Legislature(2001 - 2002)
03/16/2001 12:00 PM Senate HES
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
SB 94-EDUCATION FUNDING
CHAIRWOMAN GREEN announced SB 97 to be up for consideration. She
announced a brief at ease.
TAPE 01-23, SIDE B
SENATOR TAYLOR, sponsor, said he first filed aspects of this bill
as amendments submitted by Ron Larson in 1986 and 87 as they
tried to change an inequitable formula for funding education. It
was his intention that all residents of Alaska who pay taxes
towards education would share the same level of pain and the
funds would be distributed throughout the state and every school
district would receive benefit.
He said in Wrangell, they pay almost 9 mils of local property
taxes to support education and he considered this a low level. He
didn't think that there were any nurses in his schools and there
weren't coaches in his elementary schools. There were no music
programs or art programs. This is because of an inequitable
formula that grants area cost differentials to school districts
across the state, but basically leaves all of the school
districts in Southeast Alaska, with a very small exception in
Juneau, at the same funding base that Anchorage receives money.
Anchorage has almost half of the children in the state, so
through volumes of scale their school board can make
discretionary appropriations to other activities in their
community from their school district budget. His school boards
wrestle with the question of maintaining the one or two janitors
they have when they used to have five or six or do they have to
"can" another one of them. He said they are receiving about
$7,000 per student in Wrangell. The North Slope Borough receives
$21,000 per student and has a student teacher ratio of 10 to 1.
He has about 18 to 1.
He explained that under the bill before them, every child in the
North Slope Borough will receive an increase in funding, so will
every child in Wrangell. Anchorage would receive the largest
increase in funding. Senator Taylor explained:
This bill increases funding across the board to
education by over $47 million. It carries a state
fiscal note against the general fund of about $29
million, maybe $27 million. There is no bill that is
before you or that has been submitted so far that will
cost the general fund less money than this one does nor
is there any bill that will distribute this amount of
money to the children of Alaska. How do we do that? We
do that by expecting every citizen in the state who
lives in a tax-based district to pay the same minimum
amount. Forty-eight school districts in this state
today either have full support or provide local support
themselves. They provide that support up to a minimum
of 4 mils. Each of you three members live in tax-based
communities where you are paying a minimum of 4 mils on
your home or other property you own in your town and
that 4 mils has to be dedicated by the community of
Anchorage, the community of Palmer, the community of
Wasilla, the community of Wrangell, we all have to pay
a minimum of 4 mils before we receive one thin dime of
money from the state of Alaska. So, that's the rule
under which all of us have to play.
If you're a wealthy district and you have a tax base
that is just extraordinary, you don't have to play by
that rule. You get to play by a different rule. You
only have to pay 45 percent of the cost of educating
your children. You don't have to pay 4 mils. All this
bill does is it asks that everyone in the state play on
the same playing field - that everybody pays 4 mils on
their house towards education. It doesn't seem to me
like a lot to ask.
What does that do to your formula? That allows you,
because you would not be subsidizing with state general
fund money the North Slope Borough and a couple of
other school districts in this state fully. They would
be paying their own cost of education and they don't
even come near 4 mils….
SENATOR TAYLOR explained that Section 1 modifies the Public
School Account that is already set up by including municipal
contributions within it. It would be a contribution returned to
the state by a municipality that had so much money left over
after paying the minimum amount that each of you pay, that that
money would be redistributed back through this formula for poorer
tax-based districts.
Section 2 says the state of Alaska will receive credit for
federal impact aid funds that are received by REAAs. Today they
receive 100 percent of the money that comes from the federal
government, but the state is requiring them to only count 90
percent of it. "So, basically, they receive a 10 percent slush
fund from the feds over and above the amount of money we're going
to send to them."
SENATOR TAYLOR said that the only thing he has asked is for all
the dollars to be counted 90 - 100 percent. The other numbers in
the section would provide for both vocational education special
needs funding. At the bottom of the second section the words "not
to exceed 45 percent of" [a district's cost of education] from
the existing formula. This provides then for the full amount of 4
mils to be redistributed back across the state.
He said the next section provides for the money that is left over
or excess to come back into this formula that will distributed as
indicated in Section 3.
SENATOR TAYLOR said he had heard concerns expressed across the
state by educators and others especially in the business
community, that the state isn't spending very much money on
vocational education. He said that the state isn't spending it
because when SB 36 passed, they provided 20 percent over and
above what people get in the regular formula for gifted children,
young children that are challenged or having some difficulties,
bi-lingual programs and voc-ed. They were all rolled into one and
the districts had to figure out how to spend it.
Because of federal mandates, the legislation where they
are required to provider certain levels of funding and
certain types of programs for those of our most
challenged students, the vast majority of this money
gets eaten up for those programs. A little bit may be
there for bi-lingual and what's left over may be there
available for a voc-ed program. As a consequence, what
I've done here is I have provided a specific funding
level for voc-ed at 3 percent. These numbers, by the
way, Madame Chair, are just ideas thrown out for you.
Some are very fearful of categorically funding voc-ed
because they say every other program, then, will want
to come in and have a specific funding category just
like voc-ed does and that we should not fund voc-ed
because somebody else might come and ask for the same
thing. I think if it's justifiable, maybe we should be
specifically and categorically funding or else you're
never going to get it.
An amendment that I wish to offer as this bill moves
through is to also add categorical funding for school
nurses. That's the only way I believe I can ever get a
school nurse back into any district school that I
represent.
He said he would probably add that back into Section 4, which
provides for voc-ed funding. Section 5 is just cleanup adding
that new section. Section 6 brings the formula back into
compliance with the numbers that have been provided for voc-ed.
Section 8 is what we call the declining fund
adjustment. For the last five or six years across this
state, we have seen declining enrollments occurring in
various communities. For the first time, I think, in
several years, we're now seeing an overall increase in
student population estimates and that's why for the
first time in several years we're seeing an indication
that the formula will actually have to go up by about
$10 million next year just to fund at the same basic
level that you currently have that formula set. For
those schools, however, that are still suffering
declining enrollments, under this formula - you are all
familiar with the Wrangell Petersburg problem - because
of student declines causing major shifts in the way the
funding levels are applied, it can have a devastating
impact on a district to just loose a very few students.
SENATOR TAYLOR said he decided to submit a bill that said it
doesn't matter what the decline is, whether it's only one student
or 10 students, it shouldn't make any difference. It's still a
loss of funding for that next year. He explained further:
So rather than have a school district fall off a cliff,
what we've provided for here is that even though that
child wasn't there the next year, the school district
would still receive 75 percent funding for that phantom
child. The next year after that it would be 50 percent,
the next year 25 percent and then zero. That would at
least allow school boards the opportunity to adjust
those budgets on a much gentler slope…"
He said that Sitka lost 140 students last year and the impacts on
their budget are so severe that they're contemplating terminating
14 - 17 staff people.
He said that Section 9 is the most expensive part of this bill.
He went with $4,150 to apply to all students across the state -
an increase of $210. Section 10 provides for the Wrangell
Petersburg "fix" and drops the number from 750 to 400 on student
count for a school funding formula for three funding schools. In
Wrangell and Petersburg, he said, they have three buildings, but
are under a funding formula mechanism that funds them for as if
they were only two.
Section 11 repeals the 40 percent penalty provision, where new
students moving into a rural school district, which as its
enrollment increased would only receive 60 percent of the funding
that student would have brought under the old formula.
I believe that provision is illegal. I think it
violates equal protection and I think sooner or later,
we in the legislature are going to be sued over that
one and when we do I don't think we have a leg to stand
on.
CHAIRWOMAN GREEN said she had vaguely remembered some of the
rationale and had also voted against SB 36.
Number 1584
SENATOR WARD asked how this bill affected charter schools.
SENATOR TAYLOR replied that it doesn't affect them, but it
provides additional funding. He added that he was frustrated
because the old formula contains an area cost differential, which
was based upon studies done of what it cost to live in various
areas of the state. He does not want to provide for another
study, but he wanted to tell the Department of Education
professionals who actually audit every single school district
every year to go out and use consumer price indexing and give the
legislature an objective report of what it truly costs in the
various regions and communities and adjust the formula
accordingly. He said this had never been done. This would be done
every two years.
He recollected that rationale for the 40 percent concept came up
because no one could understand how the numbers had gotten so
distorted that some school districts were receiving $20,000 per
student and others were receiving $6,000. "When you actually look
at the formula, much of it is driven by the area cost
differential that everything is multiplied against at the end of
the formula."
SENATOR TAYLOR said that this redistributes and appropriates over
$47 million for kids. "I know that is a huge amount, but it also
the lowest amount from the general fund of any of the bills that
you'll be presented with this year…."
He said that the poorer communities of California were faced with
the same problem about 12 years ago. Poor agricultural families
used the equal protection argument and asked why they were
getting paid a certain amount for education, but the ones who
were rich in Hollywood were getting paid more. The judge couldn't
find a good reason for it other than power politics. "The same
thing has happened to us…."
MR. CARL ROSE, Executive Director, Association of Alaska School
Boards, opposed SB 94. They do not positioned to scaling back a
system of education for some to provide more for others. He
thought that repealing the funding floor was a critical issue. He
said:
My recollection of SB 35 is similar in some cases, but
different in others. As I recall the discussion behind
SB 36 was to first provide equity across the state
through a distribution of funds and once that was
accomplished, we would address adequacy. I'm not sure
that equity was accomplished, but nonetheless, that was
the reason for the passage of that bill and we still
struggle with adequacy. The issue back then was the
redistribution of state funds. The issue with SB 94
once again is a redistribution of funds…
He said he served on a task force that dealt with the adequacy
that was required under SB 36. He was concerned that they had
never recognized that PL874 dollars were in lieu of taxes, but
now they are being told that 100 percent of that money will now
be withheld in lieu of taxes. He didn't know why people would
file for that money if they get no benefit from it, other than to
create a huge hole in the foundation formula if those monies are
not generated.
MR. ROSE did not recommend that as a strategy, because they loose
on both ends of that argument. The reason people will eventually
apply for this money is because they get some credit for it as a
result of the 90 percent deduct. He said there is a long-standing
state policy that said that four school districts - North Slope
Borough, Valdez, Unalaska and Skagway - were an anomaly. "We were
trying to create a foundation formula for the entire state and
didn't know how to deal with the anomaly of wealth divided by
population.
In the case of Skagway, when the railroad shut down in 1983, they
were left in an economic disaster, but they created a tourism
corridor and as a result of that effort they have a deep water
port, an ore terminal, hotels, a railroad and a thriving tourism
economy. Six-hundred people live in Skagway full-time and if you
take all of that wealth and divide it by 600 and it puts them
into a different category. They mayor of Skagway was there under
the SB 36 discussion and said that back then they were paying the
in excess of 53 percent of the school district budget. He didn't
know what the current figures were, but he guaranteed them that
the 45 percent figure they are under is being exceeded. They have
the ability to pay more and they have. "These school districts,
though this provision is a long standing public policy, this is a
radical change and a redistribution and I don't think many people
have had a chance to really think about it."
MR. ROSE said he supports vocational education. That was talked
about in the 20 percent categorical funding that was provided
under SB 36 for special education, bi-lingual and vocational
education.
An argument can be made equally well, if you're going
to take vocational education out and fund that, we have
tremendous special education needs that aren't being
met. The money that goes to special education is coming
directly out of regular instruction dollars. So, the
issue of the 20 percent, to begin with, is a larger
issue than just the vocational education. I don't
begrudge vocational education being treated separately,
but special ed and bi-lingual education are also paying
a price as well.
MR. ROSE said has seen many foundation rewrites and he agrees
with some of the studies. SB 36 was based on a study, but it was
based largely on expenditure data from 1996 and to his knowledge,
school districts were getting and spending all that they had and
it was inadequate. "To take that snapshot and project it forward
into a new foundation formula left us further behind."
The funding task force recognized that they actually need good
empirical data so they can make changes. They specifically said
they would not encourage any more changes to the current
foundation formula until they had the empirical data that would
underwrite those decisions. To turn over to the Department of
Education and Early Development the responsibility of coming up
with an appropriate cost factor without anything to hang that
decision on subjects them to quite a bit of lobbying.
My main concern in all this is we're talking about all
the things we didn't agree with SB 36 and we tried to
deal with it then and we couldn't get there. I think
what SB 94 does is brings all that back to the table,
again, but it's not doing it in an open fashion. What
we're talking about is redistribution of wealth here.
And so, I do have some concerns and I'm also sensitive
to the concerns that have been expressed for Wrangell
and Petersburg and I agree with these. In fact, these
were part of the discussion under SB 36 that didn't get
through. I don't think I come before you to say I just
want to trash on this bill. That's not the case. But I
think what we're doing is we're changing some long-
standing policies in this state in how we treat
districts that are a fiscal anomaly with the rest of
our districts. We're going to change that policy in one
fell swoop and redistribute that money.
Without the recapture clause that would require
districts to pay back, you don't have the money to pay
for this bill. So, I would just want to talk about the
recapture. The way you get the money for this bill is
take from those who are struggling right now and I know
you will say that the North Slope has a lot of money
along with Valdez, Unalaska and Skagway, but it's the
plight that they have and they are struggling to
provide an education as it right now. To alter that
ability for those school districts simply to
redistribute the money, what we need is a increase of
funding for the purpose of educating our children
state-wide. So, any time that we start to look at
increasing funding for education to try and imbed these
standards that we're trying to do, it requires an awful
lot of need that needs to be addressed. The suggestion
comes to me that we're just throwing more money at the
problem. I don't believe that. We've never invested in
the cure. There is a solution and it was going to
require us to align our systems to provide the
professional development that we need and assist kids
with intervention to help them take and successfully
pass their exam. We've done all this and we haven't
made the investment.
MR. ROSE said they would like to work on a funding bill that
meets the needs of all Alaska's students.
Number 655
SENATOR DAVIS asked him to elaborate on why those districts are
struggling to pay for education.
MR. ROSE replied that he could speak in the case of Skagway:
The amount of money that they receive in Skagway, even
under this bill, they would loose an additional
$65,000. I think that their budget right now is
somewhere in the area of $1.3 million and they receive
about $800,000 from the state. So, a good portion of
that money already comes locally. Local contribution is
severe, but they have the money and they readily put
forward what they can. It's not that they have an open
checkbook; they are limited to what they can
contribute.
CHAIRWOMAN GREEN said they would look this year at how they could
make improvements in education funding. She set the bill aside.
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