Legislature(2003 - 2004)
02/17/2004 11:03 AM House EDU
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* first hearing in first committee of referral
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HB 471-INCREASE AMT OF BASE STUDENT ALLOCATION Number 0070 CHAIR GATTO announced that the first order of business would be HOUSE BILL NO. 471, "An Act relating to the funding of public education; and providing for an effective date." He asked if Representative Ogg, Chair of the Subcommittee on Education Funding, would provide the committee with the subcommittee's recommendations. Number 0099 REPRESENTATIVE OGG told the members that it was an honor to serve on the subcommittee with Representatives Seaton and Gara. They did an excellent job in working with this complex and difficult subject, he said. Representative Ogg commented that the subcommittee listened to public testimony during two meetings. The testimony of school districts around the state was expressing how the districts' needs had not been met was very persuasive, he said. Number 0212 REPRESENTATIVE OGG explained that after taking testimony the subcommittee spent time discussing how to address education funding. He reminded the members that in the last [subcommittee] meeting a bill that dealt with Public Employees' Retirement System (PERS) and Teachers' Retirement System (TRS) increases was referred to the [full committee of the] House Special Committee on Education. Representative Ogg said that it was the consensus of the subcommittee to deal with PERS and TRS [funding] as a separate issue. At one point it was believed that PERS and TRS should be included in the formula funding [bill]; however, in looking at the numbers it became a differentiation [issue] between the actual costs under the TRS and PERS programs and formula funding. The subcommittee decided to deal only with formula funding, he clarified. REPRESENTATIVE OGG asked the members to look at HB 471 which is the vehicle the subcommittee believes best addresses [education] funding for FY 05. The number in the bill reflects an increase of $95. He added that the subcommittee does not recommend that number based on testimony taken and a lot of discussion. Representative Ogg told the members that the amount the subcommittee recommends is an increase of $210, to the total of $4,379. The subcommittee recommends an amendment be made to reflect those figures, he said. Number 0317 REPRESENTATIVE OGG recommended another amendment which would change the wording on page 1, line 6, where the words "beginning on July 1, 2005," would be inserted after the words "on July 1 of each year," he said. REPRESENTATIVE OGG explained that the subcommittee came up with the $210 figure based on testimony given [during subcommittee hearings]. The subcommittee used the figure provided by the Superintendent of the Anchorage School District who offered that a $388 increase would make the Anchorage School District whole. The testimony from around the state came in very close to that figure, he added. Some a little less, and very few were a little more, but nothing over $400. The amount each school district will get is based on their actual costs, he said. The way the subcommittee arrived at the $210 increase was by funding the PER [and TRS] requirement through a separate bill. The amount given to the subcommittee by the Department of Education and Early Development for [TRS and PERS] funding was $35,000,000, which would equal $178 from that $388 [figure provided by the Anchorage School District], giving the amount for education funding of $210. Representative Ogg thanked the other members of the subcommittee saying that it was not an easy task. Number 0460 CHAIR GATTO told the members that there will be amendments to the bill which will require a new fiscal note from the department. It will be provided by next Thursday's meeting, he said. Number 0523 REPRESENTATIVE OGG moved to have HB 471, 23-LS1645\D, before the committee as the working document. There being no objection, HB 471, version D, was before the House Special Committee on Education. REPRESENTATIVE OGG moved to amend HB 471 as follows [adopted as Amendment 1]: On page 1, line 6 Delete "$4,263" Insert "$4,379" There being no objection, Amendment 1 was adopted. CHAIR GATTO reiterated Representative Ogg's comments that this bill reflects a $210 increase [in education funding]. He told the members it is important to note that this bill does not address the TRS and PERS shortfall, so another bill will come before the committee to deal with that issue. He said that it is his understanding that [the figure for education funding] plus the bill that will handle the PERS and TRS increase is the figure which was given to [the committee] as that which was spent on education in FY 04. He told the members that most of the school districts are saying that if funding is provided at this level it would be satisfactory and the districts will not be faced with the drastic cuts that have been proposed. Number 0702 REPRESENTATIVE OGG moved Amendment 2 as follows: On page 1, line 6 After the word "year," Insert the words "beginning July 1, 2005," CHAIR GATTO pointed out that the budget being proposed is the 2005 budget. If this amendment were effective July 1, 2005, then there would be an increase in the formula plus the percentage increase. He asked Mr. Jeans to clarify [the impact of Amendment 2]. Number 0764 EDDIE JEANS, Finance Manager, School Finance and Facilities Section, Department of Education and Early Development, testified on HB 471 and answered questions from the committee. He explained that by changing the date to July 1, 2005 [the legislation] would effect the 2006 school year. REPRESENTATIVE OGG commented that the date he is inserting is not the effective date [of the law]. He clarified that this change would mean that the 2 percent increase would not take effect until the 2006 budget. Number 0819 CHAIR GATTO asked if there were any objections to Amendment 2. There being no objection, Amendment 2 was adopted. REPRESENTATIVE GARA advised the members that a third amendment is being copied for the committee's consideration. He added that he will provide the minority's report on the subcommittee at the same time [that he presents his amendment]. Number 0893 JOHN ALCANTRA, Government Relations Director, NEA-Alaska, testified on HB 471. He told the members that he represents almost 13,000 members on NEA-Alaska. Mr. Alcantra thanked the committee for their efforts, particularly for those amendments that brought education funding up to $4,379. He told the committee it is important to note that revenue sources that were published two months ago for the Constitutional Budget Reserve (CBR) draw for the current fiscal year was less than half that which was forecasted. It came in at $195.7 million, leaving $204.3 million in abeyance of the $400 million that had been discussed for a CBR draw, he said. Mr. Alcantra stated that he understands that the $35.8 million in TRS and PERS shortfall will be dealt with in a different bill. He reiterated his appreciation to the committee for their efforts, but added that he concurs with other legislators' statements that this [funding] does not address the past losses through inflation and it will not address the adequate funding issues in the future. Number 1180 RON RUCKER, President, Classified Employees Association, testified on HB 471. He explained that the Classified Employees Association's members are the support staff for the Matanuska- Susitna School District. When he looked at the original version of HB 471 he believed it to be totally inadequate. The [amendments] are a step in the right direction; however, it is important to note that this increase still does not make the district whole, he said. Mr. Rucker commented that he's come up with some quick numbers which reflects that the district will have a $2 million shortfall. He said he believes that will be the case even with separate funding for the PERS/TRS shortfall. At this rate the public school system will not be around very long, he commented. He said that the district is no longer cutting fat or meat; it is cutting the bone that supports public education. Mr. Rucker summarized his comments by saying that education needs to be funded adequately because education [of the youth] is the future of this state. Number 1167 CHAIR GATTO asked Mr. Rucker to provide him with a name of an individual who can confirm that the Matanuska-Susitna School District will have a $2 million shortfall. MR. RUCKER responded that he did a rough estimate; based on the $8 million in cuts Mr. Doyle [Chief School Administrator, Matanuska-Susitna Borough School District] said there would be. He said that if [there were originally] $8 million in cuts, of that $8 million, $3 million is for PERS and TRS, that leaves $5 million [in cuts] on the table. Roughly 14,000 students times a $210 increase [in base student allocations] would mean an increase of approximately $2.9 million. That leaves [the district] approximately $2 million short of the $5 million shortfall, he said. The increase does not make this district whole, he stated. He pointed out that the district does not have the option of contributing additional local money that Anchorage or other communities have because the borough assembly is currently funding to the maximum amount [allowable by law]. He commented that this has been the case for a number of years. There is nowhere else to go but to cut programs and raise fees to residents and students. CHAIR GATTO asked Mr. Rucker if he is aware of the funding formula and how that works with the base student allocation. He asked Mr. Jeans to comment on the impact of the base student allocation. Number 1293 MR. JEANS responded that as Chair Gatto pointed out, there are a number of adjustments that occur in the foundation program. There is an adjustment for school size, district cost factors, and 20 percent [additional] funding for special needs [students]. The numbers will be higher than a straight per student times a dollar amount. He summarized that there will be a different number on the fiscal note going to Matanuska-Susitna Borough School District than the number Mr. Rucker mentioned. Number 1340 KRIS MOORE, Valley Voices for Children (VVFC), testified on HB 471. She offered her thanks for the work the committee is doing. She said she believes the amendments show that the state is moving in the right direction. She told the members that VVFC would be happy to help in seeing that this legislation passes. She said that she understands that [a separate bill addressing] the TRS and PERS funding issue will be coming to the committee; however, she does not see this as an education funding issue, but a revenue issue. Number 1453 CHAIR GATTO announced for the record that Representative Wolf joined the meeting some time ago. Number 1474 JENNIE HAMMOND testified in support of the amendments to HB 471. She told the committee that last night she attended a work session on the budget by the Kenai Peninsula School District. She warned that this increase will still not fully fund education in the Kenai Peninsula School District. The district is looking at reducing special education, she said. Ms. Hammond asked if the committee would create a task force for special education to look at the issue. She also asked the members to look at the idea of giving tax cuts on gas to companies that deal with the district. That might ensure that the companies do not pass the additional costs to the district, she said. Number 1565 REPRESENTATIVE SEATON asked Ms. Hammond if she recalls what base student allocation figure was used at those meetings. MS. HAMMOND responded that the figure used in the meeting to adequately fund education was $4,570 for FY 04. Number 1605 REPRESENTATIVE GARA noted that both Kenai and Matanuska-Susitna testifiers have said that roughly $4,570 would be necessary to adequately fund to FY 04 [level], and ensure that no additional teachers would be fired. It is important to note that [the increased] funding does not make up for all the teachers who were fired the year before. Representative Gara noted that Kenai said that going into this year it was necessary to layoff 10 percent of their teachers. The $4,570 would [still] leave Kenai at the point where it has lost 10 percent of the teachers. He said the point is well taken that this increase does not make districts whole. Number 1666 MELODY DOUGLAS, Chief Financial Officer, Kenai Peninsula School District, testified in support of HB 471. She echoed the appreciation expressed by others in amending HB 471 to include increases in education funding. Ms. Douglas said that this is movement in the right direction. She said she realizes that the PERS and TRS funding is not included, but the way she calculates this, the figure will come in around $4,557, which would [still] leave the district $13 off the base unit for what would hold the district to the FY 04 standards. Ms. Douglas commented that she really appreciates the language for the 2 percent increase in funding for next year; however, she said she is very concerned that the cost of inflation may exceed that [amount]. She concluded her testimony by offering to assist the members in any way possible as the bill proceeds through the legislative process. Number 1744 ANDI STORY, Board Member, Juneau School District, testified in support of HB 471. She told the members that she is the parent of three children in the Juneau School District. Ms. Story told the members that her family has been in Alaska for 17 years, but when her daughter was small, they lived in San Diego and had the opportunity to move back to Juneau to work on their business. When her first daughter started kindergarten in 1990, she was one of 21 students in the class; when her second daughter started, she was in a class of 29. It is important to understand that as the education system fails to provide a quality education, it is more difficult to attract people to Alaska. She said she does appreciate the work of the committee. Ms. Story commented that in the work session she is attending tonight there will be discussions which will focus on what to cut. Number 1877 CHAIR GATTO announced that HB 471 would be held until Thursday's meeting. HB 471-INCREASE AMT OF BASE STUDENT ALLOCATION [Contains discussion of HB 477] CHAIR GATTO announced that the committee would return to discussions about HB 471. He told the members that Representative Gara would provide a minority report on the subcommittee on education funding. Number 1907 REPRESENTATIVE GARA asked if the chair wishes to take up Amendment 3 today. CHAIR GATTO responded that he would like to hold off on Amendment 3 until Thursday. Number 1977 REPRESENTATIVE GARA said that he appreciates all the efforts of the subcommittee members and those who took the time to testify. The bill before the members goes a long way to repair the damage to the schools over the last many years, he said. Comments that were heard today from the Matanuska-Susitna Borough School District and testimony heard in subcommittee actually went further than what the bill offers. For example, Kenai Peninsula School District indicated that it would need a base student allocation of $4,570, if the PER and TRS was rolled into the [base student allocation], just to be held harmless to last year's level, he said. Matanuska-Susitna Borough School District needed the same amount of money to be at the same level as last year, he added. Representative Gara reminded the members that the school districts were very clear that last year education funding was cut and the funding fell behind on inflation [proofing]. These actions caused severe impacts which required the districts to layoff substantial numbers of teachers. Representative Gara pointed out that HB 471 only mitigates this year's damage and does nothing to repair the damage from last year's [budget cuts]. Number 2010 REPRESENTATIVE GARA told the members that he and Representative Kapsner have filed HB 477 in an attempt to go the second step in repairing some of last year's damage. As the members will recall, he said, last year the legislature eliminated community schools funding, cut what goes into pupil transportation, cut the program that helped school districts pay for the extra costs of educating foster children, and cut the kindergarten program for four-year olds. Representative Gara said he believes it is time to start repairing the damage. He explained that his plan would include an increase in the base student allocation to $4,600 per student, which would include rolling the PERS and TRS amount [into the bill]. The reason that is important is that the amount then becomes part of the base student allocation and it will not be necessary to go over the PERS and TRS issue again next year. The numbers are not that far off, he commented, the number in HB 477 recommends is $4,600, while the number the subcommittee is recommending is the equivalent of $4,557 per student. Representative Gara pointed out that the difference is $8 million and 160 teachers. He summarized that for not a lot more money [the legislature] could go a long way to solve this problem. Representative Gara applauded the subcommittee's action in addressing inflation by increasing the base student allocation into the future by 2 percent annually. He pointed out that inflation may exceed 2 percent so a better way of addressing this issue would be to acknowledge the damage that has taken place over the last decade, and to repair that damage into the future by increases to the base student allocation with inflation [proofing], plus another 2 percent until class sizes come down to a level that is acceptable. Representative Gara reiterated his appreciation for the work the committee did and acknowledged that [HB 471] is a good bill, but noted that there is much to be done to repair past damage [to public education]. Number 2162 CHAIR GATTO commented that Representative Gara's reference to the funding being "not that far off" is music to his ears, because there have been many times that the members have been very far apart. [HB 471 was held in committee.]
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