Legislature(2003 - 2004)
03/04/2004 09:02 AM Senate FIN
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* first hearing in first committee of referral
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+ teleconferenced
= bill was previously heard/scheduled
SPONSOR SUBSTITUTE FOR SENATE BILL NO. 1
"An Act relating to the base student allocation used in the
formula for state funding of public education; and providing
for an effective date."
This was the first hearing for this bill in the Senate Finance
Committee.
Co-Chair Wilken stated this bill "increases the student dollar in
our base student allocation in our foundation formula." He
remarked, "all of us have heard the school bell; it's rung" and
that that this legislation is the start of addressing the need of
adequate funding for education.
AMENDMENT #1: This amendment increases the base student allocation
from the existing $4,169 currently provided in AS.14.17.470 and the
$4,263 amount proposed in the bill, to $4,576.
Co-Chair Green moved for adoption and commented that although she
supports this legislation, this amendment would be an improvement.
AT EASE 9:05 AM / 9:06 AM
Co-Chair Wilken objected for an explanation.
Co-Chair Green noted this amendment would increase the base student
allocation, and result in an approximately $82 million increase to
the foundation funding formula distributed across the state over
the FY 04 budget year.
Senator Bunde asked the increase per student over the current
funding amount.
Co-Chair Green replied $407.
Senator Bunde asked the reason for this amount of increase.
Co-Chair Green relayed concerns expressed regarding funding for
each school district, along with the unanticipated increased costs
of the Public Employees Retirement System (PERS) and the Teachers
Retirement System (TRS) and increased insurance expenses of up to
ten percent, which the school districts could not control. She
shared that she has received comments from some districts that she
has never before heard from, that despite efforts to control costs,
increased funding for these expenses are necessary. She informed
that this funding increase would allow districts to budget for the
next two years.
Senator Bunde remarked that his was "well aware" of the PERS/TRS
"problem" but expected it should be funded separately rather than
"lock it in" to the base student allocation. He supported utilizing
the earnings reserve fund for these expenses. He also noted that
although this increase would eliminate the budget deficit of the
Anchorage School District, it would also increase the allowable
local contribution. He characterized this proposal as "good
news/bad news."
Co-Chair Green hoped that most of the districts that have requested
the legislature solve the funding problem understand that this
proposed increase would increase the local funding limits and allow
districts to increase local contributions. She remarked that this
would allow community members to "participate" in the fiscal
situation of their school districts. She also expressed that no
funding increases would be requested the following year, given the
total increase of the foundation funding formula and funds
generated locally. She predicted this increase would address the
PERS/TRS situation for one to two years, although she understood
that a multiple year solution of five to twenty years would be
required. She remarked that this increase should convey that the
legislature is accepting responsibility and that local government
taxpayers and citizens should also accept responsibility.
Senator Bunde pointed out that 24 districts would not provide
increased local contributions because they make no contributions
currently.
Co-Chair Wilken commented that some school districts do not
contribute to the education expenses in their community and
therefore those districts would not receive increased local
funding.
Senator Hoffman asked if the intention is that the PERS/TRS
expenses would be addressed within the base student allocation
funding, and whether this funding would be sufficient according to
school districts' estimates. He understood from meetings with some
school district representatives that this funding plus an
additional one-time allocation is necessary.
Co-Chair Green shared that the funds indicated by district
representatives as necessary for the PERS/TRS and other increases
would be provided for in the amendment. She predicted that these
funds would be adequate for most of the larger school districts but
qualified that some smaller districts could have an anomaly and
require a different solution. She stated that this amendment would
provide funding necessary for the PERS/TRS increased expense in
those districts she addressed.
Senator Hoffman pointed out this funding increase would be
statutory and does not address the operating budget. He asked how
this proposal compares to Governor Murkowski's budget request and
his plans, noting that the Governor has announced he would support
a draw from the CBR of no more than $400 million for FY 05 and that
the legislature must generate an additional $200 million in
revenue, while this amendment would increase the budget $82
million. Senator Hoffman asked if the intent would be that the
legislature would increase the amount of revenue generated to $282
million, or reduce other appropriations to accommodate this
increase. He recalled the Governor's comments to the Conference of
Alaskans emphasizing his adamancy about dramatic budget reductions.
Senator Hoffman asked Co-Chair Green if the intent is to meet the
Governor's expectation of withdrawing no more than $400 from the
CBR.
Co-Chair Green replied that this amendment this is the first
portion of the budget process and represents an $88 million
increase for education. She anticipated that the Governor would
support this funding increase because he supports education; she
anticipated "great cooperation".
Senator Hoffman supported the concept of this amendment; however he
countered that the Governor also supports operating government
without withdrawals from the CBR. He pointed out that the governor
has a "red pen" i.e. authority to exercise the line item veto on
appropriation legislation and has the final say unless the
legislature overrides the veto with a three-quarters majority vote.
Senator Hoffman remarked this is a high standard. He emphasized
that he supports education funding but needed assurance from Co-
Chair Green that the governor would also support an increased
budget and not exercise the line item veto authority to limit the
CBR draw to $400 million.
Co-Chair Green reiterated this is the first portion of the budget
process and that more would be known in the coming weeks. She
informed that she has been in discussions with the Governor.
Senator Hoffman asked if Governor Murkowski exercised the line item
veto, whether the legislature would "take a stance" and override
those vetoes.
Senator Hoffman agreed with this increased funding for education
and that it should be appropriated before the end of the
legislative session, provided that the Senate Minority's goal to
spend monies from the CBR as a last option is achieved.
Senator Bunde noted he has heard this amendment would cost $82
million and also $88 million and asked the correct amount.
Co-Chair Wilken stated that the cost of SB 1, as amended would be
$82 million.
Co-Chair Wilken removed his objection and the amendment was
ADOPTED.
Co-Chair Wilken noted those present to testify to this bill.
Co-Chair Wilken ordered the bill HELD in Committee.
AT EASE 9:23 AM / 9:23 AM
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