Legislature(1999 - 2000)
04/24/1999 10:09 AM House HES
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HB 191 - CHARTER SCHOOLS Number 0099 CO-CHAIRMAN COGHILL announced the first order of business as House Bill No. 191, "An Act relating to charter schools; and providing for an effective date." Number 0124 WES KELLER, Researcher for Representative Fred Dyson, presented the sponsor statement for HB 191. In 1995, the Alaska State Legislature passed CSSB 88(FIN) authorizing Alaskan charter schools. The Center for Education Reform has pretty well established that Alaska charter school law is viewed as being relatively weak, and the liaison in the Department of Education (DOE) has been in contact with the charter school people and has asked them what could be done to make the bill stronger. MR. KELLER referred the committee to the position statement in their packets. The DOE has several recommendations that they took into account. The first recommendation is to lift the current cap on the number of charter schools in Alaska, and Section 1 takes care of that. Their second recommendation is to ensure that educational programs are based on state standards, and Section 2 takes care of that, so the charter schools could not be exempt from taking the exit exam required in other public schools. The third recommendation is to establish fund raising guidelines for charter schools that are established as nonprofit under 26 U.S.C. 501 (c)(3), and Section 4 takes care of that. They also recommended that they remove the sunset provision of 2005, and that is done in Section 8. MR. KELLER informed the committee that the DOE also recommended that an appeals body be created at the local level for the charter schools, and this bill has not done that. Part of the reason is that they feel that the local school boards have that power now to establish an advisory committee, and they didn't want to add another level of bureaucracy. The next thing the DOE recommended is to grant start-up funds for funding charter schools, and they did not respond directly that way; they responded to the concern about getting more money to the schools. The next recommendation is to clarify that charter schools receive local revenues in excess of required local contribution, as well as state determined basic need, and they did that in Section 4. MR. KELLER noted that Section 7 requires that charter school be counted as separate schools for the purpose of calculating funding for school districts. The DOE counts charter schools as alternative schools when applying AS 14.17.905, which basically says that alternative schools will be counted as part of the school and district with the highest ADM [average daily membership], so charter schools are counted currently with the largest school with the highest ADM. The problem is that alternative schools reside in a public school facility, and a charter school is in its own facility. It seems like more money ought to be going to the charter schools because they have to provide the facilities. MR. KELLER acknowledged that HB 191 allows the district to charge rent if the charter school resides in a school district facility. This is the section that produced the $3.5 million fiscal note from the DOE. In addition to what the DOE has recommended, this bill does two things. One is addressed in Section 5, which requires the districts to assign itemized costs of services provided to the charter school and allows the charter school to opt out of any service that it doesn't want that is not required by law. Number 0495 MR. KELLER said that it requires an itemized list of the cost on a per student basis. The intent of HB 191 in Section 5 is to show exactly what the charter school is purchasing from the district. Section 3 requires that the itemized cost be reflected in the contract with the charter schools. The second thing HB 191 does in Section 6, is it allows for the contracts of the charter schools to be longer than five years. There were problems with long-term rent arrangements with only five year contracts, and this extends it up to ten years. He read a support letter from a charter school student which read: To the Capital, I am a 1st grader at the Academy Charter School in Palmer. My favorite [subject] is science and art. My favorite food is pizza, ice cream, and candy. My name is Danielle May Pempek. I am a happy kid. Can you give us some money so we can have some more Academy Charter Schools. My favorite teachers are Miss Cottle, Mrs. Booth, Mrs. Schmidit, and Mrs. Gerard. Love, Danielle Mary Pempek CO-CHAIRMAN COGHILL asked who provides the itemized list in Section 3. MR. KELLER referred him to Section 5 to answer part of that. He understands that it is a negotiated contract between the charter school and the school board. The local school districts shall itemize each service provided by the school district to the charter school. There is a school budget provided by the district, and the school budget is roughly $4,000 per student. The student generates quite a bit more than that and the difference between what the student generates and what is in the school budget is often defined as educational services, which includes items like special education, transportation, audio-visual support and teacher inservice. This bill is trying to itemize those things so the charter school know exactly what they are "purchasing." CO-CHAIRMAN DYSON commented that it is the perception of some of the charter schools that they are getting $3,035 per student to run their school, and the district is getting between $7,000 and $8,000, and the charter schools maintain that they are not getting their fair share. The intention of this section is to get an accounting of that to make it fair. Number 0868 CAROL COMEAU, Assistant Superintendent for Instruction, Anchorage School District, testified via teleconference from Anchorage saying one of her jobs is the liaison with the charter schools in Anchorage. She wanted to ask some questions and then will provide to the committee their written response later. She noted that they do not have any problem administratively with lifting the cap on the number of charter schools or relieving them of the geographic distribution. Anchorage currently has four charter schools, and they are allotted ten. They would welcome additional applications, but they wouldn't want to preclude others in the state from being able to apply for charter school status if their allocation would hinder that. They support that the charter schools will be required to be tested, as all the other students are, and wondered if that includes the benchmark testing as well as the state mandate on the CAT [California Achievement Test] and the exit exams. CO-CHAIRMAN DYSON answered that they didn't address that and asked what she would prefer. Number 0947 MS. COMEAU prefers that any required state testing would be required of the charter schools, so they could include those into their profile performance that they issue every fall to the public, and the charter schools, and they are to include that in their report back to the school board. MS. COMEAU requested more clarification on Sections 3 and 5 as to what would that mean. She wondered if they would be required to itemize, literally in a log everyday, when they respond to questions or provide information to each charter school. She doesn't know how they would anticipate that ahead of time before negotiating a contract. She wanted more information on their intent on the school district's part. CO-CHAIRMAN DYSON said their intent is that there be an accounting trail of the overhead and administrative costs that the school district has to devote to the administration and support of the charter schools. It might be better to do that retroactively. He is open to their coaching on making that clear and convenient. Number 1067 MS. COMEAU noted that the current law requires that they subtract from the overall allocation, the indirect cost rate which includes all of her services, budget department purchasing, chief financial officer, human resources, which would be all of their hiring procedures, assessment evaluation services, technology and public affairs, and others which they do not charge the charter schools other than the [4.31] percent in the indirect cost rate for the district. The charter schools don't have to pay for any of their services. They do require them to pay for things set by law which include special education. The state law requires that all students are able to apply to a charter school. Some of the charter schools have chosen not to provide the services, but they wanted the district to provide the services so they have worked out a charge back cost on that. That has mixed success because there seems to be less ownership of identification and IEP [individual educational plan] services on the part of the charter schools who are not delivering the services themselves. MS. COMEAU stated that they have two charter schools delivering the services, and the others are getting the services from the district. That is where they are struggling with this language because they believe if they start to cost out all of the time they are spending with the charter schools, it will be significantly more than what the charter schools are being charged now. The indirect cost rate of 4.31 percent is set by the state. She believes that when they take the charter schools' total budgets and reduce it by the indirect cost rate, she estimates it is going to cost them less than it would be under this legislation. They will wrestle with the itemization and costing things out for students and submit a written response. Number 1212 MS. COMEAU said they currently allow the charter schools to raise funds as long as they identify the resources, and that is built into their budget. She doesn't believe that HB 191 will do any disservice to the fund raising aspect. She asked what they mean by "must reflect state, local and other funding for that school district." It seems to her that that may be tied to Section 5 where they list transportation, special education and intensive services that come to the district based on the whole district's needs. She wondered if the intent was to allocate transportation funding to the charter schools, even though their policies do not provide transportation to any of their alternative schools. CO-CHAIRMAN DYSON said what they are trying to accomplish there is just an open accounting so that the charter schools see clearly what administrative and overhead costs are being deducted from the total per-student allocation. They never intended that anything here would preclude them from excluding charges like transportation. Number 1330 MS. COMEAU commented that she can assume from that that the list of services are currently provided under the indirect cost rate, the 4.31 percent, which they take right off the top. She wondered if they would then be itemizing how much time each of them in those departments is spending, and that would be given to the charter schools. CO-CHAIRMAN DYSON indicated that the record of whatever they charge to the charter schools would be a part of the accounting record that they would have access to. But the district doesn't have to charge them a pro-rata share of their time if they choose not to. Number 1370 MS. COMEAU asked Co-Chairman Dyson to explain the opt out. If their district policy requires that the charter schools follow the district's purchasing procedures, and they want to opt out of that, she wondered what the position is with this legislation on that. CO-CHAIRMAN DYSON said that is one of the questions they are interested in her response on. The problem of any school, or any subset of the school district, doing purchasing and contracting is backing them up; it is necessary to have some controls on that. What they are interested in is if there a way for the charter school to do purchasing under the district or state regulations and do it themselves, as opposed to using the district's purchasing department. MS. COMEAU asked if he was asking the district to respond to what they think the pluses and minuses would be of the services and which ones they could support and which ones they think could be problematic. CO-CHAIRMAN DYSON said that is exactly right. Number 1440 MS. COMEAU said they recognize the constraints that the current SB 36 restriction on charter schools under 200 places on the charter schools, and it seems to be forcing, in their estimation, the charter schools to have to increase their enrollment over 200 students in order to access the funding. They are supportive of the charter schools who would like to remain smaller but not be penalized by having to attach themselves to the largest school in the district. They tried to get that changed on SB 36 last spring and were not successful, but they support that. If a charter school wants to stay at 150 students, because they believe that is the size that best meets their mission and space, the district agrees they shouldn't be penalized in the funding because of that. CO-CHAIRMAN DYSON appreciates her comments. Because the charter schools are very separate, physically and administratively, it seems to him, from a management and fairness perspective, that they really are disadvantaged by being lumped with the largest school in the district, which must by scale factor, be more efficient. MS. COMEAU agreed that has been their position. As long as the charter schools are housed in a separate facility, they do not want them penalized for a smaller enrollment. They believe there is a benefit in some of the charter schools to start smaller and grow as they feel comfortable and are more successful. Her experience is that they are more successful to start that way than to start large for an artificial reason, just because a number is in the legislation, rather than what is the best program for the student. Number 1600 GLEN BIEGEL, Member, Board of Alaskans for Educational Choice, Board of Alaska Charter School Association, Academic Policy Committee for Aquarian Charter School, testified via teleconference from Anchorage. He would like to respond to some things that Ms. Comeau mentioned. One of the illustrations perfectly defines the problem that charter schools are having in their attempt to provide choice for parents. He read from his written testimony which states: It is a legitimate and most sacred function of government to provide for the equal treatment among the unequal. The manifestation of this as it is best known is the court system that arbitrates fairly among people who are manifestly unequal by position, wealth, circumstances et cetera. In the world of charter schools, we are tasked with bargaining with districts for the funding to allow us to present to the public an equal and fair presentation of school alternatives. What we are asking for is protection from the word game. The word game is really just a front for the discrimination game. The statements of the district I would like to center on are these: We in essence get local and state funding. There happens to be $38 million we are not participating in, this is called discretionary funds or discriminatory funds. We receive a fair allocation of funds as would be demonstrated if you read the general fund revenues segment and the adopted financial plan of the school district. I will take issue with that in a moment. The district will treat all other public school students as having a priority for housing. I believe that they are funded at about 65 percent of other students. The question is what is the function of the legislature in guaranteeing and allowing charter schools to make an equitable position for parents to choose, as our constitution guarantees? There is no getting around the fact that the expenditures ... for charter school students are $3,900 per child. The expenditures for the Anchorage School District are $7,500 per child. ... We get $3,900 to spend; they get $7,500 to spend. MR. BIEGEL commented that it is a question for the legislature. Is that equitable? The charter schools do not have the ability to impact that $3,900 on their own. They are asking for the ability to guarantee that charter schools have the ability to provide parents with an equitable choice. They can't provide it with $3,900. And it may be very difficult to allow for the presentation of that money to charter schools and the language in the bill as it is currently written may not provide for that. MR. BIEGEL noted that Carol Comeau is well-versed in how funding is allocated by the state, and by various sources of funding. It is very difficult to pry all that apart to say that the money is allocated by per student on this basis. They have an allocation by student in their plan here, and it shows that charter school students actually receive more money per child than every other school in this district. The average amount of money that every other student in this district receives is $3,600. Charter school students receive $3,900. But the expenditure discrepancy cannot be reconciled by that statement. It is just simply not true. They do not participate in 100 percent of local and state funding. It cannot be reconciled. They are asking in HB 191 to have the opportunity to be treated fairly in a funding way. Number 1829 MR. BIEGEL indicated that they were denied housing, a primary and necessary element of educating children. Some people in this room who represent charter schools, are going to show that they just simply won't be able to stay open unless they have a place to teach their children. The charter school movement is willing to work out how much less money they can do it for. They can't do it for 55 percent and no housing. They can't do it; they have tried. They are required to expend money in every way that the school district expends money. They are required to abide by all the same contracts with all the different unions, all their building codes much match the school district. MR. BIEGEL agrees that HB 191 holds the essence of the solution to this problem. They have some suggestions by charter school people about how to fix that problem, but he is not sure that it is dealt with adequately in the bill as it exists. Merely specifying what money they are not receiving isn't going to be enough. It is not going to be enough to say that the charter schools only gets $3,900 to expend per child, whereas the Anchorage School District gets $7,500 to expend per child, are these reasons. Enumerating the reasons isn't going to be enough. MR. BIEGEL continued with his written testimony which states: The real tragedy is that all the effort, all the thought, hope and the trust, will have been misplaced and unretrievable in the grave it has been cast into. There is only so much constructive energy to make the public school system more responsive and more effective. The legislature acted in good faith and trusted the districts to realize the dream of limited competition, but still equal competition. I have heard it said that by some, that the cry for equal treatment that there is a cry for equal treatment and consideration for all. History has shown that equality is reserved only to the equal. We will not be able to present an equitable choice unless we can secure the blessings of equality that our Constitution guarantees by its clause regarding equal access to education. Number 1967 GREG MILLER, Chair, Advisory Policy Committee, Aquarian Charter School testified via teleconference from Anchorage. He has two children at Aquarian Charter School in Anchorage, and he has been involved the past two years. There are 110 students in that school housed in seven portables. They don't have a library, gym, cafeteria, or any busing, and food isn't provided; yet they have made it and are here to stay. He wrote various letters last year regarding this issue: The breakdown of revenues, state versus local revenues and how they are being allocated. He stopped that endeavor about halfway through last year because he couldn't figure out the revenue side. He told himself he wouldn't approach them again until he did have it figured out, and he believes he does now. The irony of it is that he agrees with both Ms. Comeau and Mr. Biegel. This bill is a tremendous effort to fix some of the weak points in the existing statute. MR. MILLER referred to Section 4(a) which is a revenue versus cost issue in his mind. The cost allocation has never been a problem with charter schools. He agrees the school district shouldn't be burdened with more work for an itemized list. The revenue side of the existing statute is wholly inadequate, and HB 191 takes a very good stab at trying to clarify that. But he suggested that it doesn't quite get there because of some of the language. He thinks they need to take away any possible ambiguity within Sec. 4(a). Representative Dyson mentioned that what he is trying to do in this section is to make the allocation of revenues and funds fair and clear with an open accounting. Number 2107 MR. MILLER suggested equal funding. The school district has always said that the charter schools do get equal funding, and that isn't correct. They do get an equal share of the state monies, but they do not get an equal share of the local funding. There is about $92 million locally in the Anchorage School District that goes into the local funding side of it, and they get approximately 60 percent of that, if he understands the numbers correctly. That comes down to $36 to $38 million that Glen Biegel mentioned. Those funds are allocated by the school district per its discretion. He recommended that the language in the bill eliminate that discretion so it is equal. MR. MILLER suggested a formula for equal funding: Take the total amount of money in from all sources; divide that by the number of full-time equivalent students, and that gives the cost per student. Multiply that by the number of students in the charter school, and that is the revenue side. Alter the cost side, whether it be the 4.31 percent or an itemization of the costs, but the revenue side can be just that clear. That will then require the school district to say what the charter schools are being charged for or not, and they can opt in or opt out. He applauded Carol Comeau and the Anchorage School District for their efforts. Number 2242 CO-CHAIRMAN DYSON commented that if they are going to get anything done this session, they must do it well and quickly. TAPE 99-43, SIDE B Number 2280 BARBARA GERARD, Principal, Academy Charter School, testified via teleconference from the Matanuska-Susitna (Mat-Su) Legislative Information Office (LIO). She read her testimony which states: I am one of the founders of Academy Charter School. I currently have a first grader in this school, and I am also the current Principal of Academy Charter. I reside in Palmer. I have spent the last three years totally immersed in the formation and implementation of this school. Our school has been extremely successful. Our success has been largely due to the incredible parent dedication and commitment in both time, money and supplies and whatever else it has taken, including physically building a school out of a field last year. I am hoping you will help us by protecting us and getting a stronger law which delineates equity in funding. Currently our school is receiving $5,800 per student. Next year, due to the harm of HB 36, we are barely going to be able to scrape by. We are hoping that with the Representative Dyson's bill that we will be able to receive somewhat of an equity, an equal portion, and not lose that $1,000 per student. It is critical. Our students have not lessened in value from last year to this year, but yet we will receive less. I am hoping you will support both [HB] 191 and [HB] 197 and enable us to truly provide, and continue to provide, choice in education, and guarantee its quality, its rigor and its content. Charter Schools are true catalysts for school reform. We have seen schools all over the district that have been positively stimulated by the challenge the charter schools have placed them in. To stop the status quo and get busy and find some new innovative ways and which they can function within their own building and provide great education. Please, I can't say it enough, help us, provide us with some strength in that law. I read Representative Dyson's bill and I was excited. It says many of the things that need to be said and will help some of those gray areas become black and white. ...Thank you Representative Dyson for putting forth this bill and for all of you hearing it. Thank you. Number 2175 CO-CHAIRMAN DYSON asked Ms. Gerard if it was the defining of charter schools as alternative schools in HB 36 which caused them to lose $1,000 per student. Number 2166 MS. GERARD answered it basically classified their school with the largest neighboring school. Then through the district wizardry of funding determination, it was determined that they would drop from $5,800 to $4,817. They haven't figured out that rationale. No one seems to know what the formula is. Number 2124 JACK MILLER, Chair, Academic Policy Committee, Family Partnership Charter School, testified via teleconference from Anchorage. He has a son enrolled in their high school program, and he has been involved with the charter schools for the past two years. He reiterated that the challenge for the charter schools is to get equal funding, so they can provide housing and the other educational services that the children need. They cannot do that with the funding that they have now. MR. MILLER said he believes that the only way to solve the housing problem is for the legislature to enact a bill like HB 191. It has to come from the state as a mandate to all the local school districts that they provide equal funding, so that the charter schools can obtain housing and provide the educational programs and services the children need. The intent of the original legislation, and the whole charter school movement across the country, is to provide a good, honest, solid educational alternative for parents whose children don't fit well into the local school district's programs. Without the equal funding, they can do it better for less, but they can't do it for so much less that they barely scrape by. The children need more money, and the legislature is the only one who can provide that. He supports HB 191 and the basic challenge to get them equal funding, so they can continue with the charter school movement in the state. Number 2027 ROBERT HALL, Board Member, Midnight Sun Family Learning Center, testified from the Mat-Su LIO. They have 90 students, four teachers and staff, and the charter school experience has been exciting and challenging. The workload has been far greater than expected, and they are still very excited about it. He reported that they have received more support from the Mat-Su School District than they expected. The district has been very supportive and nurturing. However, there has been a great void of understanding of the relationship between a charter school and the district. It has changed each year; not in an adversarial way, but just because of new personnel. The funding formula isn't really a formula, it is just something that they make up every year. The idea of giving the local school board direction on how much of a local share they are entitled to is good. The charter schools do not want the overall bureaucracy charged to them because the fundamental idea of a charter school is that they can do things differently. MR. HALL commented that the idea of housing is difficult, and no one has really addressed the capital side: He wondered if a charter school wanted to be bonded, would the state step in, what would the process be, and what would be the role in support at the local level. Most school facilities are not paid for out of operating funds; many charter schools are. There is a great need for HB 191. There are a lot of little things to be worked out; clarifying the role and relationship between the charter schools and the districts in the state that will fill a big void, and it will lead to stronger and better charter schools, which offer a more appropriate alternative for students and parents. Number 1896 EDDY JEANS, Manager, School Finance Section, Education Support Services, Department of Education (DOE),came forward to testify and clarified several issues. The DOE's position is that charter schools are a part of the public school system, so they will be required to do the testing at the different grade levels as the other schools are. He discussed indirect rates versus itemizing administrative costs. Now they calculate what the charter schools' entitlement is, and then the school district is permitted to deduct from that an amount up to their state-approved indirect cost rate. Indirect cost rate is for the administrative overhead: purchasing, accounting, payroll, computer systems and so forth. An itemized list with a dollar amount will create a burden on the school district. It may be better for them to list out what services they are providing in that indirect cost rate, as opposed to trying to account for every time they work with a charter school and assigning a dollar value to that. MR. JEANS indicated that it is his understanding that charter schools do not know what services they are receiving for that indirect cost rate. In calculating charter school entitlement, the DOE has calculated a minimum that the school district has to provide to the charter school. They went to the foundation program and ran through a formula called basic need. From basic need they subtract the four mill required local effort, impact aid, and that is how they arrived at state aid. To apply the charter school law, they calculated basic need for that charter school, and that will be the minimum that the school district has to provide to the charter school. That includes the four mill required local effort. It does not include the excess local contribution over and above the four mills, and this is what the charter school people are complaining about. The DOE has left that optional local contribution up to the municipalities to decide whether or not they will provide that to the charter schools. MR. JEANS commented that the DOE would be looking for clarification and direction on Section 4. The foundation program provides operational funds; it does not provide the federal categorical funds. Those are accounted for outside of the school district operating funds: federal grants for special education, vocational education, bilingual education, and so forth. Most of those programs generate money based on students' needs identified through an application process. He assumes that if the charter school children are being identified through these programs, then that money should go there. MR. JEANS said the entire district budget includes special revenue funds. His opinion is that it is not appropriate to take the district's entire budget, divide that by the number of students, and say that this is what the allocation should be for the charter school because they are including costs that the charter school is not going to incur. The DOE has focused on the school operating fund and the foundation program for calculating entitlement. They focused on the four mills, not the local excess contribution. Number 1620 REPRESENTATIVE BRICE noted that one of the biggest issues that he is aware of deals with the capital cost of developing a charter school. He wondered how the state, under HB 191, would look at costs that certain charter schools might incur by building their own and bonding, or getting a loan and incurring certain capital costs, or would they look at incorporating charter schools within the current school construction programs. Number 1560 MR. JEANS said that schools cannot bond; the municipalities bond, and that has to be approved by the local voters. They could use existing capital requests for charter schools if they meet the same criteria as any other school within that district, and that district can demonstrate the need for the additional space. There is a mixed bag of charter schools in this state. Some are being housed in school facilities, some are renting space, and some have long-term leases. REPRESENTATIVE BRICE asked if there isn't a certain amount of logic to ensuring that local school districts are responsible for that cost that is incurred by the charter school. From what Mr. Jeans said, he gathered that those costs aren't necessarily reflected in the base rate that the state provides to charter schools, and HB 191 would require that the school districts look at those costs as well and provide funding for those costs. Number 1450 MR. JEANS said the foundation program provides funding for the academic and operations of the school district, which would include leasing of buildings. That would be part of the maintenance of the school district, and he believes that part is already covered. In terms of long-term capital costs, he believes that the charter schools can, through the school district, apply for, and get on the capital request list if they can demonstrate the needs, just like any other school in the state. CO-CHAIRMAN DYSON asked Mr. Jeans if it would follow that the districts not charge the charter schools a pro rata share of what it costs them to operate facilities across the district, if indeed the charter schools are paying their own facility operations and maintenance costs. MR. JEANS indicated that if the charter schools pay rent for a facility, the school district is taking that out of their allocation and appropriately should be. Number 1325 MR. JEANS explained that the foundation formula has a 20 percent allocation for special needs. This has been an issue raised by charter schools whether they are entitled to that funding or not. The DOE's position has been if they are providing the services on-site, then they are entitled to that funding. If the school district is sending staff over to provide those services, then that money should be retained by the school district. The DOE has left it up to the charter school and the school districts to negotiate that. MR. JEANS referred them to the fiscal note. There are 17 charter schools in the state now. All except for The Family Partnership Charter School in Anchorage, they fall under the alternative schools classification as the DOE defined in regulation. This means that they have to be serving over 200 students to get the benefit of going through the school-size-adjustment table as an independent school. If they have under 200 students, they are lumped in with the largest school in the district, and it does reduce the amount of funding, quite substantially, by being grouped in with the larger schools. In the school-size-adjustment table, for schools over 750 the adjustment is .84. That means that every charter school student is funded at 84 percent of the base student allotment which is $3,940. Each time they go through the formula, they get a base allocation. Base allocation is about $150,000. Taking each one of these schools and moving them from the .84 adjustment, putting them through the formula based on the number of students that they are serving, is what generated the $3.5 million fiscal note. CO-CHAIRMAN DYSON asked Mr. Jeans what the multiplier would be if the school was at 150 students. Number 1140 MR. JEANS said if they had 150 students, the multiplier would be 1.27. If they had 151 students the multiplier would be 1.08. If they had 150 students, the adjustment subtracts 75 students and the remaining 75 would be multiplied at 1.27; add that to the 122.85 to get the school size adjustment for that charter school. CO-CHAIRMAN DYSON said there are about 1,200 students in charter schools. He figured that the difference in moving from the .84 to the 1.27 is about $3,000 more per student. MR. JEANS explained the school size adjustment table is there to provide additional resources because the smaller the school, the less efficient it is to operate, so they are going to have higher fixed costs on a per-student basis. They have taken the students here and put them through a formula, as if they are all housed in independent facilities with very high fixed costs, low pupil-teacher ratios and on and on. Number 0963 REPRESENTATIVE BRICE asked when the policy changed and moved charter schools from regular schools to alternative schools. He asked if alternative schools were defined in statute or regulation. Number 0896 MR. JEANS told Representative Brice that the definition of schools, or facilities constituting schools, made it into SB 36 last year when the bill was in House Finance. Up until that time, the DOE ran every school regardless of size through the formula. It wasn't until they got to the House Finance Committee that this criteria was established. Number 0788 MR. JEANS said the definition for alternative schools is in regulations adopted by the State Board of Education in November 1998. REPRESENTATIVE BRICE asked when SB 36 went into effect. MR. JEANS answered July 1. REPRESENTATIVE BRICE asked how the state divided up the money in the current year's budget, with the understanding that alternative schools included charter schools, obviously without a definition. MR. JEANS said the regulation process takes a very long time. The DOE issued a numbered memorandum to school districts stating that these were the regulations that they were taking to the state board for consideration; and until the board acted on those regulations, this is the way they were going to apply the rules. The board did adopt those regulations. Number 0707 CO-CHAIRMAN DYSON asked if it is legal for the legislature to tell local school districts what to do with the local contribution. MR. JEANS said that is a very good question. Right now under SB 36, they are telling districts what to do with their local contribution with the 70 percent minimum expenditure requirement. They are telling them what to do with their local money as well as their federal money. CO-CHAIRMAN DYSON said until somebody takes them to court they will not know. Number 0614 CO-CHAIRMAN DYSON asked Ms. Comeau how they account for paying for building operation and maintenance. Number 0562 MS. COMEAU answered they do not charge the charter schools for the district-wide costs. Their policy charges a pro rata share for the custodial services for the space the charter schools use in the district's facilities. The other charter schools pay the full cost of their upkeep and maintenance through their leased or rental agreement. It varies with each charter school, but they are not charged for district-wide costs. Number 0486 MR. JEANS raised a couple of other issues for their consideration. The DOE does have a concern with changing charter schools so that they are not classified as alternative schools, especially with lifting the cap on the charter schools. The DOE may see alternative schools in districts, like alternative high schools and other such programs, apply for charter school status so that they can then go through the school-size-adjustment table. If they start having these little pockets of schools popping up all over under the umbrella of charter school, they could have some extremely high costs for the educational programs. CO-CHAIRMAN DYSON asked how they could fix that and asked Mr. Jeans for any suggestions. MR. JEANS said they may be able to come up with some ideas for fixing that. CO-CHAIRMAN DYSON said they are eager to do it right and well and not have some unintended, negative effects. Number 0330 MR. JEANS mentioned charter schools that are providing distance delivery or programs similar to "correspondence" programs. Right now they have the Delta-Greeley Cyber School, which is a distance delivery program, and the DOE has classified that charter school, for funding purposes, as a correspondence school. He asked if there was a way to clarify what the intent was for these types of programs. The foundation program has two pots of money: One for the school-size-adjustment to cover facilities, fixed costs and such, and one for the correspondence allocation which is a flat 80 percent allocation per student; that is an issue for them. Number 0244 REPRESENTATIVE MORGAN wondered how the DOE deals with the two small boarding schools in Galena with 75 students and Takotna with 25 students. He doesn't want to jeopardize them. MR. JEANS said those two schools are classified as alternative schools because they are serving less than 200 students. Under the charter school law now, charter schools that have boarding programs cannot get state funds for their residential component of that charter school. That has been an issue for those communities, but the law prohibits it, so the DOE can't help out for the funding on the residential component of that program. CO-CHAIRMAN DYSON asked Mr. Jeans how they could fix that. Number 0160 MR. JEANS answered they would need to remove the prohibition in the statute. Number 0127 CO-CHAIRMAN COGHILL noted that the fiscal note on that small change would change the chances of getting something through this year. REPRESENTATIVE BRICE asked what was the purpose of having that addition outside the fiscal impacts. MR. JEANS said he doesn't know why that was placed in there. It was placed in there about the same time Galena was getting their charter school approved as a boarding school. Number 0051 REPRESENTATIVE MORGAN said the schools in Takotna and Galena are the last line for these students. These are hard-to-place students, and these two schools have zero tolerance. TAPE 99-44, SIDE A Number 0019 CO-CHAIRMAN COGHILL suggested that they make some amendments and bring HB 191 back for discussion on Tuesday. [HB 191 was held over.]
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