Legislature(1999 - 2000)
04/03/2000 09:05 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. 290
"An Act relating to state funding for transportation
of public school students; and providing for an
effective date."
This was the second hearing for this bill in the Senate
Finance Committee. The original version of the bill, 1-
LS1555\A, was unchanged.
DAN BECK, Superintendent of Schools, Delta Junction,
testified via teleconference from Delta Junction to ask
what would happen if a new route were established and if
the district would have to pay 50 percent of that cost.
Co-Chair Torgerson answered that according to the
legislation, the district would pay 50-percent of all new
costs incurred after the FY 01 base was established.
Mr. Beck stated that he therefore did not support the bill.
He said that during this time when the state is trying to
put more money directly into instruction, this bill would
hamper that effort.
Co-Chair Torgerson commented that recent Alaska Board of
Education action gave districts more flexibility in
classifying administrative costs as instructional. The
board adopted regulations allowing the entire
administrative expenditure category of the uniform
accounting system to be considered as instructional rather
than administrative.
Amendment #1: This amendment inserts new language into the
title of the bill and adds a new section as follows:
Page 1, line 1, following "students;":
Insert "and to minimum expenditure for
instruction;"
Page 1, following line 13:
Insert a new bill section to read:
"Section 2. AS 14.17.520 is amended to read:
(a) A district shall budget for and spend a
minimum of 80 [70] percent of its school operating
expenditures in each fiscal year on the instructional
component of the district budget."
New text underlined [DELETED TEXT BRACKETED]
[Note: This amendment was never offered but was discussed.]
MIKE FISHER, Assistant Superintendent, Business Finance,
Fairbanks School District, testified via teleconference
from Fairbanks talked about the district's pride in the low
percentage spent on administrative costs and how this bill
would adversely affect their efforts. He spoke of the
district's efforts to meet an 80-percent for instruction
goal, saying that for some districts this figure could be
unrealistic.
Co-Chair Torgerson agreed that 80 percent of funds as a
minimum allowed for instructional costs was "a shot in the
dark." He again referred to the Board of Education's
actions, which essentially lowered the percentage to 75.5.
Senator Wilken asked the witness if there was a principal
for every school.
Mr. Fisher responded there is.
Senator Wilken wanted to know who decides on the number of
assistant principals and support staff for the assistant
principals.
Mr. Fisher answered the number of assistant principal
positions was a school board decision and that the
principal of each school has discretion as to how many
support staff positions are incurred. He noted these
positions along with the principal are a strong component
of the school level administration.
Senator Wilken spoke of the accounting methods for showing
these administrative costs. He asked if a new category
"405" could be added to list assistant principals and their
support staff separately.
Mr. Fisher assured that the district would have no problem
accounting for those positions separately. He said that it
could affect the instructional percentage by 2.5 to three
percent.
Senator Wilken asked if the witness thought that most other
school districts in the state could also follow this
method.
Mr. Fisher replied that most districts could adjust their
system to separately account for their assistant principals
and support staff.
Senator Wilken commented that was the same issue he and Co-
Chair Torgerson talked about when testifying before the
Board of Education. Senator Wilken stressed this was simply
a function of cost accounting to isolate the cost of
administration. He warned that if the legislature allows
school districts, school boards and principals to determine
what qualifies as an instructional component, the system is
opened up to creative accounting. That was the reason he
was in support of a sub-account to account for principals
and assistant principals.
Senator Green asked if this matter was before the
Committee.
Co-Chair Torgerson replied that a proposed amendment was
distributed but that a motion was not on the table.
RICHARD CROSS, Commissioner, Department of Education and
Early Development, spoke to the proposed amendment to
increase the percentage of expenditures for instructional
purposed from 70 percent to 80 percent. He urged the
Committee not adopt the amendment, in part because the
department has supported the legislature's efforts to
reduce administrative costs. He stressed that school
districts did not support this provision in SB 36 from the
20th legislative session, saying it was an oversimplified
answer to a complex problem. He said the department could
not oppose the concept of moving administrative
expenditures to instructional areas.
Mr. Cross disagreed with Senator Wilken's statement that a
sub-account for assistant principals and support staff is a
matter of cost accounting, saying it is instead a matter of
how schools work. He stressed that the principals directly
supervise the teachers, which improves the quality of
instruction. He stated that creative accounting is already
occurring with some districts that list their assistant
principals as head teachers. He said that head teachers are
not required to hold an Alaska Type B certificate but that
without this certificate, the teacher cannot evaluate other
teachers. As a result, he lamented, teachers are being
evaluated by people who do not work in the same school
building but rather central office administrators, thus
there is no direct supervision. He cautioned that this is
not effective supervision of instruction. He said that the
department is attempting to remedy this by including those
positions that are directly involved in the supervision of
instruction as a part of the instruction component. The
current categories are too broad in his opinion. He
suggested further delineation, as proposed by Senator
Wilken to separate those administrators that directly
supervise instruction. Other costs that are not directly
related to instruction, he felt should not be classified as
instructional.
Mr. Cross spoke of the progress made with the school
districts in their willingness to strive toward the 70
percent for instruction provision. He urged that this sub-
account be created and that those costs be considered
instructional to allow the districts to meet the 70 percent
goal. He warned that by simply raising the percentage, most
districts would be unable to meet that goal and that so
many would require waivers, the test would not be taken
seriously.
Co-Chair Torgerson interjected saying that the witness's
proposed sub-account method was not what the Board of
Education implemented. Instead, he admonished, the board
allowed the entire "400" component, to be considered
instructional, which includes supplies, travel expenses and
all support staff working in a central administrative
facility. He stated that if the board had made allowances
only for principals and assistant principals, the proposed
amendment would not have been drafted.
Mr. Cross defended the board's action saying the "400"
component was not delineated at this time to allow for
specific instructional expenditures. He said the board gave
specific direction to the department to break down the
expenditures afterwards to ensure that those administrators
directly involved with instruction were classified
separately.
Co-Chair Torgerson accused the department of counting the
administrative costs twice, once as instructional and again
as administrative.
Mr. Cross disagreed with the assessment.
Co-Chair Torgerson asked what deductions are being made to
teachers and instruction costs versus administrators and
administrative costs under the current school budget
deliberations.
Mr. Cross responded that school districts were making
decisions to reclassify personnel in include them in
instruction costs. He thought those decisions were not in
the best interest of improving the quality of teacher
performance. He gave the replacement of assistant
principals with head teachers as an example. He stressed
that the department's interest was not cost accounting but
placing those administrators who make decisions regarding
improving teachers' performance in the school rather than
at a central office.
Senator Wilken gave a scenario of a district currently at
68 percent for instruction and its attempt at reaching 70
percent the next year by simply hiring an assistant
principal and support staff and classifying them as
instructional expenditures.
Mr. Cross replied that would be a decision that could work
under the Board of Education's recent action to allow
principals to be classified as instructional expenditures.
Senator Wilken asked if the department was working to
develop sub-accounts for principals and support staff
within the "400" category.
Mr. Cross responded that the Board of Education when
adopting the aforementioned regulations, gave the
department specific instructions to separate the costs of
those personnel directly related to instruction. He said
the board does not agree that the other costs should be
considered instructional and directed the department to
report back with the specific figures.
Co-Chair Torgerson remarked that the board adopted
regulations to allow the entire "400" category anyway.
Mr. Cross agreed the board did allow the entire category,
but that it was the only option available to them.
Senator Leman asked if the Board of Education's
deliberations suggested that a principal could be both
supervising instruction and also performing other non-
instruction related administrative duties. He wanted to
know if accounting of the position could be broken down to
reflect the amount of time spend on each area.
Mr. Cross answered that the breakdown can be done and that
principals in many small schools supervise instruction and
also directly provide instruction. In larger schools, he
said, it was unreasonable to expect one principal to
provide supervision to all the teachers and that a vice-
principal is also necessary to assist with supervision. He
continued that an additional vice-principal might be
necessary to provide discipline or over see other
activities. He stressed that school leaders' efforts to
improve the quality of teaching are an important part of
instruction.
Senator Leman asked if those personnel who perform duel
roles could break down the time spent on each function.
Mr. Cross responded that kind of cost accounting can be
done, but should be avoided. He talked about federal
requirements for timesheets and the need to account
incremental minutes for each federal program. He cautioned
that too much time spent on cost accounting wastes money
and negates any efficiency gained.
Senator Adams commented that while we all want the most
money spent in classroom as possible, there were problems
getting funding for students in rural Alaska. He asked how
many waivers were granted in the previous year for those
districts meeting 65 percent of expenditures to
instruction. He then asked if this amendment were adopted
how many waivers would be necessary.
Mr. Cross believed that 13 waivers were considered in the
current year to schools meeting 65 percent of expenditures
for instruction.
Senator Adams wanted to know how many school districts met
the 80 percent to instruction criteria.
Mr. Cross answered that almost all of districts met this
goal.
Senator Green commented that all staff is included in the
formula when miscellaneous school expenditures are
calculated using the Pupil Teacher Ratio (PTR)
calculations, a process she has questioned. She suggested
that if the PTR calculation process was used in preparing
SB 36 it may have been a mistake.
Co-Chair Torgerson replied that the calculations used were
recommended in the McDowell study on school funding and
that he did not think PTR was considered.
Senator Wilken noted that the Committee had found in its
consideration of SB 36, that four school districts had more
money going to administration than to the classroom.
Senator Wilken next relayed the two important elements of
cost accounting. First, he said is the need for clear
definitions of the uniform chart of accounts and the second
element is to analyze as a function of time and track
changes. Therefore, he stated that if the legislature
allows school districts, school boards or individual
schools to vary the definitions, the changes over time are
meaningless. He understood the importance of assistant
principals, but thought those positions need to be in a
sub-account category that could be observed and compared
against other districts.
For Senator Green's benefit, Mr. Cross repeated the earlier
conversation regarding the B certificates required by
evaluating teachers but not by head teachers. He again
stressed the department's belief that teachers need to be
supervised on a daily basis by someone working in the same
school rather than a removed central administration
facility.
Co-Chair Torgerson noted that some rural schools were
showing zero percentage of expenditures spent on
administrative costs because they were already shifting
their accounts.
Senator Green wondered if the administrative percent
includes superintendents hired under contract.
GARY BATER, Superintendent of Schools, Juneau School
District, spoke in opposition to the bill. He stressed that
the hardest addition to a school district's budget is an
administrative position. He stated that whenever cuts are
proposed, the public clamors to eliminate administrators.
He thought school districts were under constraint with or
without the 70 percent for instruction restrictions.
He stated that SB 290 is about shifting future increases of
pupil transportation to local school districts and away
from the state. He said pupil transportation was an
essential component of education. He thought the current
law has worked well. He believed the Juneau School
District's rate of growth and pupil transportation costs
have been below the rate of inflation once adjusted for
increased enrollment.
Senator Wilken asked how the school district views its
participation with pupil transportation.
Mr. Bater responded that the district does not make any
changes without approval from the Department of Education
and Early Development. Rather, he said the district
proposes to the department for approval of a new route when
enrollment increases and busses become overcrowded. He
asserted the department asks tough questions and is
thorough in its review. He detailed the process to obtain a
new bus route. He stated that the district views itself as
an agent of the department.
Senator Wilken and the witness discussed the levels of bus
routes and the ability to change from a three-tier system
to a two-tier system and the expense involved.
Senator Green pointed out that the state is not required to
cover the pupil transportation costs, noting the word,
"may" rather than "shall" in statute.
CARL ROSE, Executive Director, Association of Alaska School
Boards spoke specifically to the issue of requiring the
districts to co-pay any increased costs, saying it was
inappropriate at this time. He spoke of aligned contracts,
which were too recent to see any realized savings. He also
stressed how funds allocated to classroom instruction would
be further stretched to cover pupil transportation costs.
He called the bill an unfunded mandate.
Mr. Rose continued that when the co-pay issue is raised in
the future, the foundation formula should be adjusted to
increase revenue to cover the district's costs of pupil
transportation. He suggested that an incentive should be
created to allow any realized pupil transportation savings
to be retained by the district.
Co-Chair Torgerson interrupted to ask if the witness
believed that a 48 percent increase to the cost of pupil
transportation was entirely attributable to an adjustment
to the contracts.
Mr. Rose responded that he thought there were a number of
reasons the costs increased. He pointed out that other
costs incurred in the previous contracts were omitted from
the new contracts.
Co-Chair Torgerson said he has offered to all parties the
opportunity to present a better system. However, he said
there has been no suggestions other than having the state
pay the entire cost and if savings can be identified with
the contracts, having the state pay to the district the
difference.
Mr. Rose appreciated the co-chair's concerns but warned
about later costs and an unfunded mandate.
Mr. Rose commented on the accounting of assistant principal
positions separately saying he agreed with this suggestion,
but that he did not see any advantage to a breakdown
between assistant principal and principal positions. He
also opposed changing the total instructional percentage to
80 percent of expenditures. He asked the Committee to have
patience in allowing the 70 percent goal to be reached.
Amendment #2: This amendment inserts language on page 1,
line 13, following "district" as follows:
"; the 50 percent limitation imposed under this
paragraph does not apply to student transportation
system operating costs that are incurred as a result
of an increase in student enrollment"
[Note: This amendment was never offered but was discussed.]
Mr. Rose stated that he supported this amendment. He
commented that the overall impact of the bill was yet to be
seen and listed figures of recent student enrollment.
Co-Chair Torgerson asked for explanation of the witness's
implication that costs have been passed along to local
communities.
Mr. Rose listed the reduction of state revenues provided to
the school districts and the possible reduction in
municipal assistance grants. He predicted that the local
residents could be required to pay an additional $6
million.
Co-Chair Torgerson asked if the witness was suggesting
throwing the entire foundation funding formula out.
Mr. Rose clarified that was not his suggestion but that the
association wanted a certain percentage of funds spent on
instruction. However, he stated that the state is
allocating less money to districts by the state and that
the percentage of local contributions is subsequently
rising.
Mr. Rose then asked the co-chair if SB 105, relating to
public school buildings was being considered for inclusion
in SB 290.
Co-Chair Torgerson answered that it may be.
Co-Chair Torgerson ordered the bill HELD in Committee.
Tape: SFC - 00 #75, Side A 10:42 AM.
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