03/03/2010 08:00 AM House EDUCATION

        HB 350-PUBLIC SCHOOL FUNDING: LOCAL CONTRIBUTION                                                                    
                                                                                                                                
8:34:51 AM                                                                                                                    
                                                                                                                                
CHAIR SEATON announced  that the next order of  business would be                                                               
HOUSE BILL  NO. 350, "An  Act relating to the  local contribution                                                               
to public school funding; and providing for an effective date."                                                                 
                                                                                                                                
DAVE  JONES, Assistant  Superintendent,  Kenai Peninsula  Borough                                                               
School District (KPBSD), informed  the committee that legislation                                                               
enacted  in  2001   created  a  disparity  in   local  mill  levy                                                               
equivalents and  a serious equity  issue among  school districts;                                                               
however, HB  350 would resolve  the equity issue.   Historically,                                                               
his  school district  has been  "funded to  the cap,"  thus local                                                               
support provided  by taxpayers has increased  significantly.  The                                                               
bill would lower  the [local maximum allowed by  law] and provide                                                               
local  taxpayer  relief without  a  revenue  loss to  the  school                                                               
district; therefore,  he related that  the KPBSD school  board is                                                               
in strong favor  of HB 350, and  would like to see  the bill move                                                               
forward.                                                                                                                        
                                                                                                                                
8:37:16 AM                                                                                                                    
                                                                                                                                
GEORGE  TROXEL, Superintendent,  Mat-Su Borough  School District,                                                               
paraphrased  from a  prepared statement,  which  read as  follows                                                               
[original punctuation provided]:                                                                                                
                                                                                                                                
     House  Bill 350  reduces the  revenue available  to the                                                                    
     Mat Su School District  without increasing local taxes,                                                                    
     and  furthermore,  that   impact  is  exponential  over                                                                    
     coming years.  I don't  support HB 350 for that reason.                                                                    
     The  Mat-Su School  District is  experiencing financial                                                                    
     hardships due to the general  nature of expenses rising                                                                    
     faster  than  revenues  in these  times.    Given  this                                                                    
     scenario,  the Mat-Su  and two  other Districts  in the                                                                    
     state are singled out by HB  350 to get a double whammy                                                                    
     in the area of revenue shortfalls.                                                                                         
                                                                                                                                
     The Mat-Su  School District  has a  growing enrollment,                                                                    
     over  800  students  in  the last  three  years.    The                                                                    
     District did realize  revenue enhancements generated by                                                                    
     the  growth.   Revenue  increases  received because  of                                                                    
     increased enrollment  take care of  day-to-day expenses                                                                    
     but  not  the  expenses  of more  general  support  and                                                                    
     infrastructure,    such    as    buildings,    grounds,                                                                    
     furnishings, and equipment.                                                                                                
                                                                                                                                
     In  the past  10 years  as many  new schools  have been                                                                    
     opened in the  Valley.  The opening of  new schools has                                                                    
     tremendous impact on annual budgets.   In the Mat-Su we                                                                    
     plan approximately  a million  dollars above  the usual                                                                    
     annual operating costs for that  first year a school is                                                                    
     open.   Growth in the  Valley is  a good thing  for the                                                                    
     State of  Alaska, growth has  its costs, and  while the                                                                    
     Valley appreciates the Stat's  support in handling this                                                                    
     growth that help  is also an expectation  for which the                                                                    
     state as a whole realizes dividends.                                                                                       
                                                                                                                                
     New  schools  are needed  in  the  Valley.   These  new                                                                    
     schools  will   further  stress  the   property  owners                                                                    
     capacity  to keep  up with  increasing demand  for more                                                                    
     tax  dollars  to build  these  schools.   The  District                                                                    
     currently  uses 61  portable buildings  for classrooms.                                                                    
     These   house  close   to   2000   student  full   time                                                                    
     equivalents.  Bonds will need  to be passed in the near                                                                    
     future that  will rely on  subsequent tax  increases to                                                                    
     construct these needed schools.                                                                                            
                                                                                                                                
     House  Bill 350  ultimately puts  the askance  for more                                                                    
     dollars  from  property  owners in  the  Mat-Su.    The                                                                    
     valley  is not  a home  to  major or  great amounts  of                                                                    
     industry.   Many  of our  taxpayers are  those who  can                                                                    
     least  afford more  and  more  property tax  increases.                                                                    
     Median incomes for  most who work in the  Valley are on                                                                    
     the low  end of the scale.   Multiply that by  the fact                                                                    
     that a  sizable percentage  of gross property  value in                                                                    
     the Valley is not a  result of newly developed property                                                                    
     resulting   from  growth,   but  rising   property  tax                                                                    
     assessments  on existing  property.    When higher  tax                                                                    
     assessments come about because  of increased value of a                                                                    
     property,   the  long   term  property   owners  become                                                                    
     victims.  Just because  a property's value increases it                                                                    
     does not follow that a  property owner's ability to pay                                                                    
     more in taxes increases.                                                                                                   
                                                                                                                                
     All  of us  are  in dire  budgetary circumstances  with                                                                    
     more  and more  challenges.   This is  not the  time to                                                                    
     change formulas  for funding  where anyone  loses while                                                                    
     others are experiencing substantial gains.                                                                                 
                                                                                                                                
8:40:56 AM                                                                                                                    
                                                                                                                                
CHAIR SEATON asked  for clarification on how HB  350 would reduce                                                               
the  revenue  available to  the  Mat-Su  School District  without                                                               
increasing local  taxes.  He  observed that the intention  of the                                                               
bill was to lower the mill rate across the state.                                                                               
                                                                                                                                
8:41:38 AM                                                                                                                    
                                                                                                                                
MR. TROXEL explained that HB 305  changes the base year from 1999                                                               
to  "one year  in the  past."   Due to  the increase  in property                                                               
values, even  though the mill  rate remains constant,  the dollar                                                               
amount of the  assessment is greatly increased.   In future years                                                               
to maintain  funding, those  dollars would  be provided  by local                                                               
taxpayers.                                                                                                                      
                                                                                                                                
8:42:39 AM                                                                                                                    
                                                                                                                                
CHAIR SEATON  pointed out the  intent of  the bill was  to assign                                                               
all of  the municipalities  across the state  the same  mill rate                                                               
required for local contributions.   He surmised the mill rate was                                                               
not Mr. Troxel's concern.                                                                                                       
                                                                                                                                
8:43:28 AM                                                                                                                    
                                                                                                                                
MR. TROXEL  said he is  not opposed to a  2.7 mill rate,  but the                                                               
shifting  of the  base year  to a  more recent  year with  higher                                                               
property values, results  in a substantial increase  in the local                                                               
contribution.                                                                                                                   
                                                                                                                                
CHAIR  SEATON restated  Mr. Troxel's  objection to  the bill  was                                                               
regarding  the change  from a  fixed base  year, with  new growth                                                               
taxed at 50 percent, to a rolling base year.                                                                                    
                                                                                                                                
8:45:19 AM                                                                                                                    
                                                                                                                                
MR. TROXEL said yes, and added  that the relevant provision is in                                                               
Sec. 4 of the bill.                                                                                                             
                                                                                                                                
8:45:57 AM                                                                                                                    
                                                                                                                                
COLLEEN VAGUE, President, Mat-Su  District School Board, informed                                                               
the committee her school district  has built eight new schools in                                                               
the last ten years.  Each  school was financed by homeowner bonds                                                               
that increased  taxes for  homeowners.  She  noted that  three of                                                               
the new elementary schools are now  at, or over, capacity and the                                                               
district  lacks sufficient  buildings  to house  and educate  its                                                               
school population.  In addition,  at the current growth rate, the                                                               
district  will  be further  behind  in  five  years.   Ms.  Vague                                                               
pointed  out that  the increase  in student  population does  not                                                               
result  in  more money  for  school  construction; in  fact,  the                                                               
student population  in the Mat-Su School  District increased from                                                               
12,699 students in 1999 to  the present count of 16,673 students.                                                               
She reiterated  the school  board's opposition to  Sec. 4  of the                                                               
bill.                                                                                                                           
                                                                                                                                
8:49:29 AM                                                                                                                    
                                                                                                                                
CHAIR SEATON stated that HB 350 would be held over.