Legislature(2009 - 2010)CAPITOL 106
02/26/2010 08:00 AM House EDUCATION
| Audio | Topic |
|---|---|
| Start | |
| HB297 | |
| HB350 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 297 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | HB 350 | TELECONFERENCED | |
HB 350-PUBLIC SCHOOL FUNDING: LOCAL CONTRIBUTION
9:54:06 AM
CHAIR SEATON announced that the final order of business would be
HOUSE BILL NO. 350, "An Act relating to the local contribution
to public school funding; and providing for an effective date."
9:54:36 AM
MYRL THOMPSON, Chair, Member, Legislative Committee, Matanuska-
Susitna Borough School Board, directed attention to the graphs
that he provided the committee. The graphs illustrate the
continued and rapid growth of enrollment and the upward trend of
property tax assessments. The aforementioned presents some
unique problems for the school district. In the Matanuska-
Susitna Borough School District there are 43 schools and 60-plus
portables are being used as classrooms. Therefore, the
Matanuska-Susitna Borough School Board opposes Section 4 of HB
350. Section 4 would change the structure from the base, which
allowed for 50 percent forgiveness on the growth of the
assessments over the years. The original base helped the
[district] immensely and losing the additional funding [provided
by the original base] would be difficult for the district. Mr.
Thompson acknowledged that there are always problems with
funding, but there are funding adjustments that assist
districts. For instance, small schools are adjusted for size,
which provides them a break. He said that if there was more
time to review HB 350, perhaps a moving base could be developed
as opposed to [basing the funding] on the previous year.
9:58:00 AM
REPRESENTATIVE P. WILSON inquired as to the tax structure in the
Matanuska Susitna Borough.
MR. THOMPSON informed the committee that the Matanuska Susitna
Borough is the size of West Virginia, and therefore the schools
are spread throughout. The [tax burden] is placed on the
property taxpayer. The borough includes a lot of vacant land
for which the taxes have increased. Furthermore, the borough
has many retired residents as well as elderly residents who are
on a fixed income. He characterized the area as a bedroom
community without much industry. Therefore, it's difficult to
raise taxes in the area.
10:00:08 AM
REPRESENTATIVE P. WILSON surmised then that the borough hasn't
been able to increase its taxes, and thus the borough's revenues
have stayed flat.
MR. THOMPSON clarified that he can't say revenue is flat, but
the district has received an increase in revenue in the amount
of less than 1 percent. He reiterated that the district has 60
portables, which amounts to eight large-sized elementary schools
in portables or two very large-sized high schools in portables.
Therefore, if the district had more funds it would build more
schools.
10:00:56 AM
MR. THOMPSON, in response to Chair Seaton, clarified that he is
only concerned with Section 4.
10:01:42 AM
CARL ROSE, Executive Director, Association of Alaska School
Boards (AASB), opined that HB 350 will impact those districts in
the Railbelt considerably. He stated that although he isn't
prepared to take a supportive position on HB 350, he recalled
serving on the funding task force when this issue was discussed.
He then directed attention to the last sentence of the sponsor
statement, which says HB 350 sets a uniform mill rate at the
lowest current rate so no district will have to pay more than
its current local tax mill rate. However, it should refer to
the municipality rather than the district not having to pay more
than its current local tax mill rate because districts are the
recipients of the local contribution.
10:03:20 AM
MR. ROSE, referring to the chart of state costs from the
Department of Education and Early Development (EED) updated
10/22/09, told the committee that he was present when the
foundation formula was established and later amended. He opined
that at that time, no one recognized that the $3 million in
fiscal year (FY) 2000 would triple in the second year. Although
it didn't compound all the way through, it was rapid growth to
this year's $77 million. The concern, he related on behalf of
the task force, was that this growth seems to be uncontrollable
and thus has to be addressed at some point. Although HB 350
attempts to address the growth, it inevitably creates some
problems as related by Mr. Thompson. Upon review of this chart,
it appears that everyone will be held harmless at the $77
million level in FY 11. The fiscal note illustrates that the
state will need to put up an additional $21 million to mitigate
the 2.7 mill rate. The aforementioned is a positive move if the
goal is to mitigate the escalating cost of this legislation.
However, most of the AASB membership can't calculate the impact
of HB 350 in subsequent years. He opined that it would be safe
to say that freezing the base at the $77 million level on an
ongoing basis and continue to pay the $21 [million] possibly
into FY 16 is one way to mitigate the unpredictable costs to the
state. Mr. Rose further opined that by putting this in statute,
a need has been created and people depend upon the funds and
implementation of the proposal in HB 350 will certainly elicit a
human cry from certain areas of the state.
MR. ROSE informed the committee that when the [foundation
formula] legislation was placed in statute, it included a date -
the base year of 1999. He noted the different impact on the
AASB membership. While some of the small communities haven't
grown and thus pay the full portion under the 4 mill and the 2.7
mill rate, some school districts have grown considerably. Over
the past 10 years, a need has been developed and it may be
difficult to mitigate that all at once if the public policy is
to arrest the impacts of this clause in the foundation formula
without disturbing local communities that are dependent upon it.
Mr. Rose suggested that moving the base to a prior year would
have a significant impact on the amount of money available to
municipalities for the local contribution in the future.
Although this isn't a surprise, it's a tough policy call. In
conclusion, Mr. Rose opined that if this issue isn't addressed
it will become a "runaway train." However, if the issue is
going to be addressed it must be done in a way that allows the
communities to ramp down to the level proposed. He reiterated
that AASB doesn't know what HB 350 will mean and there's no
knowledge what the impact will be in the second, third, and
fourth year after the first year when districts are held
harmless.
10:10:14 AM
REPRESENTATIVE P. WILSON commented that many of the communities
that have not grown have lost population, such as Wrangell.
Wrangell, she estimated, has lost probably 20 percent of its
student population [over the last 10 years] and one-third of its
teachers. However, the district still has to provide the school
and services. Although Wrangell is under the 4 mill base, it
has had to increase its mill rate and sales tax because there
aren't enough funds to meet the 4 mills and other community
necessities. In Wrangell the mill rate totals 11.5 mills, but
the sales tax is 7 percent. The communities that aren't growing
don't believe it's fair that the growing communities are
receiving breaks while they don't and continue to provide school
services.
10:12:25 AM
CHAIR SEATON stated that public testimony would remain open, and
HB 350 would be held over.
| Document Name | Date/Time | Subjects |
|---|---|---|
| Amendments 12 and 13.pdf |
HEDC 2/26/2010 8:00:00 AM HEDC 3/1/2010 8:00:00 AM |
HB 297 |