Legislature(1997 - 1998)
05/08/1998 07:30 PM House FIN
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* first hearing in first committee of referral
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+ teleconferenced
= bill was previously heard/scheduled
SENATE BILL NO. 36
"An Act relating to transportation of public school
students; relating to school construction grants;
relating to the public school foundation program and to
local aid for education; and providing for an effective
date."
Co-Chair Therriault provided members with a proposed
committee substitute for SB 36, work draft #0-LS0070\J,
dated 5/8/98 (copy on file).
RICHARD CROSS, DEPUTY DIRECTOR, DEPARTMENT OF EDUCATION
observed that Mr. Jeans would explain the proposed committee
substitute. He noted that the school funding formula uses
an adjusted student count to distribute funding. A school
site table was developed as part of the Alaska School
Operating Cost Study, commissioned by the Legislative Budget
and Audit Committee. It also uses district cost factors
instead of an area cost differential. The district cost
factors were also developed as part of the Alaska School
Operating Cost Study. The actual number of students is
adjusted based on the size of the school, special needs, and
the district's operating costs. An additional 26 million
dollars is included.
EDDY JEANS, MANAGER, SCHOOL FINANCE SECTION, EDUCATION
SUPPORT SERVICES, DEPARTMENT OF EDUCATION reviewed the
legislation by section. He pointed out that state aid
equals basic need minus a required local contribution and 90
percent of eligible federal impact aid. Basic need equals
the sum subsection (D). He reviewed the calculations in
section AS 14.17.410:
(A) The adjusted daily membership (ADM) of each school in
the district is calculated by 30 applying the school
size factor to the student count as set out in AS
14.17.450;
(B) The number obtained under (A) of this paragraph is
01 multiplied by the district cost factor described in
AS 14.17.460;
(C) The ADMs of each school in a district, as adjusted
according to (A) and (B) of this paragraph, are added;
the sum is then multiplied by the special needs factor
set out in AS 14.17.420(a)(1);
(D) The number obtained for intensive services under AS
14.17.420(a)(2) and the number obtained for
correspondence study under AS 14.17.430 are added to
the number obtained under (C) of this paragraph.
Mr. Jeans noted that there is a 4-mill tax levy on the full
and true value of the taxable real and personal property in
the district, not to exceed 45 percent of the district's
basic need. He observed that local contribution could not
exceed a two-mill tax levy on the full and true value of the
taxable real and personal property in the district, or 23
percent of the district's state share of public school
funding for the fiscal year. He maintained that this
provision would maintain the federal disparity standard. He
observed that newly formed boroughs could phase in the
required local effort over a four-year period. The special
needs factor is 1.2. The intensive services funding is
equal to the intensive student count multiplied by five. In
order to receive funding for special education, gifted and
talented education, vocational or bilingual education a
district must have its plan on file with the Department.
Mr. Jeans noted that the legislation sets out funding for
correspondence program set at 80 percent of the ADM.
Funding for the state boarding school is included in AS
14.17.440. This allows the Mt. Edgecumbe School to receive
funding for eligible intensive services.
The school size factor table begins on page 5, line 22. A
school must have at least 10 students. If a school has less
then 10 students they would be counted with the school which
has the lowest ADM in that district.
District cost factors are included under AS 14.17.460.
These are based on the McDowell Group Alaska School
Operating Cost Study, March 1998. The Department is
required to monitor cost factors and prepare and submit a
report of proposed new district cost factors to the
legislature by January 15th of every other year. He
estimated that the base student allocation would be $3,928
dollars.
Mr. Jeans explained that schools eligible for quality school
funding would receive the districts adjusted ADM multiplied
by $16 dollars.
A funding floor would be established for school districts
that received less funding under the old foundation formula.
The floor would be permanent. State aid is defined for the
purposes of setting the floor.
School districts are required to submit student estimates by
November 5th.
School districts cannot accumulate an unreserved fund
balance of greater than 10 percent of their current year
expenditures.
The Department of Community and Regional Affairs is required
to determine the full and true value of taxable real and
personal property in each district. School districts must
budget for and spend at least 70 percent of their school
operating expenses on instruction. "Instructional
component" includes expenditures for teachers and for pupil
support services.
Mr. Jeans noted that the student counting period would be
the 20-school-day period ending the fourth Friday in
October. The counting period for state correspondence study
would be July 1 through the fourth Friday in October,
The distribution of state aid is not changed by the
legislation.
Mr. Jeans observed that the Department would be given the
authority to prorate the school foundation formula if
insufficient funds are appropriated. Districts are required
to maintain complete financial records and spend their money
for school purposes. The Department is required to develop
regulations to implement the legislation.
Mr. Cross observed that school districts would be required
to provide, at a public meeting for parents, information
which shows how the school is performing to standards and
how the district determines the standards are being met. A
"School District Report Card to the Public" would be
included. Beginning in January 15, 2001, the Department
would provide the governor and the legislature with a
performance report on each public school and designate the
schools. Schools performing well would be accredited. By
August 2002, schools would be designated as distinguished,
successful, deficient or in crisis. Those schools in crises
would be required to submit plans for improvement. The
Department would be required to facilitate the improvement
process and provide technical support. Existing staff or
qualified persons would be used. If any school district
continues to be deficient or in crisis for a two year period
the school district would appear before the State Board of
Education and submit a report including steps to improve
quality in the school.
Mr. Cross noted that the legislation includes definitions of
a "school district" and a "charter school".
Additional standards are given to the Department to develop
performance standards for reading, writing and mathematics.
An assessment system would be provided to all school
districts.
Mr. Jeans reviewed section 13. He noted that a reference to
employing a chief school administrator was added in section
13 and deleted in section 14.
Districts that both contract and operate their own pupil
transportation would be reimbursed. The school district
portion would be reimbursed at 90 percent and the contractor
would be reimbursed at 100 percent.
Mr. Jeans noted that the Department is required to apply the
same criteria in determining eligibility for reimbursement.
The legislation clarifies that districts may employ a chief
administrator.
He noted that other sections made technical changes to
current statute to correspond to changes made by the
legislation. "Funding" was changed from "foundation".
Section 31 amends AS 14.30.650. It provides that the
Special Education Service Agency would receive a grant equal
to $15.75 times the number of students in the state in the
average daily membership of the proceeding year. The change
is required because there will no longer be special
education categorical funding under the new foundation
program.
Section 40 is transition language requiring the Department
to define the term "school" in regulation. The Department
is required to submit district cost factors by January 15,
2001. Centralized correspondence funding is set at 70
percent in the first year, 75 percent the second year and
then 80 percent the third year. The minimum expenditure for
instruction would be set at 60 percent in the first year, 65
percent the second year and then 70 percent the third year.
The Special Education Services Agency is given a one-year
grace period in regards to data.
Section 45 requires the Department to compare the use of
school funding and submit a report.
Mr. Cross clarified that special education students would
not be identified for the purposes of state aid. Special
education students would continue to be identified and
included in school plans.
Mr. Cross noted that the report mandated under section 45
would use a school size table developed by the McDowell
group. He stressed that the report requirement would test
the method of funds distribution against an instructional
unit within two years to determine if a school based method
of calculation is more effective and equitable then a
community based means. He explained that the Department
would promulgate emergency regulations to define a "school"
for purposes of the Act. The school definition would be
consistently applied to all districts in the state of Alaska
to eliminate differences in school systems across the state.
The number of small schools allowed in larger communities
would be limited.
Co-Chair Therriault observed that the legislation would make
the employment of a chief administrator permissive. State
statute would not mandate that a school administrator be
employed. Representative Martin spoke in support of the
change. He questioned if a chief school administrator would
be paid for within the student allocation.
Mr. Cross explained that the amount of funding would not
changed based on the employment of a chief school
administrator. He noted that the Aleutian Educational
Region Attendance Area does not employ a chief school
administrator. They contract with Unalaska for
administrative services. Under current law, school
districts must have a contract with a person who is licensed
as a superintendent in the State and is subject to
professional ethics requirement of the Professional Teaching
Practices Commission. Even though the Aleutian East Borough
School District does not have a superintendent in their
employment, they do have a certificate administrator who is
responsible and accountable for the operation of the
district. He thought that the legislation would allow a
district to employ someone that did not have credentials to
manage the district. A chief school administrator would not
be subject to any licensure requirements of the state of
Alaska. He stressed that the intent of the legislation
should be clarified. He questioned if the intent is to
allow districts to hire anyone they want as a chief
administrator.
In response to a question by Representative Martin, Mr.
Cross explained that the legislation applies an equal rate
of 20 percent to all districts for kids with
exceptionalities. Only children with continual medical
attention are accounted separately. He did not think that
over identification of those students would be of concern.
Co-Chair Therriault noted that this was subject to abuse
under the old formula. The flat multiplier was instituted
to prevent manipulation of these students to achieve a
funding advantage. He observed that it is difficult to fake
the intensive need category.
Representative Davies referred to page 25, line 16. He
noted that the Department would define "school" for
calculation of state aid. Mr. Cross provided members with
the proposed regulation, 4AAC 09.007, defining "school" for
the purpose of calculating state aid (copy on file). He
maintained that the definition would not be subject to abuse
and would evenly and consistent apply resources. Schools of
less then 10 students would be counted with another school.
Communities with an ADM of 10 to 50 students would have one
school. Communities with an ADM of 51 to 750 would have one
elementary school and 1 secondary school. In communities
with an ADM greater than 750, each facility which is
administered as a separate school would be counted as 1
school. Each alternative school with an ADM of less than
250 would be counted with the largest school in the
district.
(Tape Change, HFC 98 - 163, Side 2)
In response to a question by Representative Mulder, Mr.
Cross noted that schools must have property insurance that
includes fire insurance.
In response to a question by Co-Chair Therriault, Mr. Cross
noted that page 17, line 1 states that if a public school
continues to be deficient or in crisis for two years there
would be a public meeting with the Board of Education to
present a written report.
Representative Mulder referred to subsection (i) on page 17.
Mr. Cross stressed that the Department can show which
methods have proven effective for schools in crisis.
Districts would be encouraged to adopt strategies that have
been proven to work. He observed that placing someone in
the school would not be successful if the school did not
want them present. He explained that the Department would
bring proven expertise.
Representative Kelly referred to the student counting
periods. Mr. Cross noted that the legislation uses the same
count period as the current formula, except that a spring
count is not used. If good cause is shown, upon written
request, the commissioner can allow another 20-day count
period for special circumstances.
In response to a question by Representative Kelly, Mr. Cross
expressed concern that over half of the school districts in
the State would not met transitional amount. He emphasized
that goals should be attainable. He observed that the
Department would work to improve information relating to how
schools spend their funds as recommended by the McDowell
study. He estimated that the largest school districts would
meet the 70 percent level.
Representative Davies suggested that a reporting standard be
set.
Mr. Jeans raised technical issues relating to the
legislation. He referred to page 2, line 6. He noted that
under current law, AS 14.17.021(d) allows the Department to
make adjustments to correct underpayments in the previous
fiscal year. He recommended that a similar provision be
adopted. He noted that the Department must distribute state
aid based on audited local revenues.
Co-Chair Therriault pointed out that the provision was
already included in the proposed draft.
Mr. Jeans referred to page 5, line 7. He noted that the
base student allocation is premature. He suggested that the
"the base student allocation and multiplying that product
by" be deleted. This would allow an adjusted ADM for
correspondence students.
Representative Davies questioned if a charter school could
be a boarding school. Mr. Jeans noted that AS 14.17.440
deals with the Mount Edgecumbe boarding school. A charter
boarding school would not fall under this provision.
Mr. Jeans noted that page 8, line 13 states that the
Department shall establish a competitive grant process to
implement the quality school system. He pointed out that
grants would not be competitive and recommended that
"competitive" be deleted. Co-Chair Therriault noted that
the legislature would appropriate money for this purpose on
a yearly basis. Mr. Jeans explained that entitlement would
be established that would be built into the budget.
Representative Davis noted that an upper limit is set.
There is no lower limit. Mr. Cross explained that $16
dollars would be used as a multiplier. If sufficient funds
are not appropriated the funding would be prorated. The
amount could not exceed an adjusted ADM multiplied by $16
dollars.
Representative Martin questioned if the floor would be
permanent regardless of student size. Mr. Cross explained
that as school districts gain or loss students the amount of
funding that they would receive would depend on the new
formula. District cost factors are not intended to be
permanent. The Department would submit recommended changes
to the district cost factor every other year. The
legislation also requires that the school size table be
compared to another method of allocation to determine if
there is a more equitable way of distribution. He
emphasized that a school funding floor is an appropriate
means to use while an adjusted per student means of
distributing public school funding is developed.
Representative Martin expressed concern that children can be
counted more than once. Co-Chair Therriault stated that if
a student moves the districts cost goes down. The floor is
only a portion of the funding.
Mr. Cross noted that page 11, line 13 states that
"instructional component" includes expenditures for teachers
and for pupil support services. He pointed out that
"teacher" is one classification of expenditure within the
function of instruction. He suggested that the language be
amended to included instruction, special education
instruction and support services, and support services for
students and instruction and school administration. He
explained that support services for students would included
boarding home programs, social workers, and guidance
services. Library services, audiovisual and teacher in
service days would be included under instructional services.
District administration and operation and maintenance would
not be included.
Representative Martin questioned if there is a national
standard. Mr. Cross was not aware of a national standard.
Co-Chair Therriault summarized that the definition would
differentiate between the operation of the school building
and the central office that administers the whole program.
Representative Davies questioned where janitorial services
would be listed. Mr. Cross explained that they would be
under operation and maintenance. Representative Davis noted
that some janitors bring supplies. Mr. Jeans emphasized
that the Department needs a better means of setting a target
as recommended by the McDowell Study. He stressed that
principles are an important part of instruction.
Representative Kelly recommended that a subcommittee should
define instructional component and establish results based
criteria.
In response to a comment by Representative Davis, Mr. Cross
stressed that the McDowell report found that any formula
needs to be dynamic. The report emphasized the need for
better data.
Co-Chair Therriault questioned if two student counts should
be included. Mr. Cross noted that the spring count would
generally be lower than the fall count. He felt that the
fall count would be the most effective. He did not
recommend two counts.
In response to a question by Representative Davies, Mr.
Cross noted that the two biggest districts heavily weight
the 70 percent average. He did not think that averaging
would be effective where school district size varies as in
the state of Alaska. He felt that 70 percent was a
misleading number. The McDowell report stated that
administration was the area in which they had the least
confidence due to inconsistency in the data.
Representative Grussendorf stressed that the legislation is
a starting point that will need to be revisited. He
stressed that recommendations should come from the school
districts.
Representative Davis asked if the Department is comfortable
with the definition of alternative school.
(Tape Change, HFC 98 -164, Side 1)
Mr. Cross stated that there were not many "tough calls" in
applying school districts to the definitions. He emphasized
that there could be some flexibility in how alternative
schools are counted. The Department is suggesting that
alternative schools be counted with the largest school in
the district. He noted that the McDowell Group indicated
that the definition improves the quality and validity of the
study.
Representative Grussendorf asked if there is any alternative
school over 250 students. Mr. Cross noted that there are
alternative programs in Anchorage that are in excess of 250
students.
Mr. Jeans provided members with an eight-page spreadsheet
demonstrating the effect of SB 36 on school districts (copy
on file). He discussed the spreadsheet. He noted that the
North Slope Borough would not receive the floor.
Municipalities must contribute the equivalent of a 4-mil tax
to qualify for the floor. The North Slope Borough is at
approximately 2 mils. The first page of the spreadsheet
showed the funding amount under SB 36, the existing state
aid, the difference between the current and proposed amount,
floor, net change and Quality education grant. Additional
spreadsheets contained projected ADM, correspondence
students in and out of district, special education factors,
state support, required local support, federal impact aid,
mill rate and full determination, and instructional
expenditure amounts.
Co-Chair Therriault asked why Galena's local support was at
34.6 mills. Mr. Jeans noted that some smaller communities
have low property wealth. Hoonah receives timber receipts
that the city appropriates to the school in addition to
their cap for education.
Districts were compared to see how they fared with the local
cap on page 8. Klawock and Nenana would have to contribute
additional money to meet the required local effort. No
districts are over their maximum.
Page eight contained the percentage spent on instruction
versus administration and potential reduction in state aid
if the percentage spent on the instructional unit is not
met.
In response to a question by Representative Martin, Mr.
Jeans explained that timber receipts are reported as local
revenue. Federal impact aid refers to federal dollars
deducted from the foundation program.
In response to a question by Co-Chair Therriault, Mr. Jeans
explained that the required local effort is 45 percent of
basic need for the North Slope Borough, Valdez, Unalaska and
Skagway. He noted that Unalaska has large fish processing
plants that increases their full value determination.
SB 36 was HELD in Committee for further consideration.
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