Legislature(2011 - 2012)CAPITOL 106
02/17/2012 08:00 AM House EDUCATION
| Audio | Topic |
|---|---|
| Start | |
| Superintendent Presentation: Fairbanks North Star Borough School District | |
| HB313 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
| *+ | HB 313 | TELECONFERENCED | |
| + | TELECONFERENCED |
HB 313-STUDENT COUNT ESTIMATES
8:35:06 AM
CHAIR DICK announced that the final order of business would be
HOUSE BILL NO. 313, "An Act relating to student counts and
estimates for public school funding; and providing for an
effective date."
The committee took an at-ease from 8:35 a.m. to 8:36 a.m.
8:36:24 AM
REPRESENTATIVE ERIC FEIGE, Alaska State Legislature, introduced
HB 313, paraphrasing from the sponsor statement, which read as
follows [original punctuation provided]:
Our school districts need effective tools to plan and
budget for the education of our children. Under HB
313 - subject to the hold harmless provisions, changes
in the Base Student Allocation [BSA], or other
legislative changes - districts will be able to
complete the budget process and determine staffing
levels earlier, eliminate unnecessary layoff notices,
and execute employment contracts to improve the
stability of the education climate in the state.
The purpose of the bill is to base the funding for
each school district in the state on the count under
A.S. 14.17.600 for the preceding fiscal year. For
example, the count conducted in October 2012 will
establish the funding level for the district for the
2014 Fiscal Year [FY].
The new funding formula will not change the "hold
harmless" clause currently in existence. If a
decrease in enrollment of five percent or more occurs,
the district will continue to receive funding based
upon the Average Daily Membership [ADM] plus the
75/50/25 percent addition over the next three years.
Other provisions of the foundation formula will remain
as well.
If a district has an actual increase in student count
of greater than five percent, this legislation will
require the Department of Education to provide
supplemental funding to the district for the current
fiscal year equal to Average Daily Membership for the
current year. For example, if the October 2013 count
is five percent larger than the October 2012 count,
the Department will provide supplemental funding to
the district for Fiscal Year 2014 equal to the
increase in the Average Daily Membership between the
October 2012 count and the October 2013 count.
The new funding method will implement with the FY 2014
year. Thus, the count conducted in the fall of 2012
will provide the funding level for both FY 2013 and FY
2014, subject to the hold harmless provisions.
An important consideration in this legislation is,
except for Fiscal Year 2014, the actual funding given
a district will not change, only the timing of the
funding.
8:40:13 AM
MICHAEL PASCAL, Staff, Representative Eric Feige, Alaska State
Legislature, suggested that the concept and base numbers be
considered prior to determining what may occur in a specific
fiscal year. He emphasized the need to provide districts with
advance BSA funding to allow for appropriate planning. The
problem of basing the funding on existing student counts is that
it does not allow for advance budgeting; you can't count a
student until enrollment is realized. However, if the count
system is based on a previous year's adjustments can be made.
He opined that large enrollment changes would represent an
anomaly and could be adjusted for over a period of years.
8:43:00 AM
DUNCAN WARE, Superintendent, Delta Greely School District, said
the process of funding could be improved by applying the current
student count to the coming year and allow for forward funding.
He opined that budgeting by guess work could be eliminated and
stability provided, by enacting this change. Three questions
rule a district's budgeting process: 1) how many students are
expected, 2) how much will be received per student, and 3) the
actual enrollment number based on the October count.
Eliminating the October variable, and using a solid number,
which could then be adjusted for in a planned manner, during the
next budget cycle, would provide a confidence level that is
currently lacking, he said. Teacher retention would be
positively affected, as non-tenured personnel would not need to
be put on notice every March 15th, and await notification of
retention or layoff; provided on the last day of the school
year. During this limbo time, teachers seek other positions,
and the ripple effect is felt throughout the school and
community. The district risks losing highly qualified
personnel, and everyone involved is impacted.
8:47:35 AM
REPRESENTATIVE SEATON inquired whether it is more important to
have a fixed attendance number to apply to the foundation
formula, or to know what the formula amount will be, pending
legislative approval. Further, he asked for clarity on how the
BSA would be established, applied, and adjusted. Specifically,
he questioned whether a district with a current enrollment of
nine thousand realizing a four percent increase, about 360
students, could absorb the associated costs without additional
funding for the year.
8:48:14 AM
MR. WARE said the primary budget question is based on the BSA,
and that is what currently dictates the funding level. He said
removing the BSA variable would be beneficial for planning
purposes, even if the funding remained flat. Regarding an
increase in the actual ADM, he said it is a matter of scale.
The grade level distribution of students entering the system
would play an important part, as it may not require hiring
additional teachers.
8:51:33 AM
REPRESENTATIVE CISSNA noted that access to the road system is
helpful, but the cost and accessibility of fuel is one of the
major factors in communities today. Many families relocate as
winter sets in and fuel becomes unavailable or unaffordable.
She asked if HB 313 accounts for this type of variable.
MR. WARE responded that it could be beneficial to small schools,
as the funding would be based on the previous year's count. If
the enrollment were to drop below state minimums, funding would
still be received, operations could be continued, and a
strategic plan could be created, he opined.
8:54:04 AM
REPRESENTATIVE FEIGE asked whether public aid funds are fully
expended each year, or is it possible to realize a surplus.
MR. WARE said that each budget has fluidity, and excess funding
is placed in a reserve account. He reported that reserve
balances are currently at about 7.8 percent.
REPRESENTATIVE FEIGE asked if a limit is imposed on the amount
that can be retained.
MR. WARE answered that the cumulative must be less than 10
percent.
8:55:45 AM
REPRESENTATIVE P. WILSON noted that HB 313 changes the method
for counting students, and directed attention to page 8, line
31, which read [original punctuation provided]:
d) Part-time students shall be included in the student
count data and in accordance with regulations adopted
by the department. (e) When reporting a district's
ADM, a part-time student who is a correspondence
student may not be counted as more than one full-time
equivalent student.
REPRESENTATIVE P. WILSON asked if the Delta Greely School
District has correspondence students, and whether this language
would effect a change in the status quo.
MR. WARE answered that the district does have correspondence
students, and they are currently counted at 80 percent of the
BSA, as long as they are enrolled for four or more credits. He
opined that the change would not have a major impact.
REPRESENTATIVE P. WILSON clarified that the language would not
propose to increase the correspondence count to 100 percent of
the BSA.
MR. WARE said no.
8:57:16 AM
CHAIR DICK asked the logic and origin for using five percent as
the critical variable rather than three or eight percent.
MR. PASCAL indicated that the current hold harmless clause is
established at five percent, thus, existing statute it was
adopted for inclusion in HB 313. To a follow-up question, he
explained the current hold harmless clause, which provides that,
if a school district loses five percent of their students based
upon the adjusted student count for the schools, in the first
year following the loss, only 25 percent of the expected funding
is retained by the state; 75 percent is received by the district
in order to continue operating and then declines for each of the
next four years, if enrollment does not increase, with a final
result of zero funding.
8:59:40 AM
CHAIR DICK noted that the bill contains a provision for
supplemental funding, and asked for clarity on the funding
source.
MR. PASCAL deferred to legal counsel, and stated his belief that
funds would be appropriated from the supplemental budget.
9:01:21 AM
MR. PASCAL continued to explain the considerations being
scrutinized to ensure that every school district will benefit
from the proposed legislation, including the foremost advantages
of funding stability and staff retention.
9:02:55 AM
REPRESENTATIVE FEIGE interjected the importance of retention,
and asked committee members to consider staff changes in their
offices and the disruptive effects that are inherent with
turnover.
9:03:48 AM
MR. PASCAL pointed out that the first seven pages of HB 313
primarily contain the necessary conforming language. He then
turned to page 8, line 4, to point out where new language has
been inserted to change the hold harmless clause. Moving on to
line 21, he paraphrased the language which read in part:
"determination of its state aid for the succeeding fiscal year
following the count period". Thus, he said the count that was
conducted this fall would be used for the following year's
funding. The hold harmless clause is set at five percent. If a
district's enrollment increases by five percent, or more,
funding will be provided from the supplemental budget, equal to
the increase in the adjusted ADM for the fiscal year. He opined
that for many school districts, such as Delta Greely, a five
percent increase, representing 50-60 students, unless they were
all entering one grade level, may or may not result in the need
for additional staff. Finally, the changes beginning on line 28
include new subsections to allow adjustments to the count based
upon existing statutes, and to eliminate the possibility of a
part-time or correspondent student being counted twice. Mr.
Pascal referred to the committee packet handout titled
"Statewide Average Daily Membership Fiscal Year 1988-2011," and
said it is important to note that the enrollment has been
primarily flat for the last 10 years. Considering that the
state has an overall stable student enrollment may make the
process easier, he opined. He then directed attention to the
second page of the handout, to explain the two charts comparing
equal percentage increases and decreases as applied to a
hypothetical ADM. The charts cover a six year period from FY12-
FY18, and calculate totals for the current and proposed methods,
with the resulting differences, to illustrate the proposed
budgeting and funding scheme. He finished reviewing the charted
totals, and said an issue may arise if the ADM follows a
constant increase, as a district would experience a continued
budget shortfall. However, ADM decreases would result in a
district being ahead each year. The districts would need to be
prepared to handle continued increases.
9:12:09 AM
REPRESENTATIVE CISSNA questioned the downside of the scheme, and
asked:
Who's holding the bag? ... Somebody is keeping the
debt a little longer. ... The state actually winds up
giving more ... longer, and ... there's probably
interest ... that comes into this picture.
MR. PASCAL responded that earned interest on reserve accounts
was not scrutinized for the purposes of the presentation. The
focus of the bill is to stabilize the situation. A fiscal note
is attached for review, but the direct answer to who is holding
the bag is that, he said, "It depends."
9:14:10 AM
REPRESENTATIVE FEIGE added that the level of scale is a
variable, and also where the enrollment changes occur; however,
the total state education appropriation remains the same. He
noted that a district experiencing a high rate of growth may
have more of a challenge to cover costs. He reminded that some
districts, such as Delta Greely, are allowed to retain up to 10
percent of budget overages to create a reserve from the surplus.
Municipalities will often retract surplus school funding, but
that is another matter to be considered, he suggested.
9:16:44 AM
CHAIR DICK cautioned that some districts may benefit, but some
may not, and asked whether the Association of Alaska School
Boards (AASB) and the school superintendents association were
consulted, along with EED, during the bill drafting process.
MR. PASCAL assured that various educational entities have been
approached; however, feedback is still being received. Concerns
are being scrutinized and complications are under discussion,
but the comments have primarily been positive.
9:19:13 AM
MR. PASCAL moved to the third page of the handout, with three
similar charts illustrating further examples of possible
outcomes, again comparing the current and proposed methods and
the differences. The end result in all scenarios is similar
under either method. He said the first year represents an
adjustment year, and strategies will need to be identified for
initiating the program while providing appropriate financial
support to districts.
[A brief conversation ensued to ascertain the relationship of
the theoretical numbers presented in the charts.]
9:26:29 AM
REPRESENTATIVE PRUITT said in the Anchorage area school ADM's
may fluctuate by as much as 500, and, applying that to the
example ADM of $5,680, that represents $2.8 million. In a given
year, the enrollment swings could represent millions of dollars,
and he asked for further information on how large districts will
be handled.
MR. PASCAL said the larger districts have been a concern
regarding how to minimize the impacts, and the dialogue is
continuing. He pointed out that Anchorage is allowed to retain
10 percent of their total budget, and if a three or four percent
increase were to occur, it would only require that a small
portion of the reserves be used to cover enrollment increases in
the first year.
REPRESENTATIVE PRUITT opined that the district may not create a
reserve with any surplus, but rather apply it to an existing
need. He cautioned against the presumption that a district will
reserve surplus funding.
9:29:43 AM
REPRESENTATIVE FEIGE reiterated that the municipalities often
retract the surplus funds. He offered examples of how the
percentage points could be manipulated to mitigate the
situation, and further, suggested that statute could be amended
to restrain municipalities and allow districts to retain surplus
funding.
9:31:55 AM
REPRESENTATIVE CISSNA offered that the politics of size does
have an impact. A question of what part health plays in a
community is easily answerable in a small area, but in a large
community it is more difficult to answer. She noted that the
arrival of a student into a small school, following the ADM
count, may present a burden, while in a larger school it may not
represent a significant impact.
9:34:31 AM
REPRESENTATIVE SEATON stated his understanding that the basic
premise is to provide funding security; however, he said:
The question ... for the districts is: Is budget
security on how many kids you had last year, more
important than getting the actual money paid to you to
educate the number of students you have this year. ...
I think that's the philosophical difference and I
think we're going to have to hear from ... school
districts on that.
REPRESENTATIVE SEATON pointed out that intensive needs students
are budgeted at 13 times the basic BSA. Thus, one intensive
needs student arriving or leaving an area would represent a
major funding factor in a school budget, and he asked whether
that cost scenario has been factored into the proposed
legislation.
MR. PASCAL, regarding the philosophical premise, agreed.
Budgeting for a subsequent year, via a method arrived at by
basing funding on a previous year's ADM, while not creating a
negative impact on the delivery of education due to a change in
the student count, poses a question; particularly for districts
experiencing a steady increase in the ADM. He said the same
amount will be budgeted but the question of when the funds are
received represents the major difference; similar to a savings
account that pays quarterly versus monthly. Addressing the
question of intensive needs funding, he said it is being worked
on with the department. Finally, he pointed out that EED has
provided a fiscal note, which represents the supplemental
funding.
REPRESENTATIVE SEATON referred to the charted examples and
suggested that the percentages be lowered from five to two,
which could then provide an increase in each projected year.
MR. PASCAL agreed, and indicated that it is a matter of scale,
with districts being affected differently by a changed ADM.
9:41:52 AM
REPRESENTATIVE SEATON asked if there would be a reason to
maintain the current hold harmless clause, if this bill is
adopted.
MR. PASCAL said perhaps not. However, given the impact that
cutting a teacher position may represent in a small community,
he opined that it's still a good clause to have in place.
REPRESENTATIVE FEIGE interjected that some districts are tied
into multi-year contracts with teachers, which would influence
how a diminished ADM might be handled.
REPRESENTATIVE SEATON pointed out that the current hold harmless
clause stipulates a reduction to 75 percent of the BSA, and the
proposed legislation continues funding at 100 percent, based on
the previous year.
MR. PASCAL concurred and said, "We're one year behind under the
proposed formula. So they still need to be paid for that year
the student was actually counted."
REPRESENTATIVE SEATON referred to the bill page 7, line 8, to
review the language, and request a chart for illustrative
purposes.
REPRESENTATIVE FEIGE agreed, and said a chart would help clarify
the proposed concept, and said that one would be provided to the
committee.
MR. PASCAL noted that the idea for HB 313 was suggested by a
school administrator and the intent is for it to help all
districts.
[HB 313 was held over.]
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB 313 Sponsor Statement.pdf |
HEDC 2/17/2012 8:00:00 AM |
HB 313 |
| HB313-EED-ESS-2-14-2012.pdf |
HEDC 2/17/2012 8:00:00 AM |
HB 313 |