
the rate of inflation to costs, because the BSA had not
kept up with inflation.
2:14:04 PM
Representative Story continued to slide 6, Necessary and
Fair:
? The BSA has been flat funded for six years, since
FY17.
? Alaska Inflation has grown 8 percent in that period,
and almost 15 percent in the last ten years.
? FY23 adjustment of $223 ($6,153 per pupil) Less
than a 4 percent increase.
? FY24 adjustment of $55 ($6,208 per pupil) Less
than a 1 percent increase
Representative LeBon asked about the fixed cost category.
He suggested she use the Juneau School District as an
example.
Representative Story had a slide later in the presentation
that spoke to his question.
2:16:20 PM
Representative Wool thanked the sponsor for bringing the
bill forward. He asked about her decisions regarding the
step up in increases. He wondered what number she was using
for inflation. He thought the increase would be 5 percent
over 7 years.
Representative Story would be discussing how inflation was
calculated. She looked out FY 20. Districts had been
receiving $30 million outside of the formula. She had been
using Callans formula. She shifted to LFD, because LFD
thought it was more indicative of Alaska's economy.
Representative Johnson asked if the sponsor had looked at
other options like pooling teacher health care.
Representative Story did not consider pooling healthcare
costs. She stated that there were three cost drivers for
districts, healthcare being one of them. There had been a
proposal to pool healthcare, but at the time with all of
the different components the state did not go forward with
the idea.
2:20:26 PM
Representative Story advanced to slide 7, Alaska Costs are
Comparable to the National Average:
? According to the Institute of Social and Economic
Research, when unique expenses of cost-of-living and
remote geography are factored in, Alaska's average
annual per pupil costs are about $12,000 per student
according to the last US Census (2016)*.
? This is slightly below the national average.
Representative Edgmon appreciated the bill. He noted that
when comparing Alaska to other states it was not what was
spent, rather it was spending from savings. He stressed
that there was a difference from what was spent out of the
state coffers rather than from revenue. He had posed the
question about what Alaska was getting for the money. He
supported a BSA increase, but thought the bill would meet
resistance because things were declining even though
spending was increasing.
Representative Story would address Representative Edgmon's
question later in the presentation. She continued to
address slide 8.
2:25:09 PM
Representative Story moved to slide 9, What Drives Costs:
? 58 schools have less than 25 students.
? Hootch v. Alaska (1975) affirmed that boarding
schools are inadequate proxies for local schools.
? Highest healthcare costs in the US.
? Geographic costs
? The price of goods is higher in remote places.
? Fuel and Electricity
? Costs more in remote places.
? Schools don't benefit from the Power Cost
Equalization (PCE) program.
? Rural districts must offer competitive pay to
attract educators.
Representative Edgmon thought more could be added to the
list. He also spoke about the large issue of disparity
regarding energy costs and schools, especially those using
diesel fuel.
Representative Johnson noted that administrative costs were
the other items.
Representative Story deferred to ISER.
Representative Johnson felt that people thought it drove up
the price because the schools negotiated the price of
energy.
Representative Story discussed the pie chart on slide 10.
She indicated that 75 percent of expenses were spent on
instruction. She was aware the percentages varied from
district-to-district.
Representative Story continued to address slide 10,
Funding Goes to Kids:
? Districts dedicate nearly 75 percent of funding to
direct student instruction, student services, and
student activities.
? 15 percent is consumed by maintenance and utilities.
? Less than 15 percent is spent on administration and
management.
2:33:45 PM
AT EASE
2:34:20 PM
RECONVENNED
Representative Josephson had a number of questions. She
wondered if there was any documentation that school funding
was connected with student outcomes. In the ISER study, it
was recommended that Alaska take a look at the moving the
needle for student improvement. It had been well documented
that the size of the classroom was an important component
of student improvement.
Representative Johnson asked how the state could ensure
accountability. She noted hearing about problems in the
classroom and the time lost with COVID. She argued that
accountability was missing from the picture.
Representative Story noted that school board members were
to target dollars to specific programs to help with gaps.
She advised remembering that people were working on
improvement. She was aware that everyone was looking at
costs wanted to see money go to kids in the classroom.
Representative Johnson wondered if the BSA increase would
be a stand-alone item.
Representative Story was asking for 4 percent, which was
nominal, gut left room in the budget for things like
reading.
2:40:59 PM
Representative Wool was trying to understand the inflation
number. He was confused of the time period.
Representative Story believe the 15 percent came from the
LFD chart.
Representative Josephson wondered what would occur if HB
273 was unlikely to pass, which was the inflationary
adjustment bill.
Representative Story replied that if the legislature would
pass inflation-proofing which was why she offered two
separate bills. She thought HB 272 took care of the
immediate needs whereas HB 273 addressed expanded needs.
2:45:55 PM
ARIEL SVETLIK, STAFF, REPRESENTATIVE ANDI STORY, would go
through the sectional analysis. She read the sectional
analysis:
Section 1: Amends AS 14.17.470, increasing the Student
Base Allocation from $5930 by $223 to $6,153.
Section 2: Amends AS 14.17.470, increasing the Student
Base Allocation from $6,153 by $55 to $6,208.
Section 3: Sets an effective date for Section 1 of
July 1, 2022.
Section 4: Sets an effective date for Section 2 of
July 1, 2023.
Ms. Svetlik explained the fiscal notes.
2:48:28 PM
DAYNA JEAN DEFEO, PHD, DIRECTOR, CENTER FOR ALASKA
EDUCATION POLICY RESEARCH (CAEPR) AND INSTITUTE OF SOCIAL
AND ECONOMIC RESEARCH (ISER), UNIVERSITY OF ALASKA (via
teleconference), was joined by two of her colleagues //.
She was prepared to talk about three aspects of cost
drivers to education funding. Alaska remained in 6th place
because the national economy was growing faster that
Alaska's.
2:50:43 PM
Dr. DeFeo posed the question whether Alaska really paid
more for education compared to other states. She made two
adjustments to consider the buying power of Alaska dollars.
Dr. DeFeo continued that Alaska had many small schools and
Alaska was responsible for providing an education. The
second unique cost was healthcare which puts downward
pressure on school districts. Fuel costs different amounts
in different places within the state, based on whether that
community had road and water access. In addition,
electricity costs in rural Alaska had to be considered in
funding.
Dr. DeFeo continued that she wanted to look at how much was
being spent and whether that spending reflected better
outcomes. She was available for questions.
2:55:44 PM
Representative Edgmon asked about an education adequacy
study. He asked for her to comment further.
Dr. DeFeo responded that the adequacy study was done in
2017, to determine investment of resources for public
education based on best outcome data.
Representative Edgmon asked if it was a byproduct of the
Moore case.
Dr. DeFeo deferred to Dr. Hirshberg.
2:57:07 PM
DR. DIANE HIRSHBERG, DIRECTOR, PROFESSOR OF EDUCATION
POLICY, INSTITUTE OF SOCIAL AND ECONOMIC RESEARCH (ISER),
UNIVERSITY OF ALASKA ANCHORAGE, ANCHORAGE (via
teleconference), stated that she would provide information
at a later date as to whether the Moore case addressed the
study.
Vice-Chair Ortiz queried the benefit of health care
pooling.
Dr. DeFeo responded that she had not looked at it directly.
She stated that insurance between districts was variable
due to various factors.
3:00:48 PM
Representative Rasmussen queried the specific measure of
success, and asked for some defined student outcomes.
Dr. DeFeo thought the representative was asking a tricky
question. She noted another member asking about student
outcomes. She argued that investments in education had
delayed outcomes. One of the outcomes she hoped for was for
better teachers coming to the state
Representative Rasmussen thought Alaska wanted to attract
the best teachers to the state. She spoke of a personal
experience regarding her some and his education. She
advocated for more specific goals in mind. She did not
think it benefited the state to put more money into
education without seeing outcomes.
Dr. DeFeo thought it was most important to spend money
wisely to improve improvement measures.
3:05:29 PM
Representative LeBon commented that accountability was
needed and started at the local school board level.
Accountability took parental involvement as well. The
curriculum was also important and engaging. He asked if
there was competition among districts for talent. He asked
if Alaska was competitive.
Dr. DeFeo responded that the state competed for teachers.
Many rural districts attracted teachers from out of state,
but it was not just getting a teacher into a district but
keeping them in a district.
Representative LeBon commented that he recalled his own
participation in a labor agreement. He stressed that 80
percent of school district costs were people related, and
there was always upward pressure to keep the salaries
competitive.
3:10:30 PM
Representative Wool asked if Dr. DeFeo had a copy of the
chart.
Dr. DeFeo stated that she had created that chart.
Representative Wool wondered where Alaska's teacher's
salaries when it came to inflation.
Dr. DeFeo responded that thought she had a chart, and
Alaska fell at the rank of 23 in the country.
Vice-Chair Ortiz asked if retirement benefits had been
considered at the time.
Dr. DeFeo responded she would love to do the analysis on
the retirement benefits.
Representative Edgmon thought it would be interesting to
see the movement over the years as a result of removing
defined benefits.
Dr. DeFeo corrected herself that the state ranked slightly
lower after the first adjustment. She agreed that Alaska
made a complete shift from defined benefits, and would love
to do the analysis on the impact of removing defined
benefits.
3:16:32 PM
Representative Wool asked about more information related to
the states ranking.
Dr. Defeo stressed that Anchorage was considered the base,
and compared to as a source of cost of living.
Representative Wool surmised that the numerical average was
compared to the rest of the country.
Dr. DeFeo agreed.
3:19:00 PM
ANDY DEGRAW, CHIEF OPERATING OFFICER, FAIRBANKS NORTH STAR
BOROUGH (via teleconference), stated that there was a
current deficit of $19 million in the district. He had
heard remarks that districts had their hand out and just
wanted more money. He shared that the district in Fairbanks
was doing its part to hold the line and was running out of
options to save money. He stressed class reductions and
other things that would impact students in a negative way.
He urged support for the bill.
3:27:27 PM
Representative Wool asked how much relief the BSA proposed
in the bill would provide.
Mr. DeGraw replied that in FY 23 the bill would provide
Fairbanks an additional $5.3 million. He believed
Representative Johnson and others had some concerns with
attaching increased revenues to accountability. He shared
that any increase would go straight to instructional staff.
The district was currently supporting regular teachers on
Coronavirus Aid, Relief, and Economic Security (CARES) Act
funds. Any additional revenue would go straight to
instructional staff.
Representative Wool asked whether it was due to certain
parameters on funding uses of the CARES Act funding.
3:31:13 PM
Mr. DeGraw replied that Fairbanks had received $33 million
in federal pandemic relief funds, and there was an option
to request reimbursement monthly or quarterly. The district
had requested funds quarterly and there appeared to be a
significant lag in receiving the funds. He relayed that
COVID burdens and needs had far exceeded the funding
received.
Representative LeBon asked what percentage was built into
the schedule.
Mr. DeGraw asked for clarification on the question.
Representative LeBon believed the district must have built
some additional money into the steps and columns.
Mr. DeGraw answered the district was currently in
negotiations.
Representative LeBon asked if the BSA increase would impact
the negotiation.
Mr. DeGraw replied that the dollar amount he had
articulated that the $5 million increase the bill would
bring compared to the $19 million deficit likely spoke for
itself. He stressed the great teachers in the district.
Representative LeBon referenced the local contribution to
teachers. He asked if the district was competitive with
Juneau, Kenai, Mat-Su, and Anchorage.
3:38:02 PM
Mr. DeGraw could follow up with the information.
Representative Josephson asked if the deficit was net of
the COVID dollars.
Mr. DeGraw replied that the deficit was net of the COVID
dollars. He clarified the impact of the bill; it would give
Fairbanks an additional $5.3 million in FY 23.
Representative Josephson asked if the bill was
undershooting the mark. He stated the state treasury was
more robust than in FY 22, but there was still a structural
deficit.
Mr. DeGraw responded that he would not complain about any
additional dollars to the school district's bottom line. He
relayed it did not completely eliminate the shortfall, but
it would be a big help to the district.
Representative Josephson disagreed.
3:41:56 PM
AT EASE
3:42:27 PM
RECONVENED
SCOTT MACMANUS, SUPERINTENDENT, ALASKA GATEWAY SCHOOL
DISTRICT, TOK (via teleconference), provided a PowerPoint
presentation titled "The Cost of Inflation: Alaska Gateway
School District FY17 to FY21." He provided information
about the school district. The district was a Regional
Educational Attendance Area (REAA) and did not have ability
to raise funds for its schools beyond the BSA and
legislative appropriation.
3:46:25 PM
Mr. MacManus discussed maintenance costs on slide 2:
? The above fixed costs at the time of the last BSA
Increase were $4,120,293.00 (FY17) and increased
$797,727.00 by FY21 or 19 percent
? With CPI Index of 7 percent in FY22, these costs
will skyrocket further.
Mr. MacManus addressed heat and power electricity costs on
slide 3. He moved to insurance costs on slide 6, and health
insurance on slide 7. He remarked on the teacher salaries
on slide 8, and stressed that the district had done a lot
of work to try to address cost savings. The district would
actively continue to seek solutions. He was concerned about
a potential spike in heating cost due to the increase in
oil prices.
3:52:46 PM
Representative Wool asked how many problems would go away
for the district if the bill passed.
Mr. MacManus answered that $250,000 of the district's
problems would go away.
Representative Wool observed that it was about one-third of
the amount.
HB 272 was HEARD and HELD in committee for further
consideration.
HB 273 was was SCHEDULED but not HEARD.
Co-Chair Merrick noted that amendments to HB 158 were due
to her at 5:00 p.m. She reviewed the schedule for the
following day.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB 272 ISER suporting document.pdf |
HFIN 3/7/2022 1:30:00 PM |
HB 272 |
| HB 272 AGSD Presentation.pdf |
HFIN 3/7/2022 1:30:00 PM |
HB 272 |
| HB 272 organization support 022422.pdf |
HFIN 3/7/2022 1:30:00 PM |
HB 272 |
| HB 272 Presentation.pdf |
HFIN 3/7/2022 1:30:00 PM |
HB 272 |
| HB 272 Sectional.pdf |
HFIN 3/7/2022 1:30:00 PM |
HB 272 |
| HB 272 Sponsor Statement.pdf |
HFIN 3/7/2022 1:30:00 PM |
HB 272 |
| HB 272 Support 021122.pdf |
HFIN 3/7/2022 1:30:00 PM |
HB 272 |
| HB 272 Support 022422.pdf |
HFIN 3/7/2022 1:30:00 PM |
HB 272 |
| 273 Oppose.pdf |
HFIN 3/7/2022 1:30:00 PM |
HB 273 |
| HB 273 BSA Chart for ASD.pdf |
HFIN 3/7/2022 1:30:00 PM |
HB 273 |
| HB 273 presentation.pdf |
HFIN 3/7/2022 1:30:00 PM |
HB 273 |
| HB 273 Sectional.pdf |
HFIN 3/7/2022 1:30:00 PM |
HB 273 |
| HB 273 Sponsor Statement.pdf |
HFIN 3/7/2022 1:30:00 PM |
HB 273 |
| HB 273 Summary of Changes.pdf |
HFIN 3/7/2022 1:30:00 PM |
HB 273 |
| HB 273 Support 021122.pdf |
HFIN 3/7/2022 1:30:00 PM |
HB 273 |
| HB 273 Support 022422.pdf |
HFIN 3/7/2022 1:30:00 PM |
HB 273 |
| HB 166 am 1 Johnson.pdf |
HFIN 3/7/2022 1:30:00 PM |
HB 166 |
| HB 166 am 1 Johnson with Action.pdf |
HFIN 3/7/2022 1:30:00 PM |
HB 166 |
| HB 272 HB 273 Public Testimony Rec'd by 030722.pdf |
HFIN 3/7/2022 1:30:00 PM |
HB 272 HB 273 |