Legislature(1995 - 1996)
04/02/1996 09:15 AM Senate FIN
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
SENATE BILL NO. 244
An Act relating to state foundation aid and
supplementary state aid for education; and
providing for an effective date.
Co-chairman Frank directed that SB 244 be brought on for
discussion, advised that it was previously heard, and
explained that he had been working on a committee substitute
which would include:
1. An attempt to make the bill revenue neutral by
increasing the deduct from 95 to 96 percent.
2. Making the bill effective during 1996 to offset
supplemental funding.
3. An FY 96 hold harmless for districts that would
lose more than they gain in this fiscal year.
4. Removal of the single site addition with the
recognition that it would be dealt with in any
future foundation formula change.
The Co-chairman voiced his hope that members would find the
foregoing acceptable as a compromise. He remarked that a
draft furnished to him prior to the meeting was incorrect
and returned for revisions. Co-chairman Frank suggested
that general discussion and feedback from the department and
committee members proceed.
[Co-chairman Halford arrived at the meeting at this time.]
EDDY JEANS, Project Assistant, School Foundation, School
Finance, Dept. of Education, came before committee and
advised that the foregoing proposal would be acceptable to
the department.
Senator Rieger voiced his understanding that the idea behind
not "going to a 100 percent deduct was that there had to be
some small residual in order to induce a school district to
apply for PL 874 moneys." If the formula results in an
entitlement, PL 874 moneys are deducted from the
entitlement. He then questioned whether the residual
inducement was necessary. With a 100 percent deduct, a
compelling inducement to apply for PL 874 moneys remains
because those funds are needed to bring districts to full
entitlement. Mr. Jeans explained that the state cannot
require school districts to apply for impact-aid funds. The
foundation program utilizes impact-aid moneys to determine
the state allocation. If school districts do not apply and
receive these funds, there is nothing to deduct to "adjust
state aid by." Senator Rieger voiced his understanding of
the foregoing to mean that the formula does not deduct the
entitlement but actual receipt of the funds. Mr. Jeans
concurred.
In response to a further question from Senator Rieger, Mr.
Jeans explained that school districts that apply for impact-
aid funds are entitled to a greater amount than they
currently receive. Funding is based on an annual
appropriation from Congress. That appropriation has been
less than entitlement. The foundation statute also clearly
states that it is based on funds received in response to the
application rather than the entitlement.
Senator Zharoff raised a question regarding removal of
single site schools. He attested to support for the
original legislation on behalf of the state board of
education, school board administrators, and NEA and
suggested that removal of single site provisions represents
a "step backwards." He expressed disappointment with the
proposed compromise. Co-chairman Frank acknowledged the
concern, but voiced his expectation that single site
language would be included in the budget.
Senator Zharoff next distributed an amendment (copy on file
in the original Senate Finance Committee file for SB 244)
and explained that he had been asked to provide it for
consideration on behalf of another member of the Senate.
The amendment relates to funds identified for preschool
children. Speaking to the amendment, Mr. Jeans explained
that impact-aid law was amended in 1994 to allow school
districts to claim preschool children for impact-aid funds.
The proposed amendment would have the state "back those
funds out before it considers the impact aid." The
arrangement would be similar to the special education add-on
and the Indian lands' add-on. The impact-aid program does
not currently address preschool funds as incremental funds
the state cannot consider. The foundation program does not
provide funds for preschool children. That is the reason
for the amendment.
Co-chairman Frank voiced his understanding that amendment
provisions would reduce the state deduct in districts with
preschool programs that qualify for federal funds. Mr.
Jeans concurred. He added that impact-aid funds are
currently paid at a hold harmless level--a percentage of the
'94 year. Even though districts could claim these students,
they are not receiving funding for them at this time. The
department is aware of the issue and will be working with
the U.S. Department of Education on how to properly address
it.
Discussion of proper terminology for former PL 874 moneys
followed. Mr. Jeans advised that it is now referred to as
"Title 8" moneys.
CARL ROSE, Executive Director, Association of Alaska School
Boards, came before committee. He noted that he was on
record in support of SB 244 but expressed concern regarding
the proposed compromise and removal of single site
provisions. Many small districts depend on single site
funds for 10 to 15 percent of their overall budgets. If
this funding remains outside the foundation, "Any kind of a
decrease could affect them twice": once through the
foundation and a second time due to the possibility of not
receiving additional supplemental funding.
Mr. Rose voiced need for clarification of the impact from
increase of the deduct from 95 to 96 percent. Co-chairman
Frank reiterated that it attempts to render the legislation
revenue neutral.
Co-chairman Halford directed that SB 244 be held in
committee pending receipt of the compromise committee
substitute.
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