02/24/1994 01:00 PM House CRA

  HB 477 - ALLOWABLE LOCAL EFFORT FOR SCHOOL FUNDING                           
                                                                               
  DIANNE LINDBACK, STAFF TO REPRESENTATIVE ULMER, said, "HB
 would raise the cap on local contributions.  As you                      
  know, there are two provisions in statute which control                      
  local contributions to schools.  One is a minimum required                   
  contribution and the other is a maximum allowable                            
  contribution.  This bill addresses that discretionary or                     
  allowable portion over the minimum required.  The federal                    
  government has a cap of 25 percent on this additional local                  
  contribution, and the purpose of that cap is to ensure that                  
  there's relative parity between school districts in the                      
  state, so that those communities that have a lot of money                    
  don't end up with schools that are funded way in excess of                   
  those communities that are perhaps less endowed financially.                 
  So we need to keep within that federal cap of 25 percent.                    
  The current statute sets the allowable discretionary local                   
  contribution at 23 percent of the basic need and this bill                   
  would raise it to 24 percent.  And the Department of                         
  Education has advised that that would still keep us                          
  underneath the cap, so that we're not violating that federal                 
  control.  There are several districts that are really right                  
  at the cap now, that this would probably be very useful for                  
  and this, besides Juneau, is Fairbanks, Kenai, Ketchikan and                 
  Sitka.  For Juneau, this would mean that we could contribute                 
  an additional $289,957.  So this will help offset the costs                  
  of inflation, the way that's eroding our ability to maintain                 
  our current programs."                                                       
                                                                               
  Number 079                                                                   
                                                                               
  REPRESENTATIVE CYNTHIA TOOHEY said, "I'm nervous about                       
  removing this 23 percent and going to 24 (percent) when we                   
  haven't shown any signs or desires to cut anything.  In my                   
  district, it would be very upsetting, I think, to do this at                 
  this time."                                                                  
                                                                               
  MS. LINDBACK said, "This does not affect the general fund at                 
  all."                                                                        
                                                                               
  CHAIRMAN OLBERG clarified, "I think we're talking local                      
  option again where each individual district is simply being                  
  given the option to go to 24 percent, instead of 23 percent.                 
  Some districts may, some districts may not.  To the extent                   
  that we can avoid mandates, I think we're all better off."                   
                                                                               
  MS. LINDBACK proceeded, "There's also another reason why                     
  this would be additionally desirable.  If the instructional                  
  unit is essentially short funded or underfunded so that we                   
  come out with a unit, as the Governor has proposed at                        
  $59,800, the Department of Education...would have to by                      
  regulation reduce the amount that a local district can                       
  contribute.  So they go down proportionately, is what I'm                    
  trying to say.  So if we are able to allow our districts to                  
  compensate for some of that, the only way we can do it is in                 
  this local option."                                                          
                                                                               
  Representative Con Bunde joined the committee at 1:16 p.m.                   
                                                                               
  REPRESENTATIVE JOHN DAVIES said, "I think it is the                          
  case...around the state that real cuts have been made,                       
  especially if we level fund the instruction unit, that's                     
  going to fund additional real cuts and this just allows the                  
  local option to decide whether or not they want to try to                    
  offset some of those cuts with increased local effort."                      
                                                                               
  REPRESENTATIVE BUNDE said, "In the Anchorage area, they do                   
  not fund up to the maximum local level at this point, so                     
  this bill may not have an impact there.  I'm concerned that                  
  it will increase the disparity where these folks, who chose                  
  to make up the larger local contribution."                                   
                                                                               
  Representative Fran Ulmer joined the committee at 1:18 p.m.                  
                                                                               
  REPRESENTATIVE JERRY SANDERS asked, "If we pass this, does                   
  this mean we can cut the budget one percent?"                                
                                                                               
  Number 180                                                                   
                                                                               
  REPRESENTATIVE FRAN ULMER, SPONSOR OF HB 477, said,                          
  "Remember not all districts are situated in the same way in                  
  this state.  Some are at the cap and some aren't.  Some are                  
  in a position to use this and choose to use it, and others                   
  aren't or won't.  So it's not like an across the board                       
  assistance of one percent to every district in the state."                   
                                                                               
  REPRESENTATIVE SANDERS proceeded, "If we did cut, they'd be                  
  free to make it up, right?"                                                  
                                                                               
  REPRESENTATIVE ULMER said, "If you allow the districts to                    
  move up one percent, it will help take the pressure off some                 
  districts, absolutely.  But it doesn't replace as much as                    
  we're looking at in terms of potential cut."                                 
                                                                               
  Number 199                                                                   
                                                                               
  REPRESENTATIVE BUNDE said, "I certainly applaud those                        
  districts that not only are at their cap, but would be                       
  willing to make a greater contribution and as such, I would                  
  support this legislation.  I do think it's a double edged                    
  sword though, because if we support this, there's more of an                 
  inclination to cut state support, which may be coming                        
  anyway.  So we're allowing local districts to make up what                   
  the state will no longer provide, and I think it will make                   
  this gap between those that are funding clear to their max                   
  and those that are not, even more apparent and will cause                    
  some political pressure..."                                                  
                                                                               
  REPRESENTATIVE SANDERS asked, "Is there a reason for not                     
  raising them to 25 (percent) to the cap?"                                    
                                                                               
  REPRESENTATIVE ULMER replied, "What we're trying to do is                    
  not get so close to the federal percentage as to really                      
  create a possibility that we have offended this discrepancy                  
  of percentage for the federal level and that might throw us                  
  into a litigation situation...  I think it's to just create                  
  kind of a little cushion so we're not really right at the                    
  max."                                                                        
                                                                               
  Number 248                                                                   
                                                                               
  DUANE GUILEY, DIRECTOR OF SCHOOL FINANCE, DEPARTMENT OF                      
  EDUCATION, stated, "The previous question about the 25                       
  percent limit:  Certainly, the state legislature has the                     
  opportunity to increase the cap to 25 percent, however, I                    
  would remind you that when districts are preparing their                     
  budget, we are in fact, working on a budgeted figure and                     
  when we actually calculate our disparity standard, it's well                 
  after the end of the school year.   If we were to raise our                  
  limit to 25 percent, it may actually require a retroactive                   
  repayment of local dollars from the district to the                          
  municipality after the dollars have already been spent.                      
  That's why the current threshold is 23 percent...there would                 
  be no harm in raising it to 24 percent and for that reason                   
  the Department of Education does support this legislation;                   
  in that on a simple basis it provides an opportunity for                     
  those that wish to further help themselves to do so without                  
  putting the burden on the state.  And we don't anticipate                    
  that it will harm our disparity standard or put us out of                    
  compliance with federal statutes."                                           
                                                                               
  REPRESENTATIVE TOOHEY asked, "Do the citizens have a chance                  
  to vote on it (HB 477)?                                                      
                                                                               
  REPRESENTATIVE ULMER said, "It's up to each city council and                 
  borough assembly as to whether or not they want to do it..."                 
                                                                               
  Number 300                                                                   
                                                                               
  REPRESENTATIVE DAVIES moved to pass HB 477 out of committee                  
  with individual recommendations.  There were no objections.                  
                                                                               
  ADJOURNMENT                                                                  
                                                                               
  CHAIRMAN OLBERG adjourned the meeting at 1:26 p.m.