Legislature(1997 - 1998)
02/17/1998 03:06 PM House HES
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* first hearing in first committee of referral
+ teleconferenced
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SSHB 148 - SCHOOL FUNDING ETC./ CHILD CARE GRANT Number 0540 CHAIRMAN BUNDE announced the next order of business was SSHB 148, "An Act relating to the public school funding program; relating to the definition of a school district, to the transportation of students, to school district layoff plans, to the special education service agency, to the child care grant program, and to compulsory attendance in public schools; and providing for an effective date." CHAIRMAN BUNDE asked Eddy Jeans from the Department of Education to come forward. He reminded Mr. Jeans of his request for a spreadsheet that would indicate the implications of SSHB 148 in future years. Number 0580 EDDY JEANS, Manager, School Finance Section, Education Support Services, Department of Education, responded he was waiting for further direction from Chairman Bunde before completing the spreadsheet. CHAIRMAN BUNDE asked if the committee had any further questions regarding the side-by-side school funding analysis or the foundation formula. Number 0672 REPRESENTATIVE AL VEZEY said the glaring question is the unknown funding required to implement SSHB 148. It was his opinion the committee was dealing with subjective portions of the formula, but was failing to put enough objective analysis in it to actually see what the legislation would actually do. CHAIRMAN BUNDE remarked the committee could go through SSHB 148 section by section and examine the side-by-side analysis until committee members were comfortable with it. He asked Mr. Jeans to begin the sectional analysis. MR. JEANS pointed out the reason for the unknown cost on the spreadsheet for SSHB 148 is because the Department of Education was anticipating the incorporation of the McDowell Study into the school funding analysis. CHAIRMAN BUNDE pointed out the representative from the McDowell Group had been unable to attend this committee hearing, so the committee would move the bill when committee members were satisfied with it, and the Finance Committee could incorporate the figures of the area cost differential. Number 0798 MR. JEANS noted he would be addressing the fiscal note from last year, inasmuch as the fiscal note for the current year had not been updated. Beginning the analysis, he said that basically the funding formula is a departure from the current funding formula which is based on instructional units. Sponsor Substitute for House Bill 148 will be based on students; those students will be adjusted by a size factor for the size of the school; that will also be adjusted by an area cost differential, as well as an adjustment for special needs; i.e., special education, bilingual education and vocational education. This legislation recommends a 20 percent adjustment for categorical funding and excludes a category of intensive students which are severely multi-handicapped students. There are approximately 12,000 intensive students statewide and the cost runs about $20,000 per student. Number 0884 MR. JEANS further stated that SSHB 148 is a student based allocation formula, based on per pupil allocations. The legislation does not call for an annual increase in the student allocation number, so once the number is established in statute, it would be up to the legislature to either increase or decrease the funding. As mentioned earlier, the special needs factor is a 20 percent adjustment factor based on the students enrolled in schools for categorical funding. This would include special education, gifted/talented, bilingual and vocational education. There would be no change from the current program for students identified with intensive needs. The required local effort under SSHB 148 would start at three mills, increase one-quarter of a mill each year until it's back at the current level of four mills required contribution. Number 0953 CHAIRMAN BUNDE said there was a hold harmless clause written into SSHB 148 to ease the transition, but he questioned what the chances were that one or more districts would continue to try to function under the hold harmless after the second year. MR. JEANS responded the only two districts he could think of that could possibly qualify for the hold harmless in the third year would be the Aleutian region and possibly, Pelican. CHAIRMAN BUNDE observed the amount of funds going into hold harmless would decrease very rapidly. Number 0997 MR. JEANS referred to page 2 of the school funding analysis and said SSHB 148 does not have a redistribution based on property wealth. He pointed out this is referred to in Senate Bill 36 as supplemental equalization and in Senate Bill 146, as normalization of property wealth. Basically, it's a redistribution of property wealth based on a per student basis, and SSHB 148 does not contain that provision. Number 1026 CHAIRMAN BUNDE understood that under SB 36, the North Slope Borough would have to pay $33 million to the state of Alaska. MR. JEANS explained that's the recapture provision. Senate Bill 36 sets the required local effort for all municipal school districts in the state at 4.5 mills. Any revenue generated over and above basic need for a school district would come back to the state as a revenue source to the foundation program, and that is approximately $33 million. CHAIRMAN BUNDE indicated the bottom line is the North Slope Borough would be helping finance the rest of the state's schools. MR. JEANS confirmed that. Number 1068 MR. JEANS explained that SSHB 148 does not consider federal impact aid in the formula, so the cap on local contributions is able to be lifted. Currently, the cap on local contributions is equivalent to 23 percent of basic need, in addition to the four mill required local effort. CHAIRMAN BUNDE asked Mr. Jeans to address the disparity issue. Number 1103 MR. JEANS pointed out the federal disparity test is a test of equalization of revenues that are distributed to school districts. On a per student basis, the test gets more difficult to apply and to meet the standards. Under the instructional unit basis, it's quite easy because a much larger figure is used in computing the disparity; $61,000 as opposed to possibly $5,000 per student in allocation. Impact aid funds are considered in the state distribution plan, so the federal disparity equity test must be met. He continued, "Once we no longer consider how much money a school district receives in federal impact aid, we're not subjected to the federal equity test; although you will still be subjected to some test of equity within your own state, possibly within the courts if a district filed suit." CHAIRMAN BUNDE understood the federal equity concerns are to ensure the poorest schools are not too greatly different from the richest school districts, and it's done on a percentage basis. MR. JEANS confirmed that. Number 1200 REPRESENTATIVE PORTER reflected that if federal funds are not considered in the state formula, the state is not held to the requirement of limiting the disparity. MR. JEANS said that was correct; the state would not be held to the standard of equity that's in the federal law. REPRESENTATIVE PORTER asked what happens to the federal funds. MR. JEANS said the federal funds continue to go to the school districts, as it does now. REPRESENTATIVE PORTER asked, "We just don't add or subtract from what the state gives based on what they received from the federal government. Is that correct?" MR. JEANS affirmed that. REPRESENTATIVE PORTER inquired if there was a great disparity in federal funds that go to school districts. MR. JEANS explained, "The way I like to look at federal impact aid funds are just like the required local effort - the four mills. In many of our rural school districts, the revenue they get through impact aid is in lieu of property taxes and that's because the lands out there are held in trust by either the Native corporations or the Natives, themselves. This is the federal government making their contribution in local tax revenue because those lands have been removed from the tax rolls due to federal intervention. So, there is quite a variance out there as to which districts get how much money and it all depends on who lives on the federal lands." Number 1280 REPRESENTATIVE VEZEY said that no one has been able to show him where the federal government applies a cost differential between schools within the state in calculating disparity. There's never been any disparity after cost differential is applied. He doesn't have a problem with this approach, but he does get frustrated with the discussions about the state being subject to a disparity test, when the state has never challenged the federal government to rule on that issue. MR. JEANS acknowledged the Department of Education has not challenged the federal government on the disparity test itself, but the school districts historically have challenged the Alaska Department of Education on the disparity test and the department has gone through hours and hours of hearings to prove that the state of Alaska does, in fact, meet the federal disparity test. He said, "In terms of equity and the differentials, it's assumed that all school districts are equal when we get to basic need." REPRESENTATIVE VEZEY replied, "But your point being is that you're saying the federal disparity test requires you to have a geographical area differential - it doesn't. I never did see that when I looked through the rules and regulations. It basically says -- it assumes that you're going to allocate this, so much per student or school or square foot of classroom. It never dreamed of, when the feds sat down and wrote that set of regulations, that some state would come along and give somebody a 43 percent cost of living differential in their funding ..." Number 1395 CHAIRMAN BUNDE pointed out that impact aid comes not only to rural areas, but to Anchorage and Fairbanks as well because of the military bases, which is in lieu of property taxes. He said, "We can ignore the disparity to a certain extent, and just turn down the impact aid." MR. JEANS pointed out that it's not a matter of receiving or turning down the impact aid funds; those funds are going to continue to flow to the school districts. What is at question is whether or not the state of Alaska is going to measure how much impact aid a school district receives when determining that school district's state aid allocation. Number 1439 REPRESENTATIVE TOM BRICE cited a hypothetical situation of two similar foundation formulas; one includes federal impact aid, the other doesn't. He asked what the difference would be in terms of the state allocation. MR. JEANS said, "That's a difficult question to answer. Unless you're assuming that we have the identical formula in both cases and you take impact aid out of the equation, unit value is still $61,000. What is the new entitlement to school districts? It will increase by approximately $35 million of state aid because we offset state aid by about $35 million -- federal impact aid." CHAIRMAN BUNDE said it had been his assumption that impact aid was in jeopardy if the state doesn't meet the disparity test. But apparently that assumption was incorrect; the state ends up in court if it is not met. MR. JEANS replied that if the state does not meet the disparity test, the state would first have to pay back those funds that were withheld, which would be the $35 million, to those school districts and the state would not be able to withhold those funds in the future until the state has proven to the Office of Impact Aid that the state has a new formula which meets the standard of equity. Number 1529 MR. JEANS resumed his sectional analysis. He said that SSHB 148 has an adjustment for single site school districts, which is true of all the bills, except HB 294. Also, SSHB 148 sets a minimum size for a funding community at ten. He believed that currently there are approximately ten funding communities that are serving less than ten students. CHAIRMAN BUNDE interjected that recent statistics indicated there are 49 schools in the state with 20 or fewer students. Number 1571 CHAIRMAN BUNDE said, "For an administrative concern to put a cap on a minimum on the size of districts to form a school district - to put a cap on the administrative costs - without HB 148 would require separate legislation." MR. JEANS advised that establishing new school districts or setting a minimum size for school districts would require additional legislation. Sponsor Substitute for House Bill 148 simply sets a minimum size for a funding community and does not deal with the school district. Number 1620 CHAIRMAN BUNDE said he would like to discuss the area cost differential after Mr. Jeans finished his overview. Number 1643 MR. JEANS continued that SSHB 148 has transitional funding, or hold harmless funding, for school districts. The rate of hold harmless decreases quite rapidly. He directed the committee's attention to the millage rate on the school funding analysis, and said it is not an increase in required local contribution, it simply states that to qualify for the hold harmless, a municipality must be making a contribution at that millage level. CHAIRMAN BUNDE asked what the local contribution mill rate is for Juneau. MR. JEANS said Juneau contributed 7.7 mills in FY 96. REPRESENTATIVE PORTER pointed out that Anchorage is over eight mills. CHAIRMAN BUNDE asked if the hold harmless was addressed in the Department of Education's fiscal note. MR. JEANS replied the hold harmless was included in the fiscal note. CHAIRMAN BUNDE asked Mr. Jeans to address pupil transportation. Number 1723 MR. JEANS explained that SSHB 148 includes a weighting factor in the formula for pupil transportation. Currently, pupil transportation is funded outside of the foundation program. This would take the approximately $36 million allocated for the pupil transportation program and distribute it through the foundation program based on a ratio of what the pupil transportation program costs in a district to their total budget. CHAIRMAN BUNDE asked if that would be a net loss or a net increase in areas like Fairbanks, Anchorage and Kenai who use a number of buses. MR. JEANS said the Department of Education views it as doing a couple of things. First, if the money is provided to the school districts and the department gets out of reviewing the Requests for Proposals (RFPs) and setting parameters for the contracts, then the districts could be more aggressive and hopefully, save some money. Secondly, the pupil transportation program has been inflation- proofed. That's because inflationary adjustments based on the Anchorage Consumer Price Index (CPI) are built into the contracts and the department budgets for that on an annual basis. CHAIRMAN BUNDE inquired if that could be described as block granting. MR. JEANS affirmed that. Number 1788 REPRESENTATIVE KEMPLEN asked if an accurate summation would be that it was the department's thinking that school districts would get more aggressive in cost reductions by allowing the districts more discretion. MR. JEANS said that was accurate. REPRESENTATIVE KEMPLEN noted the Anchorage School District recently bid out their school bus service and discovered the cost actually increased significantly, which is one of the reasons the district is working toward maintaining an independent bus system. Laidlaw is the only private sector entity providing public transportation and almost has a monopoly. His concern with this approach is that as areas expand and populations spread out, significant amounts of money will be required to transport students and if Laidlaw or some other private sector entity is the dominant provider, it could create a hardship for local school districts. The districts would be forced to choose between providing transportation or using the money for education. He asked Mr. Jeans to explain the weight factor. Number 1898 MR. JEANS said using FY 94 data which was the most recent, the department ran the percentage of pupil transportation costs to the total budget and used that percentage as a proxy for an allocation through the formula. In terms of Laidlaw, the department is aware that Laidlaw has a corner on the market in pupil transportation in this state. He said transportation contracts in Alaska are fairly fragmented. For example, Anchorage lets two contracts of approximately 80 buses each, and Mat-Su lets three contracts. Since Laidlaw does have a corner on the market in Alaska, the department talked with other contractors around the nation about what it would take to entice them to bid in Alaska. He explained these contractors are not interested in coming to Alaska because the start up costs are too high for the small contracts. The department has been working with the Anchorage and Mat-Su School Districts trying to get as many of the contracts on the same cycle, so 300 buses are being bid out in a year on two bids, as opposed to 80 buses this year and 2 sets of 80 next year. Number 1972 REPRESENTATIVE KEMPLEN again asked if it is likely a school district will have to make a choice between pupil transportation and education in order to meet the needs of a growing, scattered population in the district. MR. JEANS said school districts will definitely have to make some decisions; Anchorage currently makes similar decisions in running contracted routes along side the district-operated routes. The department does not fully reimburse Anchorage for the district- operated routes because the cost is much higher than the contracted routes. Number 2021 CHAIRMAN BUNDE noted that Representative Kemplen had recounted that when the contracts were rebid, private transportation has come in higher. REPRESENTATIVE PORTER said, "Mr. Chairman, as I remember their presentation, they said their bids were higher, but I don't think they yet came into the area of the cost of their own service. The costs went up of those private contracts, but I don't think they reached the level of their own." MR. JEANS verified that contracted costs are coming up, but still have not reached what the district-operated routes cost. CHAIRMAN BUNDE interjected the philosophy is that if there are no district-operated routes, then Laidlaw sets whatever price they choose. Number 2063 REPRESENTATIVE VEZEY didn't understand what the problem was if the contracts are still coming in below district cost. He explained that three or four years ago, Laidlaw underbid everyone and got the contracts, now the unit cost has gone up but it is still lower than district operated routes. MR. JEANS pointed out that Laidlaw bought out Mayflower, a major competitor, so Laidlaw did get a corner on the market but as long as there are fragmented contracts, no other company will come to Alaska to bid. Number 2149 REPRESENTATIVE BRICE asked if he was correct in saying that under the current formula, there is a cap on the amount that a municipality can contribute to their education. MR. JEANS confirmed that. REPRESENTATIVE BRICE asked if that was incorporated into SSHB 148. MR. JEANS replied that under SSHB 148, the local cap is removed and left to the discretion of the local municipality. REPRESENTATIVE BRICE inquired if there would be a conflict with the federal disparity test. MR. JEANS responded the disparity issue would no longer be an issue because federal funds would not be considered in the formula under SSHB 148. CHAIRMAN BUNDE interjected that if the disparity became too great, there would probably be court suits that would challenge, under federal law, that students were not being treated equally. He pointed out that some municipalities have their own local caps. Number 2221 REPRESENTATIVE BRICE expressed concern with it being silent in SSHB 148 that if it should go to court, the court would then mandate a cap. He asked for some feedback from the department. Number 2281 CHAIRMAN BUNDE asked, "Would I be correct in saying that on this disparity issue, if the North Slope Borough chose to assess themselves at the four mill level, that $33 million you were mentioning, they could put -- that would come into supporting all schools -- they could actually put that in their own schools if they chose to without any disparity, if the disparity concerns are removed?" MR. JEANS said that would be accurate under SSHB 148. Number 2315 REPRESENTATIVE KEMPLEN referred to the categorical funding, and inquired how the 20 percent figure was arrived at. MR. JEANS stated the 20 percent figure came from the Governor's bill last year. The department wanted a separate pot of money for categorical funding, so the special interest groups in special, bilingual and vocational education still felt they had funds available for the special needs. TAPE 98-9, SIDE B Number 0001 MR. JEANS ... the department went back and calculated how much money was going through the current foundation formula for each one of these categories and took that ratio of the total pot of money, and it worked out to be a 20 percent allocation. Number 0011 CHAIRMAN BUNDE commented the genesis of this bill was the two years of work done by the state school board and foundation formula experts, coming up with their considered opinion in what a formula rewrite should look like. Number 0025 REPRESENTATIVE KEMPLEN noted that gifted/talented is separated out as a distinct category under some of the other proposals listed on the school funding analysis and asked if there was a specific reason for that. MR. JEANS explained that currently gifted/talented is included in the categorical funding heading of special education. The reason it is displayed as such in the side-by-side school funding analysis is because SB 36 actually removes gifted/talented out of the category of special education and creates its own separate category of funding. The Governor's foundation formula rewrite proposes to use the special education task force recommendation which was to continue to have gifted/talented under the umbrella of special education, but that it become its own separate allocation. It was listed out separately so people didn't think that gifted/talented had been forgotten. Number 0098 REPRESENTATIVE KEMPLEN speculated about the possibility of the number of gifted/talented children increasing as a result of the emphasis society has placed on the importance of early childhood development. He suggested that it would be prudent to differentiate the gifted/talented category from bilingual and vocational education to avoid potential competition for the 20 percent funding. He asked Mr. Jeans if he could foresee a conflict in which there would be a tradeoff between the increasing gifted/talent student population and the other categories. MR. JEANS said that kind of competition for those revenue sources currently exists. Under the current foundation program, there are no categorical expenditure requirements in the state. The formulas provide revenue and it's up to the school districts to spend that revenue as they see appropriate. However, for special education, there is an individual education program (IEP), which identifies the services that have to be provided a child regardless of the cost, whether the state fully reimburses the district or not. Number 0251 REPRESENTATIVE PORTER asked how the money was currently allocated. MR. JEANS said it was based on the number of students identified with that need and receiving services. CHAIRMAN BUNDE noted there had been problems with some districts claiming a higher number of students in order to increase the level of funding. Number 0279 REPRESENTATIVE VEZEY recalled the committee had already heard testimony that average daily memberships(ADM) are not audited. MR. JEANS affirmed that Representative Vezey was right. He said currently, the department does not go to each school and verify average daily membership. Although, for the special education category, the department has a review team that goes out on a 3- or 5-year cycle to review the IEPs. Every year the department sends out bills or money to school districts for misclassifications. The only mechanism available to the department at this point for the K- 12 students, is the October 1 enrollment which is strictly a head count. That enrollment count is compared to the foundation reports to identify any large discrepancies. There simply isn't the staff to perform the audits. Number 0346 CHAIRMAN BUNDE defined the head count for clarification. He said it's a 20-day period, and the average of those 20 days. Under SSHB 148, a second count will be required in the spring. He asked Mr. Jeans what the best way would be of verifying the average daily memberships figures. MR. JEANS commented without additional staff, the department uses the tools that are currently available. CHAIRMAN BUNDE asked how the department would verify the figures under the scenario of a per unit formula. MR. JEANS said the department would continue to use the October 1 enrollment figure as a proxy. He explained that under the current foundation formula, the department still gets average daily membership counts, and would continue to get the average daily membership under all of the proposed legislative bills. The difference would be that under SSHB 148, an adjustment factor would be applied to the students to derive at the number of students. Whereas, under the current formula, the number of students is run through a formula which converts the product to instructional units. Number 0443 CHAIRMAN BUNDE again asked how the department could authenticate the average daily membership count without an audit team traveling to the school to conduct a head count. MR. JEANS stated the department has two counts that occur. The school districts take a head count on October 1 by grade, by ethnicity, which is used for federal reporting purposes. That information is compared to the information submitted to the School Finance Section, Mr. Jeans' Office, which is the 20-day count, for any large discrepancies between the two reports. CHAIRMAN BUNDE said the point is that both counts are being done by the same people. Number 0523 REPRESENTATIVE BRICE asked how the department verifies that school districts are spending special needs funds for special needs purposes. Under the current formula, special needs children do not necessarily compete with vocational education programs being offered, but under SSHB 148 it is possible that vocational education programs could end up competing with the special needs children. MR. JEANS said the intent of the 20 percent allocation was to put approximately the same dollars that are currently being allocated to those three programs under the current foundation program out to the districts. He said, yes, there will be some competition between programs. REPRESENTATIVE BRICE understood the difference was that SSHB 148 gives school districts more leeway to allocate those funds. His preference would be to allocate funds for each category. He reiterated his concern that some type of auditing or verification function be performed to ensure that special needs monies are actually being spent for special needs. CHAIRMAN BUNDE confirmed that IEPs are a federal requirement so there is a procedure for auditing in the special education area. MR. JEANS added the individuals who actually do the field audits are paid with federal funds. Number 0704 CHAIRMAN BUNDE reflected the concern that special education students might be victimized probably is not as well founded as that monies for vocational education and gifted/talented students might be usurped because there is no auditing procedure for those two categories. MR. JEANS pointed out that gifted/talented students also have IEPs. CHAIRMAN BUNDE said he would like to discuss the area cost differential study and asked Mr. Jeans for his comments. MR. JEANS said he wanted everyone to understand that the area cost differential study or "The Alaska School Operating Cost Study", is not the cost differential study the department anticipated receiving. The department was expecting a new list of area cost differentials, either assigned at a funding community level or a school district level. It is the department's opinion that the report represents another formula proposal. He explained the report deals strictly with inputs based on school size; i.e., how many teachers, counselors, librarians, are needed based on school size. The report goes on to state there should be an area cost differential for nonpersonnel. So, basically the report is saying the money needs to be split into two pots; one for instruction which would be allocated strictly based on school size, and second would be a pot of money that would be distributed based on the nonpersonnel index created in the study. The study does not deal with any of the categorical funding issues, which Mr. McDowell pointed out, but it needs to be addressed in any proposal that attempts to adopt the recommendations from this study. The study also does not deal with what Mr. Jeans refers to as the back end of the formula; i.e., what are the adjustments that will be made to arrive at state aid. Will there be a formula requiring local contributions? Will impact aid be considered in the formula? Will the Rural Education Attendance Areas (REAAs) be taxed? It leaves all the questions unanswered that need to be addressed to arrive at state aid. This report dealt strictly with school size and nonpersonnel costs. He said he wouldn't address the district administrative portion of the study because the McDowell Group indicated the variances were so huge, they couldn't justify them. So, in the department's opinion they're really not valid. Number 0910 CHAIRMAN BUNDE asked if Mr. Jeans was implying the study wouldn't be accepted. MR. JEANS responded he wasn't saying the study wouldn't be accepted; the study has some good pieces in it. But he wanted to point out that it fell short of providing the one list of differentials the department was anticipating. The study really gives the legislature another funding proposal for the foundation program without all the pieces. Number 0945 CHAIRMAN BUNDE asked if the committee would be able to get the department's perspective on what the missing pieces are and, based on the information from the area cost differential, a spreadsheet showing what the impacts would be on various schools statewide. MR. JEANS responded the department can't determine what the impacts on the schools statewide will be until the adjustments are determined; e.g., will there be an adjustment for special education, whether there will be a deduct for required local effort and at what level, will impact aid be considered in the formula, whether or not there will a tax on the REAAs. Number 1004 REPRESENTATIVE PORTER said, "Maybe I misunderstood the intent of that study, but I thought it was a study to look at if all things were equal, what things aren't equal - if that makes sense - not all the other factors that you've brought in, but just in terms of a cost to provide the service, what things should be higher in one area and lower in another area of fixed costs, not the varying kinds of revenue sources. And I thought -- I mean, they had their own point of view on it and I don't know if I agree with it or not, but I thought from their point of view that's what they provided. Then it would be up to us to throw in the other considerations that obviously you have to have before you come down to what's the bottom line, here. But the study, I thought, was just an attempt to see if it should cost more money in Kake than in Egegik." REPRESENTATIVE VEZEY recalled the McDowell Group addressed the instructional and nonpersonnel units at the presentation, but didn't get to the administration unit. He was under the impression there was going to be another presentation by the McDowell Group at which time the administration unit would be addressed. CHAIRMAN BUNDE indicated there would be another presentation but they were unavailable to attend this committee hearing. He pointed out the McDowell Group's contention was that cost of instruction, cost per teacher, was the same statewide. Recently, the committee received information from the North Slope Borough that cost of instruction is 30 percent higher in the North Slope School District. MR. JEANS said he was unable to respond to the information reported to the committee by Northwest Arctic School District, but the McDowell Group's study did indicate there wasn't much difference in average teacher salary because teachers in rural Alaska spend three to five years and then leave, while teachers in urban areas tend to stay longer. Number 1210 REPRESENTATIVE KEMPLEN referred to the allocation on a per student basis, and asked Mr. Jeans to explain what adjustments would be made for districts that have a higher number of students with challenges and/or obstacles; e.g., broken families, harsh environment, et cetera. MR. JEANS stated in SSHB 148, that adjustment is included in the special needs adjustment - the 20 percent allocation. There would no longer be a requirement of school districts to identify students with special needs for the purpose of generating funding. CHAIRMAN BUNDE reiterated the genesis of this formula was the work completed by the State Board of Education who represented probably a number of areas referred to by Representative Kemplen. There are no areas nationwide that he is aware of that have moved from per pupil to per unit, but there are areas that have moved from per unit to per pupil and the preponderance of the districts nationwide found the per pupil unit a more equitable way of distributing money. Number 1407 CHAIRMAN BUNDE indicated that HB 148 would be brought before the committee at another time, and it was his intention to have the area cost differential addressed in the Finance Committee. REPRESENTATIVE VEZEY asked where the minimum size for schools was addressed in SSHB 148. MR. JEANS replied the average daily membership is on page 5. He noted the minimum average daily membership is set at ten. CHAIRMAN BUNDE noted that all the iterations of the formula are a minimum size of ten, except for the Governor's bills which are set at eight. He reminded committee members that SSHB 148 would be brought before the committee at another meeting.
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