Legislature(1997 - 1998)
03/09/1998 10:35 AM Senate FIN
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* first hearing in first committee of referral
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= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
SENATE BILL NO. 36
"An Act relating to transportation of public school
students; relating to school construction grants;
relating to the public school foundation program and to
local aid for education; and providing for an effective
date."
Co-chairman Pearce convened the committee and outlined the
schedule. She noted they would meet on 18 March at 10:00
a.m. prior to the Floor session at 2:00 p.m. There was no
meeting scheduled for Tuesday, 17 March. She said there
would be session Friday, 13 March.
(pause on record)
Co-chairman Sharp called the committee back to order and
introduced SB 36. He said everyone should have the work
draft from of the new CS "Q" version, dated 3/6/98. Also
there should be a new spreadsheet from the Department of
Education dated 3/9/98 including a new fiscal note and a new
audit report dealing with pupil transportation from
Legislative Budget and Audit.
Richard Cross, Deputy Commissioner, Department of Education
was invited to join the committee. He said the three runs
accompanying version "Q" were explained in his cover
memorandum dated 3/9/98. He noted that the values the runs
generate were covered in that. Page 7, line 21 the value
should be changed to $3,944; page 21, line 13 the value
should be changed to $3,888; and page 21, line 12 the value
should be changed to $3,855. The attached runs were
supporting documents of why the changes were made. Co-chair
Sharp asked if the dates would remain the same and Mr. Cross
responded that was correct. He said the only other value
they were asked to provide was the differential for
intensive needs students. They had tried to deal in whole
numbers. Co-chair Sharp asked if the fiscal note for pupil
transportation amendment as included remained the same? Mr.
Cross responded that it did.
Co-chair Sharp asked to revisit the quality school proposal.
He wanted to know what the fiscal note would be for the
first year and the years thereafter as proposed in amendment
was the one developed for SB 257 in the amount of $3.6
million in the first year, and similar but slightly
declining amounts across the years.
In response to a question by Senator Phillips, Mr. Cross
indicated that the #24.1 million added to the foundation by
the Governor would go to districts to cover implementation
and district expenses.
Co-chair Sharp said with that response it cleared up some of
his misunderstanding.
Mr. Cross said the lion's share of the $3.6 million was in
an assessment area and some is in reporting on that
assessment. That also included the cost of implementing the
quality initiatives. The additional $24.1 was the cost of
the foundation. The department has argued that if they are
asking districts to improve and increase standards by having
students that are better readers, writers and better at
math, that they will provide the resources for that effort.
Senator Torgerson asked if the $24.1 million would be an
increase in the old unit value? Mr. Cross said that SB 257
increased the instructional unit value and that is what
would generate the lion's share of the $24.1 million. He
explained that some was resources for special education and
to not cut districts during the transition time. He further
explained SB 257 modifications to existing foundation
formula were an incremental or gradual departure from it and
not a complete rewrite.
Senator Torgerson asked about the block funding for special
education. He asked how much money it was and what the
program did. Mr. Cross said that SB 257 did not block fund
bilingual/bicultural education but it does special
education, with the exception of intensive needs students.
It used a study done by educators throughout the State
several years ago with special education leadership. He
said no funds were distributed for special education or
gifted and talented.
Senator Torgerson further referred to page 7 of 8,
spreadsheet dated 3/9/98, which showed room under local cap.
He said in his district that they had been tight against the
cap for a number of years. At present they show they are
under the cap. He asked for an explanation of how they got
to that number. Mr. Cross said the language in the bill was
used and by using the two mills or twenty-three percent
allowable excess gave the room under the cap that they did
not have before.
Senator Torgerson asked if the two mills or twenty-three
percent was existing statute? Mr. Cross indicated that was
correct. Senator Torgerson said his district would get more
State aid under the present proposal and would that allow
the district to put more money in? Mr. Cross indicated that
was also correct. He explained the redistribution that
occurred in SB 36 allowed for greater local effort because
there was greater State effort for some districts. Senator
Torgerson asked about the impact of SB 36 on Federal
disparity and wondered if this was still within Federal
guidelines. Mr. Cross said that no disparity calculations
on the full implementation of SB 36 had been run. He was
not sure what the outcome of those calculations would be.
Senator Torgerson told the committee that he felt a response
as to the Federal disparity was an important component to
the bill. It would not allow goals to be accomplished if in
the process of putting together SB 36 they were out of
compliance with Federal rules. He asked the Co-chair to
order up a run based on the Federal disparity.
Co-chair Sharp asked Mr. Cross what mechanics might be
included in getting that request done. Mr. Cross said Mr.
Jeans would have to answer that request.
Eddy Jeans, Manager, School Finance Section, Education
Support Services, Department of Education was invited to
join the committee. In response to Co-chair Sharp he
advised the committee that a disparity could be run based on
the information contained in the spreadsheets and the
committee substitute as it stands. Mr. Cross further
explained that their concern with disparity before had to do
with taxation and that issue significantly complicated the
whole disparity issue. Now that issue has been removed from
the bill the test can be applied.
Mr. Jeans said he felt the run could be completed today. He
would do his best to meet a 4:30 p.m. deadline. Co-chair
Sharp kindly requested he do his best "one more time".
Senator Adams asked that in staying with disparity this
foundation formula tried to take away public school funds
from districts that have predominantly native students. Mr.
Cross said the department was in the process of taking a
look at that assumption. It was not an issue, however, that
had to do with the Federal disparity test. That was only a
test to see how resources were distributed and dealt with
equal protection. Senator Adams asked they also view
violation of the 1964 Federal Civil Rights Act. Mr. Cross
said they would do an analysis by district of the
race/ethnic/social economic factors and compare them to the
winners and losers.
Senator Adams said in looking at the "Q" version now before
the committee he would have to advise his constituents the
following: (1) the three percent income tax is now out;
(2) third-class borough option is out; (3) zero funding for
the North Slope Borough is still out; (4) capping the
category programs is still in; (5) a consolidation provision
is still in; (6) 70/30 provision is still in with a waiver
provision; (7) employment of chief administration is
optional; and (8) section 40(a) which does not take place
until there is mandatory boroughs. Mr. Cross responded that
he did not think Senator Adams had forgotten anything.
However, in the runs the department did, the three boroughs
(Alaska Gateway, Yupiit and Kashunamiut) that were turned
into six because the language in the amendment was removed
were consolidated. He said the bill, as the department
understood, did not consolidate any districts, however, the
companion bill, section 40, might very well do that.
Senator Adams asked Mr. Cross to again review the fiscal
note with a $50 million add-on. Mr. Cross said they were
asked to provide a run showing unadjusted ADM's and adjusted
ADM's through various scenarios and looking at the existing
foundation, State aide, SB 36 State aide, local contribution
per unadjusted ADM and then adding $50 million into the
existing foundation formula and SB 36. He noted that
explanation was attached to the fiscal note. He noted that
even with $50 million added into SB 36, twenty-three
districts would still lose money and ten districts would
lose more than ten percent. The Lower Yukon school district
would still lose over $5 million.
Senator Adams said that under these circumstances they were
working on a "flawed" SB 36.
Co-chair Sharp said the present formula was flawed because
one could see that even by adding another $50 million and
how distorted the distribution of that $50 million would be
under the existing formula. He referred to the Fairbanks
school district and with the $50 million extra they would
only get $38 more per real student, whereas Tanana would get
$700 more per real student. He did not think that was fair
and noted that more dollars added to the existing formula
the distortion just gets larger and larger. If there was
going to be new dollars added it was necessary to fix the
problem before more dollars were added to get more
distortion. To fix a problem there was always going to be
winners and losers. It cannot be guaranteed that a past
distortion in a foundation formula that is based on bad data
by holding the losers harmless was not fixing the problem.
That was only continuing the problem. He noted that the
same organization that gathered the data regarding this
matter in 1985 and now has reanalyzed the data on the
economic justification of all the fudge factors in a formula
and they find that the formula is out of whack and there is
good justification on the data that they presented to us on
every element. They've allowed for small school
adjustments, which a lot of the rural schools have. To say
those that are losing are being screwed is a fabrication.
The one's that have been had over the last ten years are the
larger ones who are getting less and less per real student.
One can't be held harmless on a formula that is so bad and
then continue pouring more money into it. That does not fix
anything. He said he was sick and tired of hearing
political posturing that this bill, because it fixes
inequalities on the actual costs of operating a school over
all Alaska, based on new data, is punishing some and
rewarding others. The application of putting $50 million as
an illustration purposes to find out where that money would
go is very mind-boggling of what would happen if it were
actually put in the present formula.
Senator Adams said one of the things if they were talking
about equity and fairness with this piece of legislation, we
shouldn't be robbing from one school district or taking it
away from areas that have, perhaps, a low report card area.
We should be trying to help those school districts and make
sure all school districts are taken care of. That is where
he was hoping the bill would get to. But it is not getting
that way. It is hurting school districts in the North Slope
Borough that pays the second highest tax, which puts forty-
four percent of its money into education. Why hurt those
districts that try to help each other. Lower Kuskokwim is
another. We are taking twenty-five percent of their money
away when we should be helping them. That's one of the
things he said he would like to see if they were going to be
fair and equitable. However, it was not being reached by
this piece of legislation.
Senator Donley said a lot of the defense or opposition to
the bill begs the question as to whether the existing
formula was fair. There are a lot of assertions, which
somehow implies that they are arguing the existing formula
is fair. This is not a fair formula. This formula was not
adopted in a reasonable manner. It is unpretty history how
this existing formula came to be. It is not something to be
proud of as a State government. It certainly has resulted
in incredible unfairness to...now we are finding out eighty-
six percent or eighty-two percent of the children in Alaska.
This is not something people should be defending. Frankly,
he said he was incredibly disappointed it has taken us this
long in political courage to step up to the plate and point
out how unfair most of the children in Alaska have been
treated under this formula for over a decade.
Co-chair Sharp said the committee would return at 4:30 p.m.
this afternoon. The new CS had been available since the
weekend, however, since most were not here, he wanted to
make sure everyone had a chance to follow through on the
major changes they made late last week. He mentioned that
the fiscal notes from the Departments of Labor and Revenue
have resulted in zero fiscal notes now they have taken out
some of the major tax issues and cost factors that would
have influenced those two departments of State government.
The drafters would still have to load in the new figures Mr.
Cross has given the committee. He wanted to make sure that
anything before the committee that they may consider moving
out the actual numbers were in the CS. He requested any
amendments be presented this afternoon. He said he did not
get a chance to see any ripple effect of what was taken out
as far as reference to boroughs and the taxes. He would
like a little time to look at that. He indicated that after
the 4:30 p.m. meeting they would get back to SB 36.
Senator Phillips asked if it was the Co-chair's intent to
move the bill out tonight. Co-chair Sharp indicated that it
was so that it could be read across on the Senate Floor in
the morning.
Senator Adams indicated that one of his requests of the
Department of Law was the constitutionality of the new
version "Q" because it did have some areas of concern having
to do with equal protection clause, the disparity clause,
the Federal Civil Rights Act of 1964 and a violation of the
State's Human Rights Act of AS 18.80.255. He said he knew
the Co-chair had taken the matter under consideration and
encouraged him to continue to do so.
Senator Parnell said he was also deeply disturbed over
representations made relating to rural versus urban splits.
He said that Senator Adams charged that this was somehow
race-based. That was a charge that was objectionable and
despicable. There was certainly no motivation around the
committee table that he was aware of related to either of
those two things. In the bill, twenty to twenty-three rural
districts benefit and seven to ten urban districts benefit,
depending on how rural and urban is defined. The largest
village of minorities in Alaska is Anchorage, who benefits
substantially. He said he believed that of those twenty to
twenty-three rural districts that minorities benefit there
as well. He said he could not stomach somebody claiming
that anything here is race-based or inequitably distributed
based on race. He felt that would be borne out. Finally,
at latest count he said eight-two percent of all Alaska's
children benefit financially and directly from this piece of
legislation. He said one hundred percent of Alaska's
children benefit from a more equitable funding formula,
because where there's discrimination against one there is
discrimination against all. The current formula simply
perpetuates that inequity. The goal has been achieved in
the legislation by more substantial strides towards that
goal of a simpler and fairer foundation formula. He said he
thought this was landmark legislation. It is time that it
was done. He appreciated the Co-chair's latitude.
Co-chair Sharp said he apologized for his harsh attitude but
said it was just a reaction to some of the things that have
been said on politicians posturing themselves on this issue,
who may be running for reelection. He said that really
bothered him.
Senator Adams in response to Senator Parnell said that if
his counterpart wished to quelch his statements to the two
things he said regarding Federal and civil law, then the
Department of Law should be here. We should not be taking
care of just eighty-two percent of the children. We should
be taking care of one hundred percent. Anchorage is the
largest native village around. But his child, who is a
native child, would say to him that he did not want to rob
another child's education money. That should be stated
here. He did not think PTA's, school board members in
Anchorage would say it was good to rob some other school
districts so they could have a higher education in
Anchorage. That is not what they are saying. Parents
around the State seem to be saying they should have equity
funding all over the State of Alaska. Don't rob from
another school district.
Senator Phillips said the current foundation formula is
broken and we should have at least the political courage to
look at this and that is exactly what they were attempting
to do.
Co-chair Sharp thanked the committee for their time. He
noted they would look at the rest of the bill at 4:30 p.m.
ADJOURNMENT
Co-chair Sharp recessed the committee until 4:30 p.m.
SFC-98 -8- 3/9/98
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