Legislature(2001 - 2002)
04/03/2002 08:08 AM House EDU
| Audio | Topic |
|---|
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HB 479-MINIMUM EXPENDITURE FOR INSTRUCTION CHAIR BUNDE announced that the first item of legislation would be HOUSE BILL NO. 479, "An Act relating to a minimum expenditure for the instruction component in a public school budget; and providing for an effective date." Number 0274 REPRESENTATIVE GUESS, Alaska State Legislature, testified as the sponsor of HB 479. Representative Guess explained that with SB 36 a minimum expenditure for the [instruction component in a public school budget] was placed in statute. That minimum expenditure was 70 percent. However, a dispersed school district, which lacks economies of scale, has the same requirement as a dense school district, which has economies of scale. Therefore, a dense school district should be able to put more money into the classroom. She explained that she used the number of students per school as the density proxy. Therefore, if there are more students per school, she believes [that school district] should be able to put more toward classroom expenditures. Representative Guess specified, "It just [goes] from the 70 [percent] and [goes] up. I did not deal with the lower part of the 70 percent scale." She acknowledged that there is controversy with regard to whether 70 percent [as the minimum expenditure for the instruction component] is appropriate. CHAIR BUNDE commented that he would appreciate Representative Guess' view with regard to the appropriateness of the 70 percent [for the minimum expenditure for the instruction component]. REPRESENTATIVE GUESS remarked that the legislature should tackle energy. She said that until the energy costs for certain school districts are addressed, she didn't know [how] to fairly assess what school districts are able to use for classroom expenditures. She pointed out that some school districts use a third of their operating budget for energy costs, and therefore it's hard to assess anything else. REPRESENTATIVE WILSON asked whether [the minimum expenditure] should also take into account the rising cost of insurance. REPRESENTATIVE GUESS said that part of the discussion is in regard to what should be part of the minimum expenditure. Number 0581 EDDY JEANS, Manager, School Finance and Facilities Section, Education Support Services, Department of Education and Early Development, noted that he had provided the committee with some handouts. Mr. Jeans said that EED reported a zero fiscal note for HB 479 because the department is already doing this process. This legislation simply changes the percentage for some school districts. He explained that the spreadsheet based on the current budgeted expenditures for instruction illustrates that 39 school districts would have required a waiver under this proposed provision this year. Under the current 70 percent minimum expenditure requirement, there were a total of 29 school districts that required a waiver in fiscal year 2002. MR. JEANS related his belief that the concept to require districts to direct more money to instructional expenditures is a good concept. The question is whether 70 percent or the new recommended percentage is the appropriate percentage. As the spreadsheets illustrate, the percentages recommended in HB 479 would require the department to review and make recommendations for an additional ten school districts. He noted that the department has been heavily questioned on the 29 waivers that were approved this year. However, Mr. Jeans said he believes that all the school districts are making progress, which is demonstrated through a schedule [the department] has circulated throughout the legislature. Mr. Jeans remarked that he likes the concept of density as a factor in determining what percentage districts have to put toward instruction. He pointed out that some school districts are serving 10-15 communities with 100 to 200 children in each community. There are fixed costs for each facility in each community. Therefore, it will be difficult for those districts to ever meet the 70 percent. Mr. Jeans pointed out that he took Representative Guess' proposal and reviewed what would happen if each category was reduced by 5 percent. By a 5 percent reduction, 13 school districts would require a waiver. Number 0810 CHAIR BUNDE asked if HB 479 is the equal waiver opportunity bill. MR. JEANS responded that he believes [HB 479] provides a more realistic view of what districts are able to do. With the 70 percent minimum expenditure, there will always be a number of school districts that won't meet the 70 percent. Those school districts that don't meet the 70 percent have too many fixed costs with too small of a student population to spread those costs. He pointed out that there are a large number of school districts in this situation, and they aren't just the large disbursed districts. Some of the districts that don't meet the 70 percent are small single-site districts that have fixed costs for the facilities, the administration, and the utilities. If HB 479 was to move forward, Mr. Jeans recommended the committee consider decreasing these percentages by 5 percent. Although a number of school districts still wouldn't meet the 65 percent, there would be quite a few districts that would be close to the 65 percent. He predicted that those districts close to the 65 percent would move to the 65 percent with the department's encouragement. CHAIR BUNDE related his belief that this is a new enough concept that the bill shouldn't be moved forward today. Number 0950 REPRESENTATIVE PORTER inquired as to how Mr. Jeans viewed this approach as related to the cost differential study that is occurring. MR. JEANS stated his opinion that the two issues stand alone. The cost differential study will make adjustments for school districts for fixed costs such as increased heating costs. As districts receive that adjustment through the foundation program, those districts should be able to move closer to the minimum expenditure requirement. However, he specified that he wasn't saying that the 70 percent along with the adoption of the district cost factor study would result in everyone meeting the 70 percent. He related his belief that it would assist districts in moving toward that goal [of 70 percent], which he believes to be positive. Number 1005 REPRESENTATIVE GREEN surmised that the majority of the children are going to be in school districts needing waivers under either Mr. Jeans' or Representative Guess' concept. REPRESENTATIVE GUESS pointed out that such [reasoning] would assume that in the year lag, the school districts don't rise to the minimum expenditure required. "We are assuming waivers under the current budget not under the effective date as a year away, not under a future budget," she pointed out. This [legislation] pushes the larger school districts, which she felt hadn't been pushed yet. She said she didn't assume that Anchorage, Fairbanks, and Juneau would request waivers. Under Mr. Jeans' proposal those [districts] would have to move 2-3 percent. Representative Guess specified that she hadn't viewed HB 479 as a waiver equity bill. With the 70 percent, the school districts with economies of scale didn't have to look at their books, although she felt those districts have the opportunity to put more money into the classroom. Therefore, the committee should consider requiring such. CHAIR BUNDE said he didn't disagree. Number 1147 REPRESENTATIVE WILSON requested that Mr. Jeans provide a chart specifying the base pay in the schools so that [the committee] can see that those schools paying the teachers less can easily meet the percentage requirement. CHAIR BUNDE pointed out that the more a district pays for teachers the more money there is in the classroom, which would make it easier for the 70 percent to be achieved. MR. JEANS informed the committee that the department doesn't readily have the school districts' salary scales available and thus it would require quite a bit of data gathering. However, based on the McDowell study from which the 70 percent was developed, the study concluded that on average there is very little if any variance in average teacher salaries. Although the more remote rural districts are paying teachers a higher salary at the entry level, those teachers simply don't stay in the position very long. In large urban districts, the teachers stay for a long time and move further up the pay scale. Mr. Jeans said that he believes HB 479 is really addressing the fixed costs because a small student population disbursed over a large area results in higher fixed costs on a per student basis. Therefore, the district wouldn't be able to meet the percentage. With a more condensed large population, those fixed costs are smaller on a per student basis and thus it's easier to meet the [percentage]. REPRESENTATIVE WILSON explained that what she was addressing is that those schools that pay less would have difficulty reaching the 70 percent. Number 1319 JOHN ALCANTRA, Government Relations Director, National Education Association - Alaska (NEA-AK), announced that NEA supports HB 479. Any legislation that places more funding in the classroom is viewed as positive. Number 1385 DEBBIE OSSIANDER, Legislative Chair, Anchorage School Board, testified via teleconference. Ms. Ossiander announced the Anchorage School Board's opposition to HB 479. The board believes that HB 479 isn't a realistic approach to school funding. Ms. Ossiander informed the committee that Anchorage spends approximately 78 percent of its [funding] on the instructional [expenditure] in the classroom. In order to make the 85 percent [required under HB 479], the Anchorage School District would have to spend over $22 million additional dollars on instruction. If the Anchorage School District eliminated every administrative post and every curriculum support area and left only the instructional expenditures and operation and maintenance, the district would reach the 85 percent. Ms. Ossiander pointed out the in-depth review that school boards and districts give their annual budget each year. The [board] has tried its best to place as many dollars in instruction as possible. The [Anchorage School Board] believes that it's doing a good job. Ms. Ossiander concluded by reiterating the board's opposition to HB 479. CHAIR BUNDE related that one of the comments he receives is that there are too many people "in the head shed" [in the Anchorage School District] and thus the expenses are too high. Therefore, he suggested that perhaps [the district/board] could do be a better job of communicating the administrative costs to the general public. MS. OSSIANDER mentioned that they have been working on that. In comparative studies of other large districts in the country, she believes [the district/board] does well [in communicating the administrative costs]. Number 1550 MIKE FISHER, Chief Financial Officer, Fairbanks North Star Borough School District, testified via teleconference in opposition to HB 479. Mr. Fisher noted that the Fairbanks North Star Borough School District, a relatively large district, does enjoy an economy of scale. That, along with prudent fiscal management, enables the district to meet and exceed the current 70 percent requirement, with which the district philosophically agrees. Currently, about 76.8 percent of the Fairbanks North Star Borough School District's budget is allocated to the instructional component. Increasing the instructional component requirement to 85 percent is unrealistic, he said. Mr. Fisher informed the committee that the district spends about $86 million on the instructional component and $26 million on the noninstructional component. He pointed out that just because something is classified as a noninstructional component doesn't mean that it's an administrative cost. Most of the noninstructional costs aren't administrative costs. He specified that of the district's $26 million noninstructional component, about $15 million is operation and maintenance and about $11 million is everything else. Therefore, to meet an 85 percent instructional component, the district would have to shift over $9 million of the $26 million noninstructional budget to the instructional budget. Such action would result in the elimination of every central office department and all noninstructional support other than operation and maintenance, which is impossible. Such cuts would include cutting the entire school board, the superintendent, the assistant superintendent, all school secretaries, all property insurance coverage, all student testing and assessment, all teacher recruitment and hiring, all payroll and vendor payment processing, all accounting and financial recordkeeping, all purchasing and warehousing, and all student records and data processing functions. Mr. Fisher explained that in order to obtain an idea of a district's administrative overhead, then one must review the indirect cost rate. Alaska's approved rate next year will be 4.3 percent. Reduction in the noninstructional areas are in conflict with the legislature's increasing impetus toward assessment, evaluation, and accountability. Number 1743 CHAIR BUNDE asked if, in fact, assessment and testing aren't part of the instructional component. MR. JEANS related his belief that assessment is part of the instructional component, but he offered to double-check. REPRESENTATIVE WILSON remarked that it might be interesting to review what those schools meeting 70 percent actually fund. CHAIR BUNDE noted the cost differential study and the challenge to have a common chart of accounts that would apply for each district. Chair Bunde announced that public testimony on HB 479 would be closed. [HB 479 was heard and held.]
| Document Name | Date/Time | Subjects |
|---|