Legislature(2013 - 2014)
04/11/2014 04:29 PM Senate FIN
| Audio | Topic |
|---|---|
| Start | |
| HB278 | |
| SB209 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
CS FOR HOUSE BILL NO. 278(FIN) am
"An Act increasing the base student allocation used in
the formula for state funding of public education;
relating to the exemption from jury service for
certain teachers; relating to the powers of the
Department of Education and Early Development;
relating to high school course credit earned through
assessment; relating to school performance reports;
relating to assessments; establishing a public school
and school district grading system; relating to
charter schools and student transportation; relating
to residential school applications; relating to tenure
of public school teachers; relating to unemployment
contributions for the Alaska technical and vocational
education program; relating to earning high school
credit for completion of vocational education courses
offered by institutions receiving technical and
vocational education program funding; relating to
schools operated by a federal agency; relating to a
grant for school districts; relating to education tax
credits; establishing an optional municipal tax
exemption for privately owned real property rented or
leased for use as a charter school; requiring the
Department of Administration to provide a proposal for
a salary and benefits schedule for school districts;
making conforming amendments; and providing for an
effective date."
4:31:40 PM
MICHAEL HANLEY, COMMISSIONER, DEPARTMENT OF EDUCATION AND
EARLY DEVELOPMENT, relayed that department staff Elizabeth
Nudelman would walk the committee through the Department of
Education and Early Development (DEED) current bond debt
reimbursement program.
ELIZABETH NUDELMAN, DIRECTOR, SCHOOL FINANCES AND
FACILITIES, DEPARTMENT OF EDUCATION AND EARLY DEVELOPMENT,
communicated that the DEED debt reimbursement program was
included under AS 14.11.100. She detailed that as of
January 30, 2014 there was approximately $1.7 billion in
school construction and major maintenance debt that had
been used to construct, build, and repair the state's
schools. Based on the current reimbursable rates, the
state's share was approximately $1.1 billion. She explained
that the program was funded on an annual basis with
operating budget funds; the current operating budget
included approximately $127 million for the program.
Ms. Nudelman discussed the two rates that were reimbursable
by the state under the debt program. She elaborated that a
municipal school qualified for a 70 percent reimbursement
rate when it built within the maximum allowable square
footage in regulation for the program. Alternatively, the
60 percent reimbursement rate applied to projects that did
not meet the square footage calculation.
4:34:38 PM
Co-Chair Meyer asked how much had been spent on the 60
percent/40 percent (60/40) program. He asked for
verification that the state had little, if any control over
the program.
Ms. Nudelman replied that the 60/40 program had more
flexibility and less criteria than the 70 percent/30
percent (70/30) program. Both rates had statutory
requirements related to the refunding of bonds and
requiring bonds to be sold over a period of at least ten
years. Additionally, both rate programs districts were
required to maintain their preventative maintenance
program. The 70/30 program had additional requirements
including space and designating need in other categories.
She referenced a handout in members' packets titled "Alaska
Statute 14.11.100 State Aid Costs of School Construction
Debt" (copy on file). The handout showed that for the past
3.5 years $510.5 million was 70 percent debt and $139.6
million was 60 percent debt.
4:36:34 PM
Senator Dunleavy communicated that he was a member of the
committee that dealt with school construction. He recalled
prior discussions related to the amount of outstanding
major maintenance on the state's public school buildings.
He noted that the figures were not precise, but costs were
estimated to be upwards of $2 billion. He addressed the
life expectancy for some of the buildings. For example, the
construction of a school in rural Alaska may cost $60
million due to location, weather, and other. He questioned
how long the school would last. He believed the life of
some of the schools was 30 years. He observed that cost
outweighed benefit in those situations. He commented on
DEED's implementation of a major maintenance program in the
past several years; however, there may not be a systematic
method of continually upgrading and dealing with the
buildings.
Senator Dunleavy believed it was pertinent to consider
whether the 70/30 debt reimbursement was something the
state wanted to continue. He wondered if the state needed
to look at the concept of prototypical school design in
order to save money on design and engineering. He thought
the state should contemplate how it wanted to view, build,
and locate buildings. He suggested that in some rural
locations it may be more cost-effective to build one school
for several communities that were in close proximity to one
another. He stressed that currently the state currently
churned out schools every year, but their longevity was not
known. He stated that the legislature was responsible for
establishing and maintaining a public school system. He
believed the issue required consideration.
4:40:15 PM
Co-Chair Kelly appreciated the comments of Senator
Dunleavy. He was disturbed that the legislature had
discussed the issue many times, but had never taken any
action. He surmised that the Alaska Housing Finance
Corporation (AHFC) or another state housing/construction
entity could conduct a study on how the state built
schools. He thought it was possible to provide funding in
the current year to have the issue studied.
Senator Dunleavy commented on the complexity of building a
school. He pointed to statutory mandates to put art in
schools, design committees comprised of community members,
and other. He observed that there was a system of
regulations and laws embedded in the process. He believed
determining what laws currently required would enable the
legislature to identify laws and processes that needed to
be changed in the future.
Co-Chair Meyer asked Commissioner Hanley to provide
additional comments on school construction. Commissioner
Hanley recognized the challenge facing the state. He
relayed that there were over 500 buildings that were
largely supported/funded by the state. He agreed that how
the schools were designed and developed was complex; there
was not a simple fix. He surmised that it would take
direction to find a solution to the components currently in
statute and the way the schools were currently built. He
discussed the state's responsibility to keep the schools in
place and safe. He communicated that some schools lasted
for 30 years, while others only lasted 15 to 20 years. He
believed another part of the conversation revolved around
finding a way to incentivize and find needed resources for
maintenance. He noted that the maintenance expertise around
the state was not equal; some communities may not have a
person with the skills needed to maintain a $30 million
building. He believed the state may want to consider how to
incentivize and support high quality maintenance.
4:44:40 PM
Senator Bishop agreed with the previous comments. He
believed that schools should be built to last 50 years. He
opined that a lifespan of 15 to 30 years was unacceptable.
He recalled the remodeling of a territorial high school in
Southeast; subsequently, it had become a great school. He
thought the school may be good for another 20 to 30 years.
Senator Hoffman noted that local hire encouraged students
to take better care of schools when they had a sense of
ownership over the facilities. He discussed his
chairmanship of the Bethel Native Corporation Board. The
corporation had built schools and other projects and aimed
to have a minimum of 50 percent local-hire. He acknowledged
that constitutionally Alaska-hire could not be included in
contracts, but he thought that incentive to hire in-state
would help to give communities a sense of pride in their
schools. He believed when parents worked on the schools the
schools were better maintained.
4:47:58 PM
Senator Bishop commented that the Department of Labor and
Workforce Development had a provision where 90 percent
local-hire could be encouraged if the project used 100
percent state funding. He agreed with Senator Hoffman's
comments.
Vice-Chair Fairclough observed that two issues were
currently before the committee. The first was related to
the 70/30 and 60/40, which was encouraging debt in the
larger communities. She discussed reasons project costs may
be higher than normal. She believed a conversation should
take place about whether debt should be encouraged and
whether the state should continue to encourage debt to
refurbish some of the communities that had the ability to
tax themselves. She reasoned that if a change was made
there could be more application for the state grant
proposal that had been blocked by the Kasayulie case [1997
Kasayulie v. State] due to need in rural Alaska. She
remarked that the state was currently in transition and was
considering a substantial draw from savings to tide it
over. She did not believe local communities should be
encouraged to take on more debt. She encouraged the state
to consider buying down the debt to relieve some of the
responsibility to make room in local budgets. She opined
that the 70/30 and 60/40 loans were encouraging voters to
approve bonds that had $0.30 on the $1.00, which property
tax paid for. She did not mean to say she would not pay
more as a property tax payer. She believed there was a
different perspective if someone was paying every $1.00 for
the construction; it would be challenging for school
districts to bring a dollar-for-dollar payment before
voters.
Vice-Chair Fairclough addressed the second longer-term
issue, which related to what the schools the state financed
should look like. She discussed that schools in rural
communities were actually community centers. She observed
that the state failed to recognize that the schools may be
emergency shelters, food distribution centers, and a
community's only library. She agreed with a prototype
approach, but believed dialogue was needed pertaining to
square footage allotments for the schools. She opined that
it would be nice to have a separate door for health aide
nurses to allow for private entry into the office and for
school nurses to share the office separated by a partition.
She suggested working with cold climate research to
determine the appropriate weatherization on some of the
facilities. She reiterated that the debt financing should
be discussed by the legislature.
4:52:18 PM
Co-Chair Meyer addressed prior conversations related to the
debt ratios. He noted that in some ways DEED liked the
70/30 because the department had to agree to the debt prior
to taking it on. He recalled that the commissioner had
relayed the debt had been a useful tool to help complete
school maintenance. Whereas, the 60/40 provided less
control for the state and more flexibility for local
municipalities, which meant the municipalities may not be
using the money for things the state would like. He
wondered if the commissioner would rather see a ratio of
50/50, 40/60, or other.
Commissioner Hanley referenced the handout titled "Alaska
Statute 14.11.100 State Aid for Costs of School
Construction Debt" (copy on file). He pointed to the second
bullet point on page 2 related to the 70 percent
reimbursement. He relayed that to be eligible for the 70
percent reimbursement a municipality was required to
demonstrate need [for the project] and to fit within the
space requirements. He relayed that the requirements did
not apply to the 60 percent reimbursement rate; the 60
percent reimbursement had less oversight and accountability
for the space. He could speak to the fiscal aspects of the
70 percent, but it was difficult to speak about how it
impacted communities, the value it held, and a community's
ability to maintain its schools. He communicated that at
the 60 percent rate the state still had significant buy-in,
but with little say; the facilities were typically outside
the square footage requirements and had not demonstrated
need.
Commissioner Hanley directed the committee's attention to
page 3, which contained a list of projects. He detailed
that just because a project fell under the 60 percent
eligibility and did not have to demonstrate need did not
mean it was a bad project. He remarked that in a summary
level conversation he would be much more comfortable
reducing the amount in the 60/40 reimbursement rate than in
the 70/30 rate simply because there was no identification
of need. He believed it was important to consider what the
impact of reducing the rates would be. He thought that a
significant reduction would mean some projects would not
come forward any longer. He reasoned that there also may be
increased efficiencies in designs. He hypothesized that if
a school district was receiving less than 70 percent maybe
some of the extra features should be excluded. He suggested
that a more modest design may be available without the
other prototypical models in place; he was not suggesting
cutting down on quality. He reiterated that in the future
project requests may be reduced because due to a lack of
affordability. Additionally, more modest requests may
increase because more responsibility was falling to the
local municipalities.
4:57:02 PM
Vice-Chair Fairclough requested when the applications were
received and how the state committed to projects. She
wondered when the department would implement any potential
change to the reimbursement rates if approved by the
legislature. She noted that Anchorage had recently had a
bond package; page 5 of the handout included a notation
that FY 15 debt projects for Anchorage [at 60 percent] were
not included in the figures listed because they were not
voter approved, but had been approved by the department.
Ms. Nudelman replied that applications could be received
throughout the year for the debt program. She believed that
if any changes were made, the wording and structure of
statute would need to be designed to capture any
outstanding projects that had been approved or were in the
queue. She reasoned that if a change was made it would
identify the timelines for implementation.
Vice-Chair Fairclough emphasized that an effective date
needed to be determined if a change was made in order to
avoid a rush to get bonds included on a November 2014
ballot. Alternatively, the state could allow the rush to go
forward with the knowledge that its annual debt payment
would increase. She referred to Commissioner Hanley's
testimony that $127 million of annual debt payments from
the state supported the $1.1 billion in debt carried at a
local level. She asked the committee to consider that in
2015 the state would begin analyzing the debt that should
go on the balance books of cities across the state. She
noted that school districts were part of the financial
picture in some cases. She referred to Anchorage's
enterprise funds and relayed that when the debt allocation
went into effect on of the state's fiscal "houses" would go
upside down; the debt owed in the Public Employees'
Retirement System (PERS)/Teachers' Retirement System (TRS)
calculation would be greater than the assets, which would
impact the leverage of its ability to bond. She referred to
her prior suggestion to buy down some of the local debt to
avoid a reduction to cities' credit rating.
5:00:32 PM
Co-Chair Meyer inquired if the state placed limits or caps
on municipalities, school districts, or specific projects.
Ms. Nudelman replied that there were no currently no
statutory limits or caps on the debt program. She detailed
that at times over the past 25 years limits or caps had
existed. Cost estimates were done at the municipal or
school district level for specific projects and were
forwarded to the department for review. She expounded that
costs were generated based on professional estimates.
Typically large communities such as Anchorage managed their
levels of debt (as projects were completed, new projects
were brought on).
Senator Dunleavy commented that a building constructed in
Constantinople in the year 537 was still in use at present.
He remarked that a building that deteriorates in 20 years
was often considered a consumable structure; it was not
looked at as an investment. He believed the bill provided
an opportunity for the state to reinvent how it looked in
the future. He pointed to opportunity for public/private
partnerships. He referred to requests for building funds
from charter schools. He thought the bill may provide an
opportunity to change the paradigm. He noted that the
legislature may come up with funds for rent or lease
offsets. He concluded that there would be an opportunity
for various things, which would not be completed in one
year; the new direction could potentially save the state
significant money while ensuring adequate buildings for
students in the future.
Ms. Nudelman continued with her presentation. She pointed
out that under the 70 percent debt reimbursement program,
many of the projects were aimed at increasing the lifespan
of buildings. She explained that major maintenance for
items such as roofs were part of the debt reimbursement
program. She referred to information she had provided to
the committee including total debt, the state's share of
the debt, and the annual cost that ran through the state's
operating budget out to the school districts. The final
page of the handout included a breakout by school district.
5:04:58 PM
Co-Chair Meyer commented that a couple of years earlier a
change had been made to mill rates. He referenced public
testimony requesting an increase in flexibility for local
communities. He expressed frustration that the state had
made the change to mill rates; however, it had been
criticized for not funding more. He communicated that the
state had picked up significant responsibilities of the
municipalities including school construction, PERS/TRS, and
the change in mill rates. He asked for an explanation of
the mill rate process.
Ms. Nudelman replied that years back the mill rate had been
set at a local minimum requirement that school districts
would contribute 4 mills of the assessed value for their
community as a minimum local effort to the school district.
She detailed that 10 to 12 years ago there had been a
change to statute, which provided that as assessed values
increased the required contribution would be half of the
increase. Over time, as communities grew, the mill rates
for the required local contribution across Alaska began to
decrease from the 4 mills down to 2.65 mills at the lowest
contribution level (there were various mill rate levels
across the state including 3.2, 2.9, and other). She
elaborated that the required local contribution was smaller
in mill rate, but not in actual dollars. She communicated
that a couple of years back legislation had used the lowest
mill rate of 2.65 for the foundation program for the
minimum required local effort for all districts except for
three (that had a different convention due to tax base).
Additionally, the legislation had eliminated the statutory
language allowing for a 50 percent reduction as the
assessments grew. In order to set the mill rate at 2.65 the
state had picked up the remaining share (the cost
represented $1 million for some municipalities); the total
cost to the state was $20 million.
5:09:06 PM
Co-Chair Meyer noted that theoretically under the old
method, there would be $20 million in savings to the state
that could be put in the Base Student Allocation (BSA) to
equate a $100 per child increase. Ms. Nudelman indicated
yes, and clarified that savings under the rates from 2
years back would be $20 million; savings would vastly
exceed $20 million under the rates used 20 years earlier,
before the rate started dropping.
Co-Chair Meyer asked for verification that the mill rate of
2 years ago had been set at 2.9. Ms. Nudelman confirmed
that the average was approximately that.
Co-Chair Meyer wondered aloud if the savings to each
community was in the millions, and speculated that
Anchorage had a savings of $7 million.
5:10:40 PM
Co-Chair Meyer inquired about the commissioner's thoughts
on the bill itself, including areas of concern or for
adjustment. Commissioner Hanley responded that there were
several things the governor wanted included that had been
removed from the bill on the House side. He noted the
removal of the boarding school/residential school stipends.
There was a suggested increase to reflect the true cost of
these schools; the same increase that was before the
legislature the previous year and was also included in SB
113 [2014 legislation sponsored by Senator John Coghill
related to increasing the stipend for boarding school
students.]
Commissioner Hanley stated that the other area of concern
was a size factor for charter schools - when the enrollment
dropped below 150, the funding level drops slightly to 95
percent. By changing the enrollment number to 75, schools
could remain at the full funding level. The change would
particularly affect small communities and would make it
more feasible to have smaller charter schools.
Commissioner Hanley stated that the third component was the
inclusion of the SAT/ACT; in addition to the WorkKeys
assessment system, it would allow students a choice and
give them a score that would not only qualify them for the
Alaska Performance Scholarship but also would enable them
to get into a college of their choice.
Co-Chair Meyer asked whether that would go along with
eliminating the high school exit exam. Commissioner Hanley
responded in the affirmative and noted that ultimately they
would like to see the repeal of the High School Graduation
Qualifying Exam (HSGQE). The HSGQE repeal would be a
decrement of $2.7 million, and would cover the cost of
approximately $500 thousand for the SAT/ACT.
5:13:29 PM
Senator Hoffman requested a brief description of the
eliminated provisions, as well as why they were removed.
Commissioner Hanley noted that the components were removed
in a committee substitute rather than through amendments in
committee, so there was no chance to see the impacts
directly. He concluded that the concerns had related to
fiscal components.
Senator Olson expressed concern that the governor had not
included any funding for the major maintenance of schools
to enhance longevity. Commissioner Hanley responded that
there had been an ongoing conversation with Governor
Parnell, and there was a list of expenditures to consider.
He postulated that it had been the intent of the governor
to put something forward that was fiscally responsible, in
hopes that the legislature would weigh in on areas of
needed maintenance.
5:15:14 PM
Senator Olson commented that the fiscal responsibility
seemed somewhat lacking if the current buildings were not
being maintained. He opined that the Commissioner's
explanation was a poor characterization of the missing
maintenance items.
Senator Hoffman agreed with Senator Olson and noted that
there seemed to be selective decision making when there was
money in the budget for deferred maintenance for the
University of Alaska and other facilities throughout the
state, yet the only area that did not receive a major
component was schools.
Senator Dunleavy referred back to the subject of the HSGQE
and mentioned recent testimony by former Alaska State
Senator Con Bunde, who had been instrumental in its
creation. He inquired if it had been the intent to
eliminate the exit exam as part of the diploma-granting
process, or rather to eliminate the test itself because it
was outdated. Commissioner Hanley replied that the intent
had been a little bit of both. When the HSGQE was
originally put into place, it was a primary evaluative tool
to measure student progress and preparation. In the years
since, other measures had been developed including
formative assessments that guide instruction. Commissioner
Hanley further opined that the state still had the same
remediation needs which were originally a motivating factor
for development and implementation of the test. Further,
it had not been a good indicator of graduation outcomes or
success following high school.
5:19:12 PM
Senator Dunleavy inquired as to how the DEED would know
that a graduating senior was ready to leave the system.
Commissioner Hanley responded that the department relied
heavily on the school districts to determine preparation
through course grades and credit requirements.
Senator Dunleavy inquired if the HSGQE was put in to place
as a result of any federal compliance issues such as No
Child Left Behind (NCLB) funding requirements. Commissioner
Hanley replied no, only half of the states had a high-
stakes exam such as the HSGQE.
5:20:49 PM
AT EASE
5:23:08 PM
RECONVENED
BRUCE JOHNSON, EXECUTIVE DIRECTOR, ALASKA COUNCIL OF SCHOOL
ADMINISTRATORS (ACSA), spoke to four components of HB 278.
He stated that the council was supportive of course credit
mastery, but limited to subject areas that were more easily
assessed by conventional exams (math, English, science,
social studies and world languages). He cited the
difficulty of assessing areas that involve more
subjectivity and how it subsequently creates a challenge to
maintain equitable treatment for all students throughout
the districts and state. He reiterated support for the
credit component of the bill and further explained it would
help students move forward more quickly in their education
and perhaps even move into earning dual credit. He spoke to
school and district designations and stated that the ACSA
supports the current star rating system; he noted that it
was new and still being tried out. He also noted its
efficacy and characterized it as being about continuous
progress. He stated the ACSA was split on the issue of
teacher tenure; in part it was reconciled by the other body
as they considered school municipalities, first-class
cities, and Rural Education Areas under 5,500 population to
be able to grant tenure in three years and the other
districts would then move to five. The rationale is one of
recruitment. He noted that some ACSA members believe many
new teachers are unconcerned with retirement during their
first years of work.
Mr. Johnson noted that the ACSA had heard from large
population districts that it would be helpful to have extra
time with tenure, particularly with hard to fill positions
and unique circumstances. He went on to describe a concept
they had discussed under which tenure would not be granted
until after the third year (which takes care of districts
that are involved in municipalities and first-class cities
under 5,500); other districts could grant tenure after the
third, fourth, or fifth year depending upon individual
growth of the teacher. The value added is the extra time
in which to evaluate teacher growth. He cited an
illustrative example of two special education teachers who
had not been retained after their third year for reasons of
imposed tenure consideration despite uncertainty about the
capability of the employee. He concluded that the concept
could work in Alaska, and had been considered by some of
the council members.
5:29:09 PM
Mr. Johnson addressed the subject of funding and related
that the ACSA was cognizant about Alaska's changing fiscal
future and the importance of using the state's funds in the
most advantageous way to improve education for all kids.
He noted that ACSA membership preferred the money within
the BSA for obvious reasons. The organization appreciated
funds outside the formula, honored the unique circumstances
of school districts, and put the money through the formula
as funds were awarded. He went on to relate that school
districts have looked at potential cost savings with the
insurance health pool, including 100 percent of school
districts participating. He noted that this was an example
of their commitment to cost saving measures, and that the
ACSA was open to exploring new approaches and would work
with the legislature to explore possibilities in light of
the fiscal situation.
Senator Dunleavy inquired as to where the ACSA stood on the
tenure issue. Mr. Johnson responded that the council agreed
with the three-year span in small/rural districts - the
districts thought this was necessary in order to attract
individuals to their district with the potential of
achieving tenure more quickly. He noted that many of the
larger districts preferred a longer time frame, which could
be a helpful tool in some situations.
Senator Dunleavy inquired if they would support a statewide
salary study as well as a healthcare study. Mr. Johnson
responded that the ACSA was ready to explore any of those
possibilities. He also noted that he knew the committee had
communicated that if there were not cost savings and the
proposed element was not a good idea, it would not be
implemented.
5:34:44 PM
RON FURRER, PRESIDENT, NATIONAL EDUCATION ASSOCIATION-
ALASKA (NEA), related that he had nothing to add to his
prior testimony, but that he was ready to answer questions.
Co-Chair Meyer noted that Vice-Chair Fairclough had several
questions.
Mr. Furrer hoped that the committee had a copy of a
document dealing with teacher terminations [NEA Teacher
Tenure Chart, dated April 10, 2014 (copy on file).] Co-
Chair Meyer noted that the committee did have the document
in question.
Vice-Chair Fairclough inquired about NEA's position on
tenure, and noted that Mr. Furrer had gone quickly through
his testimony. Vice-Chair Fairclough reiterated some of the
items she thought he addressed, but asked for more
clarification. She further asked Mr. Furrer if there were
specific things he did not like in the bill and to propose
an option for fixing any problems being addressed.
Mr. Furrer replied that NEA-Alaska believed that the
current tenure process was not broken. He was aware that
some think that tenure must be given or denied after three
years; however, he disagreed. He had worked with several
teachers that did not meet or exceed the state standards
after three years. The teachers had been put on a plan of
improvement and had another year to show they could
perform. He noted that when Alaska was recruiting teachers,
it would be difficult to get a teacher to consider Alaska
with one of the highest tenure laws in the nation. He
related that the defined contribution plan was another
disincentive. He referred to some statistics from the
Alaska Retirement Management Board, citing that since July
2006, Alaska had hired 3,037 teachers. However by June of
2012, only 632 of those teachers had stayed in Alaska for
more than five years; about a 20 percent retention rate.
Of the 12,297 PERS employees hired in the same period, only
989 stayed for five years or more, which represents a
retention rate of approximately 8 percent. In the last two
years defined contribution employees who had left public
employment, in both PERS and TRS, have withdrawn almost $33
million from the system, much of which has left the state.
He stated that according to the rules of the defined
contribution plans, at the end of five years, public
employees as well as teachers can take 100 percent of what
they contributed to the plan and 100 percent of what the
employer has contributed. He characterized the issue as "a
merging of disincentives," and noted that having the
ability to attract and retain the best and brightest
teachers was the primary reason for the concern regarding
moving to a five year tenure.
5:40:49 PM
Vice-Chair Fairclough referred to Section 30 through 41 of
the bill and asked Mr. Furrer if he wanted to expand on his
testimony regarding expanding tax credits to K-12 for
public or private non-profit agencies or schools. Mr.
Furrer noted that in the current and previous sessions
there had been concerns regarding public monies and private
institutions; the NEA wondered if for-profit companies were
getting a tax credit for monies that went to private
institutions or K-12, and expressed its concerns about the
constitutionality.
Co-Chair Meyer thought that he recalled that the state
currently allowed tax credits for vocational technical
education in high school and post-secondary. Senator
Dunleavy noted that that was correct, and that the Governor
is adding some additional recipients of the tax credits in
his bill.
Co-Chair Meyer inquired if any state had zero tenure in its
system. Mr. Furrer replied that Washington D.C. was the
only state he could identify with no policy. He summarized
differing state tenure policies.
5:43:35 PM
Senator Bishop inquired if the information that Mr. Furrer
was referencing could be provided to the committee. Co-
Chair Meyer thought that there was some misinformation with
regard to the document.
Vice-Chair Fairclough referred to the statewide salary and
benefits section, and reiterated that Mr. Furrer had spoken
in opposition to a statewide salary and benefits survey.
She queried how to solve the issue of maintaining local
control while at the same time coming to the state when
they cannot pay the bill. Mr. Furrer responded by
revisiting the issue of student achievement and teacher
proficiency. With regard to the statewide salary and
benefits survey, he stated he believed the $600,000 plus
would be more useful in looking at the foundation formula.
He mentioned that a statewide salary could place rural and
urban areas in competition for teachers, which could be
challenging for rural communities.
5:46:46 PM
Vice-Chair Fairclough noted that the question was how the
state controlled the budget and maintained local control
without the revenue to do so. She expressed optimism about
the future but emphasized the need for a holding pattern in
the current fiscal climate. She used the analogy of kids
with a credit card to illustrate the current spending
patterns. She noted that the two finance committees did not
currently have a way to manage the spending side of things.
She queried Mr. Furrer as to whether there was a way for
them to manage spending together. She revisited the idea of
setting a salary schedule, which would let people know what
to expect in terms of spending, and furthermore currently
constituted 85 to 90 percent of what the state was
investing in schools.
Mr. Furrer replied that he had been told that school
district settlements negotiated at the local level had
achieved smaller increases than those settled by the state.
He clarified that this is was what he has been told and he
was not in possession of backup information.
5:49:11 PM
Vice-Chair Fairclough noted that based on that information,
the council should advocate for letting the state set the
scale. Mr. Furrer responded that he guessed so.
Senator Bishop wondered if there were other states in which
their education association negotiated a collective
bargaining agreement with the state. Mr. Furrer replied
that he believed Hawaii was the only state with a statewide
salary schedule.
Senator Dunleavy clarified that the reason was that there
was only one (statewide) school district in Hawaii.
Senator Dunleavy thanked Mr. Furrer for his testimony and
noted that he and the NEA "have not always been on the same
side of things." He commented that one of the things that
Vice-Chair Fairclough was getting at was that Alaska was a
very unique state with regard to how it funded education,
whereas in the Lower 48 there were many county school
districts with the power to tax and bond for both
operations and capital. He further described them as local-
controlled districts with an elected board, and responsible
to the people for fiscal issues. He also noted that the
recent negotiated salary increases in state have been
small, but there had not necessarily been any controls over
it. He continued to explain a hypothetical scenario of a
district negotiating a raise that was not sustainable, then
coming to the state for additional funds. He also
referenced an issue in Copper River many years ago in which
the district tried unsuccessfully to file for bankruptcy.
He summarized the concern of determining how to control
costs so that the state would have enough funding to
continue to provide education throughout the state.
Mr. Furrer noted that he was hoping that someone would ask
what the one thing was that would improve student
achievement. He explained that as a group the NEA was very
concerned about attendance. He noted frustration with the
compulsory attendance law stating that students must only
attend until they are 16.
Senator Bishop commented that had an idea he wanted
everyone to work towards. He expressed concern that an
Alaskan born individual could go to the University to
become a teacher and then could not get hired in the state
of Alaska, yet could get hired out of state.
5:54:04 PM
Senator Dunleavy inquired how Mr. Furrer would fix the
attendance issue in schools. Mr. Furrer referred to his own
experience as a teacher and the resultant frustration with
students not attending school. He brought up the importance
of accountability in students, which was lacking.
Senator Olson commented that in Golovin he had noticed that
there was an upsurge in attendance with the offering of a
school breakfast program. He added that there were other
reasons that contribute to absenteeism such as lack of
sleep, parental neglect, and parental disinterest in
education.
5:58:03 PM
SUNNI HILTS, PRESIDENT, ASSOCIATION OF ALASKA SCHOOL BOARDS
(AASB), SELDOVIA (via teleconference), stated that in the
interest of time she would address only one portion of the
bill. She related that school board members took their
stewardship of public money seriously. She added that
salary negotiation was one of the most difficult issues
they dealt with; but they understood the reasonability they
had been given and try and keep costs down while still
affirming the importance of their teachers, support staff,
and administrators. She reiterated the request for
additional funding inside the foundation formula, of which
salaries were a part. She recognized the state deficit and
expressed that the AASB wanted to be part of a solution.
She related that currently increasing costs required the
AASB to eliminate programs needed to ensure student
success. She again urged the committee to add money to the
foundation formula.
NORM WOOTEN, DIRECTOR, SCHOOL IMPROVEMENT AND GOVERNMENTAL
RELATIONS, ASSOCIATION OF ALASKA SCHOOL BOARDS (AASB),
JUNEAU, described that AASB represented all 53 school
districts across the state, and noted that Alaska's school
boards were made up of elected officials statutorily
charged with governance oversight of the school districts.
He reported that each year AASB members coalesce around
positions that affect students, and that he would briefly
walk through the bill section by section to address areas
on which the AASB had taken a position. In Section 2,
regarding testing out of courses, the AASB supported
challenge tests to give students credit for mastery of a
subject. In Section 8, Mr. Wooten indicated AASB support
for staying with the star system of school rating rather
than changing to a letter grade. He noted that as a
requirement of the NCLB waiver, it seemed to be adequate to
let communities know how their schools measured up in
relation to other schools. In Section 9, Mr. Wooten
expressed that AASB members across the state supported
charter schools as an option as part of the school district
under the governance of a local school board. He clarified
that the AASB did not support an appeal of the denial of a
charter that went outside the authority of a local school
board. In Sections 11 through 13, Mr. Wooten reiterated the
AASB's support for charter schools, as well as its support
of efforts to make them more successful. He noted that
facilities were the greatest challenge that Alaska's
charter schools faced, and the right of first refusal to
lease district space would help alleviate that challenge
somewhat. Additionally, the startup grant would ease up
some of the initial challenges of opening a new charter
school. In Section 16, regarding the State Board of
Education reporting to the legislature on ways that schools
could be improved, Mr. Wooten relayed that the AASB had
always supported any effort to improve schools and create
efficiencies. He further noted that the AASB would welcome
the opportunity to work with the department towards that
end.
Mr. Wooten addressed Section 17, regarding charter school
pupil transportation, and reiterated support for charter
schools and for the provisions. He then noted that the AASB
found themselves at odds with the National School Board
Association (NSBA) on the subject of charter schools. He
expressed that as a state we believed in offering as many
educational choices as possible, while the NSBA perhaps did
not understand the various options that exist in Alaska
including but not limited to charter schools and
correspondence.
Mr. Wooten referred to Sections 18 and 19 and expressed the
board's support for residential boarding schools. In
Section 20, 21 and 22; dealing with the increase to the
BSA, he expressed the board's great appreciation for the
increase inside the foundation formula. He stated that
they are also grateful for a three year increase, as was
indicated in those sections. He added that the increase
would help them plan for the coming years. He noted that
the amount still did not meet the budget shortfalls that
exist in districts all across the state. In Section 23 and
24, regarding teacher tenure, Mr. Wooten related that the
board had a resolution supporting the increase in time to
acquire tenure. In Section 26, regarding dual credit
vocational courses (TVEP), the board was strongly in
support. He noted that students should be able to advance
as quickly as they can while being challenged. He added
that students would rise to whatever standards were placed
on them.
Mr. Wooten referenced Section 29, which dealt with
municipal tax exemptions for rental property of charter
schools, and expressed his support as he identified it as a
means of assisting and meeting the needs of charter
schools.
6:08:26 PM
Mr. Wooten addressed Sections 30 through 40, which dealt
with tax credits, and remarked that the AASB was not
specifically opposed to tax credits, however they were
opposed to the use of public money to support private
schools. In referring to Section 48, a one-time grant of
$30 million to districts with money outside the BSA, Mr.
Wooten noted the board's great appreciation and support. He
went on to recognize the legislature's additional support
through PERS, TRS, major maintenance, bond-debt
reimbursement, and categorical funding. He continued that
the board also recognized the proposal by the Senate to
fund schools with $100 million over the next two years. He
thanked the committee and stated he was available to answer
questions.
Senator Dunleavy clarified that the tax credit concept was
not public money, and in fact tax credit never touched the
public treasury. He noted that many people still considered
them public money, but the courts had ruled on the matter.
HB 278 was HEARD and HELD in committee for further
consideration.
6:12:12 PM
AT EASE
6:13:16 PM
RECONVENED
Co-Chair Meyer noted that Vice-chair Fairclough and Senator
Dunleavy had been working during the interim on various
education related subjects that are germane to the bill
itself.
Vice-Chair Fairclough referred to a contract with the Hay
Group, insurance pooling, and controlling costs in school
districts in the state. She noted that she would release
the reports in a moment and inquired if Senator Dunleavy
wanted to make any comments first.
Senator Dunleavy added that Co-Chair Kelly was also part of
this process over the summer and fall; it was part of an
expanded Senate Finance Subcommittee on Education. He noted
that he was looking forward to the release of the reports,
and the information wherein. He reiterated that we want to
exhaustively pursue educational issues and make sure
there's nothing in the policy that doesn't work for Alaska
and Alaskans.
6:15:09 PM
Vice-Chair Fairclough read from a report (copy on file) in
association with SB 90. She noted that the Hay Group's
contract has been extended to June 30, 2014; and that they
intend to continue the discussion and work on the rising
costs of healthcare for school districts across Alaska. She
stated that there are cost savings to be had, but there are
some concerns with school districts that they are committed
to working out before making changes in the legislative
session.
Co-Chair Meyer noted that he was also involved in this
process, in addition to Senator Dunleavy, Co-Chair Kelly,
and Vice-Chair Fairclough. Vice-Chair Fairclough added
that Senator Gardner and Senator Stevens also participated
as well as an extended group that drafted the original
Request for Proposal to start acquiring the information.
She continued that it was a group effort including all the
school districts that participated. Co-Chair Meyer noted
that there was 100 percent participation in the data
gathering.
Senator Dunleavy relayed that the legislature is mandated
by the constitution to establish and maintain a system of
public schools. He pointed out the differing levels of
engagement and involvement of legislatures over time, using
the example of the 1997 writing of the Foundation Formula
with the help of Senator Wilkens and his staff Sheila
Peterson. He continued by relating that due to our current
revenue projections and our oil commodity status, that we
need to become more actively involved in "untangling" the
education system to be sustainable and maintain/improve the
quality. He noted that it would take some time and charged
the legislature with looking at items such as construction,
healthcare and salaries/benefits in order to make the
system sustainable for the next 50 years.
6:19:46 PM
Vice-Chair Fairclough expressed appreciation for
legislative staff, department staff, and school districts
for their work and participation in the process.
Co-Chair Meyer inquired as to the next steps on the
subject. Vice-Chair Fairclough noted that there are summer
plans to continue the conversation. She reiterated that
there were cost savings to be had, but there are contracts
in place with a staged exit and other issues to evaluate.
She pointed out that they were currently acquiring all the
associated data to examine. She expressed that they wanted
to honor collective bargaining agreements that exist. She
noted the importance of understanding the ramifications of
cost savings, and cited an example of incorporating
Fairbanks school districts without consideration for the
impacts. She noted that they may revisit extending this
contract or asking for a new one, but currently having the
latitude to move forward this summer to examine insurance
pooling.
Senator Dunleavy noted that the advancement of SB 90 won't
take place this year due to time constraints, but the
concept will survive through the summer and it will
continue to be pursued in the future.
6:22:54 PM
Co-Chair Meyer
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