Legislature(2003 - 2004)

03/02/2004 03:07 PM HES

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
HB 471-INCREASE AMT OF BASE STUDENT ALLOCATION                                                                                
                                                                                                                                
Number 0050                                                                                                                     
                                                                                                                                
CHAIR WILSON announced that the  first order of business would be                                                               
HOUSE BILL  NO. 471, "An  Act relating  to the funding  of public                                                               
education; and providing for an effective date."                                                                                
                                                                                                                                
CHAIR WILSON  announced for the  record that  Representative Wolf                                                               
has joined the meeting.                                                                                                         
                                                                                                                                
Number 0100                                                                                                                     
                                                                                                                                
REPRESENTATIVE  GATTO  moved  to  adopt  CSHB  471,  version  23-                                                               
LS1645\I, as  the working  document.   There being  no objection,                                                               
version I is before the committee as the working document.                                                                      
                                                                                                                                
REPRESENTATIVE GATTO  summarized the CSHB 471  increases the base                                                               
student allocation from $4,169 to  $4,379 this year, and provides                                                               
for a 2 percent annual increase  beginning July 1, 2005.  He told                                                               
the  members that  as Chair  of  the House  Special Committee  on                                                               
Education,  he  appointed  three  members to  a  subcommittee  on                                                               
education funding.   The subcommittee  took public  testimony and                                                               
asked each  individual school district  what its  shortfall would                                                               
be and what  funding would be necessary to  return the districts'                                                               
funding levels to that of the  previous year.  The conclusion was                                                               
that there  needed to  be a  $210 increase  [to the  base student                                                               
allocation] to  keep the districts  at the previous  year's level                                                               
of funding.   Representative Gatto  pointed out that  this figure                                                               
does  not include  the PERS/TRS  shortfall.   It  was decided  to                                                               
address that issue in a separate bill, he commented.                                                                            
                                                                                                                                
Number 0281                                                                                                                     
                                                                                                                                
REPRESENTATIVE  COGHILL  asked  whether  there  would  be  public                                                               
testimony before  or after  the presentation  of amendments.   He                                                               
told  the members  that he  plans  to propose  an amendment  that                                                               
removes the language  which provides for a 2  percent increase in                                                               
funding annually.                                                                                                               
                                                                                                                                
CHAIR  WILSON  announced  that the  committee  will  hear  public                                                               
testimony before the amendments are presented.                                                                                  
                                                                                                                                
Number 0359                                                                                                                     
                                                                                                                                
KRIS  MOORE,  Member,  Valley Voices  for  Children  (VVFC),  and                                                               
parent of  four children in the  Matanuska-Susitna Borough School                                                               
District, testified  in support of HB  471.  She said  that basic                                                               
needs are  not being  met and  that the  quality of  education is                                                               
suffering.  She urged the committee  to not only address the cuts                                                               
from this year, but also repair  the damage done to the education                                                               
system in prior years.                                                                                                          
                                                                                                                                
Number 0559                                                                                                                     
                                                                                                                                
DEBRA  GERMANO,  School  Board Member,  Kenai  Peninsula  Borough                                                               
School District, testified in support  of education funding.  She                                                               
told  the  members that  she  is  disappointed  to hear  about  a                                                               
suggested amendment  which would  take funds away  from education                                                               
funding.   Ms. Germano commented  that while she  appreciates the                                                               
efforts of  the committee, the  only thing the proposed  level of                                                               
education funding does is provide  for education to almost remain                                                               
at the  present level.   She explained  that last year  the Kenai                                                               
Peninsula  Borough  School  District  lost  56  teachers  and  14                                                               
custodians.   Ms. Germano shared  that at a school  board meeting                                                               
she  attended the  previous  night she  heard  about more  people                                                               
leaving  the   community  because  of  the   uncertainty  in  the                                                               
direction of public  education.  She said she believes  this is a                                                               
big   contributor  in   declining   enrollment   that  is   being                                                               
experienced in school  districts.  Ms. Germano  urged the members                                                               
to do  more than provide for  a $210 increase and  support a cost                                                               
of living increase.                                                                                                             
                                                                                                                                
Number 0718                                                                                                                     
                                                                                                                                
REPRESENTATIVE   GATTO   commented   that  he   understands   the                                                               
disappointment that  education funding has decreased  for several                                                               
years.   He pointed  out that the  retirement shortfall  has been                                                               
separated from  the base student  allocation.  He said  he agrees                                                               
that  $210   is  not   enough,  but   it  does   prevent  further                                                               
deterioration from the previous year.                                                                                           
                                                                                                                                
MS. GERMANO  responded that  she appreciates  the efforts  of the                                                               
members.   In the Kenai  Peninsula Borough School  District there                                                               
are losses  of programs,  she said.   For instance,  the district                                                               
does not have a foreign language  program or a gifted program any                                                               
more.                                                                                                                           
                                                                                                                                
Number 0859                                                                                                                     
                                                                                                                                
REPRESENTATIVE  WOLF  agreed  with  Ms. Germano  that  the  Kenai                                                               
Peninsula  Borough School  District  has been  dealing with  this                                                               
issue for  a long  time, and  now the issue  has spread  to other                                                               
parts of the state and is now being addressed.                                                                                  
                                                                                                                                
Number 0904                                                                                                                     
                                                                                                                                
REPRESENTATIVE SEATON told Ms. Germano  that he is concerned that                                                               
the 2  percent increase in  the base student allocation  could be                                                               
viewed  as  "the deal."    Basically,  this  could mean  the  $86                                                               
increase in following years could  be considered both the maximum                                                               
and minimum amount  of an escalator by the legislature.   He said                                                               
he believes  that could  present problems for  the district.   He                                                               
asked  if  Ms.  Germano  has   any  comments  on  the  2  percent                                                               
escalator.                                                                                                                      
                                                                                                                                
MS.  GERMANO  replied that  the  2  percent  increase is  only  a                                                               
beginning, but  at least it  is something the districts  can plan                                                               
on when developing a budget.                                                                                                    
                                                                                                                                
Number 0943                                                                                                                     
                                                                                                                                
TIM  STEELE,  School  Board Member,  Anchorage  School  District,                                                               
testified on  HB 471.   He  told the  members he  appreciates the                                                               
work done in funding education;  however, there have been serious                                                               
cuts in  Anchorage including  332 jobs and  cuts to  programs and                                                               
activities.    He  agreed  with  Debra  Germano's  comments  that                                                               
Kenai's  school  district  has  been hurting  for  a  long  time.                                                               
Anchorage School  District has also had  cuts, but since it  is a                                                               
much  larger district,  it has  been possible  to absorb  some of                                                               
those cuts.                                                                                                                     
                                                                                                                                
MR. STEELE said now the  district, like everyone else, is feeling                                                               
the pain, and the  pain is a result of a failure  to fund cost of                                                               
living allowances  (COLA) for decades.   Since 1999  the district                                                               
has  lost $253  in  purchasing  power, he  explained.   The  $210                                                               
increase  almost gets  the district  to where  it was  last year,                                                               
which  was  almost  to  point  the  year  before.    There  is  a                                                               
cumulative effect,  he said.   Mr. Steele  told the  members that                                                               
districts  need a  significant increase  to  the funding  formula                                                               
this  year to  make  progress  toward adequacy.    The 2  percent                                                               
increase  would be  progress toward  sustainability.   Without it                                                               
the districts will be much worse off in five years.                                                                             
                                                                                                                                
MR. STEELE  told the members that  last night there was  a school                                                               
board  meeting which  focused  on  a six-year  plan.   There  was                                                               
overriding  gloom that  dominated the  discussion that  the goals                                                               
could  not be  met.   He  stated that  he  wants to  get back  to                                                               
focusing  on  educating kids  and  spend  less time  begging  for                                                               
money.                                                                                                                          
                                                                                                                                
Number 1166                                                                                                                     
                                                                                                                                
JENNIE HAMMOND  testified on HB 471.   She told the  members that                                                               
the quality of  education provided to students in  Kenai is going                                                               
down,   and  that   failure  is   not  based   on  the   lack  of                                                               
professionalism of the  teachers, but due to the  lack of funding                                                               
being received  from the state.   Ms.  Hammond said she  does not                                                               
believe $4,600  per student is a  small price to pay  compared to                                                               
what is being done to the children.                                                                                             
                                                                                                                                
CHAIR WILSON  agreed with Ms. Hammond.   She shared that  she has                                                               
had parents who  were educated in the same  school district their                                                               
children  are  attending now,  and  who  have  come to  her  with                                                               
concerns  that  there were  better  course  offerings and  better                                                               
educational  opportunities  afforded  to  them  many  years  ago.                                                               
Chair Wilson stated that she believes that is a sad statement.                                                                  
                                                                                                                                
Number 1249                                                                                                                     
                                                                                                                                
MELODY DOUGLAS,  Chief Financial Officer, Kenai  Peninsula School                                                               
District,  testified in  support of  HB 471.   She  commended the                                                               
members  in  taking the  lead  in  providing increased  education                                                               
funding.  She said that the  increase of $210 in the base student                                                               
allocation is  significant and  does not want  to take  away from                                                               
that, but echoed the earlier comments by Kenai residents.                                                                       
                                                                                                                                
MS. DOUGLAS told  the members she opposes  the proposed amendment                                                               
that would remove the 2  percent incremental increase in funding.                                                               
She said that  while she understands why it might  be removed, an                                                               
incremental increase of 2 percent  annually is an important place                                                               
to  start.     Ms.  Douglas  told  the  members   that  Kenai  is                                                               
experiencing significant facilities  increases, such as utilities                                                               
costs.   She  urged  the members  to keep  the  2 percent  annual                                                               
increases in education funding.                                                                                                 
                                                                                                                                
Number 1363                                                                                                                     
                                                                                                                                
AMY  LUJAN,  Business  Manager,   Nome  Public  School  District,                                                               
testified  on HB  471.   She  stated that  she  is supportive  of                                                               
increases of  the base  student allocation  so that  the district                                                               
can  maintain  parity with  the  current  year.   This  would  be                                                               
especially  true if  PERS/TRS is  addressed in  a separate  bill.                                                               
Ms. Lujan explained that while this  helps, it does not help with                                                               
the programs  that have been  cut over the  past two years.   For                                                               
example,  there are  fewer junior  and  senior course  offerings,                                                               
larger class sizes which is  problematic at the elementary level,                                                               
no school nurse, no social  worker, and no assistant principal at                                                               
the elementary  level, fewer aides, growing  deferred maintenance                                                               
needs,  and no  professional  development.   Ms.  Lujan said  she                                                               
appreciates the increase in the base student allocation and                                                                     
urged the members to maintain the 2 percent annual increase as a                                                                
starting point.                                                                                                                 
                                                                                                                                
Number 1449                                                                                                                     
                                                                                                                                
MARY FRANCIS, Ph.D., Executive Director, Council of School                                                                      
Administrators, testified on HB 471.  She provided the following                                                                
statement:                                                                                                                      
                                                                                                                                
     The school  administrators are  strongly in  support of                                                                    
     an increased  base student allocation.   We prefer that                                                                    
     the  amount  be  sufficient to  include  the  increased                                                                    
     TRS/PERS  costs, so  that this  ongoing  cost of  doing                                                                    
     business  doesn't  have to  be  fought  for each  year.                                                                    
     Provided,  of  course,  that   the  districts  have  an                                                                    
     eroding funding  floor would be  equally taken  care of                                                                    
     with the other districts.   We also think including the                                                                    
     TRS/PERS  costs in  the formula  will then  allow those                                                                    
     communities with  taxing powers  to contribute  more to                                                                    
     schools, should they choose to do so.                                                                                      
                                                                                                                                
     That  said,  it  is  our wish  that  the  base  student                                                                    
     funding  also be  adequate to  provide a  comprehensive                                                                    
     educational  program  for  all   kids.    As  a  school                                                                    
     administrator  of  over  20  years,  I've  watched  the                                                                    
     steady erosion  of educational  programs.   Starting in                                                                    
     1986,  when  a  10%  across  the  board  reduction  was                                                                    
     imposed,  school  districts  have reduced  services  to                                                                    
     balance  budgets   year  after  year.     Watching  the                                                                    
     schoolhouse crumble is not what  I thought I'd spend my                                                                    
     career doing!                                                                                                              
                                                                                                                                
     Recently I  heard that a philanthropic  organization is                                                                    
     planning  to provide  funding for  the  arts in  public                                                                    
     schools.   This is terrific  news!   But how sad  is it                                                                    
     that  a  critical  component of  educating  the  "whole                                                                    
     child"  is  now   dependent  on  someone's  generosity?                                                                    
     Isn't  it  the  State's  responsibility  to  provide  a                                                                    
     comprehensive educational program?   Shall we next turn                                                                    
     to   the    National   Basketball   League    to   fund                                                                    
     extracurricular programs?   Shall we turn  to Microsoft                                                                    
     to  fund workplace  preparation  programs?   Vocational                                                                    
     programs,  the arts  and music,  are some  of the  many                                                                    
     programs  falling by  the wayside  as school  districts                                                                    
     prepare budgets on inadequate funding.                                                                                     
                                                                                                                                
     Alaska's  students  deserve   a  quality  comprehensive                                                                    
     educational  program.    Please  help get  us  back  on                                                                    
     course  by supporting  a  substantial  increase to  the                                                                    
     base student allocation.                                                                                                   
                                                                                                                                
     Thank you for your time.                                                                                                   
                                                                                                                                
Number 1559                                                                                                                     
                                                                                                                                
REPRESENTATIVE WOLF asked why the  state should not ask Microsoft                                                               
to contribute.   Alaska owns $240 million worth of  stock in that                                                               
company.                                                                                                                        
                                                                                                                                
Number 1591                                                                                                                     
                                                                                                                                
MARY  HAKALA, Coordinator,  Alaska  Kids Count,  testified on  HB
471.   She  told the  members that  Alaska Kids  Count is  a non-                                                               
partisan   group  of   parents,   grandparents,  educators,   and                                                               
community  members  who  have joined  together  to  advocate  for                                                               
schools  and  safeguard  children's  education.    She  told  the                                                               
members that about a month ago a  few of us got together to start                                                               
the initiative, and now there are  over 400 in a statewide e-mail                                                               
network.  She  pointed out that the growth reflects  the level of                                                               
concern out there.  The group  works along side Valley Voices for                                                               
Children, other  parent groups, and  PTAs, she added.   She asked                                                               
the members  to remember  that each  time a  Representative hears                                                               
from  one of  them, it  often  reflects the  perspective of  many                                                               
people.   It is tough for  a parent to approach  the legislature;                                                               
it is not a common day experience for most people.                                                                              
                                                                                                                                
MS.  HAKALA  explained that  the  group  she represents  are  the                                                               
volunteers in  the school, the ones  who set up bake  sales, help                                                               
with the  valentine parties, and  increasingly raise funds.   For                                                               
example, in  Juneau it is  the PTA  that funds the  art supplies,                                                               
and field biology,  which is a long  way from what it  use to do.                                                               
She  emphasized that  this funding  is  for core  subjects.   Ms.                                                               
Hakala reiterated  that the current  funding is adequate  and the                                                               
additional cuts are  unacceptable.  She said that this  bill is a                                                               
step forward in the right  direction, but believes that much more                                                               
is needed.                                                                                                                      
                                                                                                                                
MS. HAKALA commented that between  the PERS/TRS solution and this                                                               
bill  would be  about  $78 million.   She  urged  the members  to                                                               
invest $100 million in education.                                                                                               
                                                                                                                                
Number 1719                                                                                                                     
                                                                                                                                
CARL  ROSE,  Executive  Director, Association  of  Alaska  School                                                               
Boards, testified on HB 471.   He told the members that this past                                                               
weekend  he  had the  opportunity  to  revisit the  Molly  Hootch                                                               
decision  made  30 years  ago  which  provided that  people  were                                                               
allowed to  educate their children  at home, rather  than sending                                                               
them  away to  boarding schools.    Much of  the discussion  that                                                               
surrounded  the gathering  he attended  focused on  the kinds  of                                                               
education options  available given the  shortage of funding.   He                                                               
added that  the people in  attendance do not  want to go  back to                                                               
the pre-Molly Hootch days.   Mr. Rose explained that although the                                                               
people  support boarding  schools as  an option  for many  of the                                                               
students,  it  was  clear  there  was  no  support  for  mandated                                                               
boarding schools.                                                                                                               
                                                                                                                                
MR. ROSE  told the members  that in  rural areas of  Alaska there                                                               
have been tremendous reductions in  services across the state due                                                               
to the lack  of funding.  He pointed out  that six state senators                                                               
represent the  entire landmass  of Alaska  with the  exception of                                                               
the  Railbelt,  and  28 representatives  represent  the  Railbelt                                                               
proper, while the other 12 represent  the rest of the state.  Mr.                                                               
Rose told the members there is  a tremendous crisis with the lack                                                               
of capacity to deal with the issues being presented.                                                                            
                                                                                                                                
Number 1831                                                                                                                     
                                                                                                                                
MR.  ROSE  explained  that  the decision  for  Molly  Hootch  and                                                               
Bullock vs. Lind  was largely due to what many  people felt was a                                                               
preponderance  of  evidence that  suggested  that  the state  was                                                               
operating two systems of education that  were not equal.  He told                                                               
the members  that he believes  that can  be said about  the state                                                               
today.   He  urged the  members  to look  at the  state of  rural                                                               
education  and  how  the  state  addresses  the  needs  of  those                                                               
children.  There  is serious need for increased  investments.  He                                                               
added that there is a serious  need for water and sewer and other                                                               
amenities that  many of  us take  for granted.   Mr.  Rose stated                                                               
that everyone is covered by the  same constitution.  That is just                                                               
a backdrop to what is involved, he added.                                                                                       
                                                                                                                                
MR. ROSE told the members that for  the last 17 years he has been                                                               
involved  in managing  the decline  of public  education.   Every                                                               
year  education has  been provided  with  less money.   Now  that                                                               
shortages in funding  is being felt in the Railbelt,  there is an                                                               
awareness of the  problem in the state.  He  urged the members to                                                               
look at the  entire system with a sense of  conscience of what is                                                               
being done  for and to our  kids.  He summarized  his comments by                                                               
saying "if  we do not model  what we teach, then  we are teaching                                                               
something else."   Mr. Rose  suggested that  if it is  being said                                                               
that  educating our  youth is  our highest  priority, then  it is                                                               
important to take every step to do that.                                                                                        
                                                                                                                                
Number 1907                                                                                                                     
                                                                                                                                
MR.  ROSE   said  the  association   supports  this  bill.     He                                                               
understands  the hard  work that  was involved  in producing  the                                                               
increase  in funding,  and urged  the  members to  support the  2                                                               
percent annual  increase as well.   It is a good  place to start,                                                               
he commented.  Mr. Rose told  the members that everywhere that he                                                               
goes  he hears  people say  they are  willing to  pay for  better                                                               
education for their  children.  He said even  though his children                                                               
finished their  education, he would  be willing  to pay a  tax to                                                               
educate children for the future of the state of Alaska.                                                                         
                                                                                                                                
Number 1911                                                                                                                     
                                                                                                                                
REPRESENTATIVE  GATTO  commented  that  the  total  base  student                                                               
allocation  in the  bill is  $4,379 or  close to  $4,400.   The 2                                                               
percent annual  increase would mean  an additional $88  more next                                                               
year.   Neither he nor Mr.  Rose will be satisfied  with $88 next                                                               
year, he  said.   Representative Gatto  said he  understands that                                                               
there  could be  some thought  that next  year someone  could say                                                               
that  education  funding has  already  been  addressed with  a  2                                                               
percent  increase,  and  would  question why  there  would  be  a                                                               
request for more  funds.  Representative Gatto asked  Mr. Rose to                                                               
comment on this.                                                                                                                
                                                                                                                                
MR. ROSE replied that he believes  2 percent is a starting point.                                                               
Often there are supplementals that  will add funds later as needs                                                               
are identified.   He suggested  that since all the  testimony has                                                               
addressed the loss  in buying power, there is  no addressing that                                                               
unless there is a step increase  in funds.  He reiterated that he                                                               
is  willing to  start at  2 percent,  but guaranteed  the members                                                               
that  2 percent  will be  inadequate this  year, and  it will  be                                                               
inadequate next year as well.                                                                                                   
                                                                                                                                
REPRESENTATIVE  SEATON pointed  out  that this  bill states  that                                                               
there will  be a 2  percent increase,  not that an  increase will                                                               
start  at 2  percent.   He  asked Mr.  Rose  if he  is really  in                                                               
support of the language that says  funding will be increased by 2                                                               
percent.                                                                                                                        
                                                                                                                                
MR.  ROSE  responded  that  he is  supportive  of  that  language                                                               
because he has never known the  legislative body to be limited by                                                               
what a  previous legislature had  passed.  The language  giving 2                                                               
percent is  better than  nothing.  He  encouraged the  members to                                                               
work for  progress.  The door  is not closed on  this subject, he                                                               
added.                                                                                                                          
                                                                                                                                
Number 2020                                                                                                                     
                                                                                                                                
CATHERINE REARDON testified  as a parent of  a kindergartener and                                                               
a four-year  old.  She  asked for  a significant increase  in the                                                               
base  student  allocation  and  an  annual  inflation  factor  to                                                               
address the loss in purchasing power.   She told the members that                                                               
she believes  strongly that it is  important to put money  in the                                                               
education system  that can allow it  to help all the  children of                                                               
the state.   She said  her testimony represents many  parents who                                                               
find it difficult  to testify.  Most parents would  be willing to                                                               
pay  taxes  to  fund  education.    She  stated  that  she  finds                                                               
education more important than the permanent fund dividend.                                                                      
                                                                                                                                
MS. REARDON  told the  members that  the Juneau  School District,                                                               
like many  other school  districts, has been  looking at  ways to                                                               
cut its  budget.  The  Charter School where her  daughter attends                                                               
will be  cut to  the statutory minimum  which really  brings into                                                               
question the  existence of  the school.   This  is an  example of                                                               
what is happening statewide, she said.                                                                                          
                                                                                                                                
REPRESENTATIVE GATTO  commented that  it would  be nice  to index                                                               
education funding as the permanent fund  is indexed.  He asked if                                                               
Ms. Reardon knows what it  takes to inflation proof the permanent                                                               
fund.                                                                                                                           
                                                                                                                                
MS. REARDON replied 3 to 3.5 percent.                                                                                           
                                                                                                                                
REPRESENTATIVE GATTO  asked if  Ms. Reardon  would be  happy with                                                               
only a 2 percent increase per year.                                                                                             
                                                                                                                                
MS. REARDON  responded that  she would  guess that  the inflation                                                               
costs  for some  things in  education, such  as PERS/TRS,  have a                                                               
higher  escalation in  inflation.   Inflation goes  up and  down.                                                               
While it is low at this time, next  year it could be higher.  Ms.                                                               
Reardon said she  would be more comfortable with  indexing than 2                                                               
percent, but appreciates what has been done.                                                                                    
                                                                                                                                
CHAIR WILSON announced that public testimony is now closed.                                                                     
                                                                                                                                
Number 2233                                                                                                                     
                                                                                                                                
REPRESENTATIVE  COGHILL moved  to  adopt  Amendment 1,  [original                                                               
punctuation provided] which read as follows:                                                                                    
                                                                                                                                
     Page 1, Line 6:                                                                                                            
     Delete:  "However, the department shall, on July 1 of                                                                      
      each year, beginning July 1, 2005 increase the base                                                                       
     student allocation by two percent"                                                                                         
                                                                                                                                
                                                                                                                                
Number 2241                                                                                                                     
                                                                                                                                
REPRESENTATIVE GATTO objected.                                                                                                  
                                                                                                                                
Number 2245                                                                                                                     
                                                                                                                                
REPRESENTATIVE COGHILL told the members  that there are two sides                                                               
to  the question  of a  2  percent annual  increase to  education                                                               
funding.   Is this  a sufficient  amount, he asked.   He  said he                                                               
believes the answer is "no",  so the starting point should always                                                               
be  the  formula.    This  is  a  very  complex  formula.    When                                                               
discussing adequate  funding it is  clear that the issue  must be                                                               
addressed   and   funded   by   the   legislature   every   year,                                                               
Representative Coghill added.                                                                                                   
                                                                                                                                
REPRESENTATIVE  COGHILL said  that  he believes  there are  other                                                               
important issues  that must be  addressed as well.   For example,                                                               
he told the  members he believes public safety rises  to the same                                                               
level of  importance as  education, and  there are  no escalating                                                               
clauses in legislation for funding  that.  Representative Coghill                                                               
acknowledged that  he has a  bill that requests more  funding for                                                               
education and is working to find more funds.                                                                                    
                                                                                                                                
REPRESENTATIVE COGHILL  agreed that Mr.  Rose makes a  good point                                                               
that it  is an interesting  time where there is  declining income                                                               
and increased  expenses.   He told  the members  that there  is a                                                               
bigger debate going  on and that is to use  some of the permanent                                                               
fund  to fund  state government.   He  told the  members that  he                                                               
would not  support indexing education  funding and is not  even a                                                               
big fan of  inflation proofing the permanent fund  even though it                                                               
is statutorily required.  The  growth factor is market driven and                                                               
an  income that  is revenue  driven  from royalty  oil and  lease                                                               
sales.    He added  that  he  would  rather  see the  [funds  for                                                               
inflation proofing] be placed in  education funding.  If indexing                                                               
were included  for education funding,  it could then  be included                                                               
in every  budget because each  one is important.   Representative                                                               
Coghill summarized  that since  he has  been in  the legislature,                                                               
the  education funding  issue has  risen to  the top  every year.                                                               
This amount is  not enough for education funding,  he stated, and                                                               
is  surprised that  there is  not  an amendment  to increase  the                                                               
funding.  The question is where can the money be found.                                                                         
                                                                                                                                
TAPE 04-16, SIDE B                                                                                                            
                                                                                                                                
Number 2364                                                                                                                     
                                                                                                                                
REPRESENTATIVE  COGHILL  explained that  this  is  just one  more                                                               
layer the House Finance Committee  must go over to determine what                                                               
is adequate  educational funding.  He  told the members if  it is                                                               
believed that the  amount for the base  student allocation should                                                               
be higher,  then raise the  amount.  He  stated no one  is fooled                                                               
that the 2 percent annual increase will do anything.                                                                            
                                                                                                                                
Number 2351                                                                                                                     
                                                                                                                                
CHAIR WILSON announced for the  record that Representative Cissna                                                               
joined the meeting some time ago.                                                                                               
                                                                                                                                
CHAIR WILSON commented  that she has been in  the legislature for                                                               
four years and has been  fighting for increased education funding                                                               
all  that  time.     The  schools  in  her   district  have  been                                                               
experiencing  serious  shortfalls  in  funding  long  before  the                                                               
larger schools districts  felt the pain, she said.   Chair Wilson                                                               
told the  members that she agrees  with what has been  said about                                                               
the 2  percent increase  being only  a start.   The  schools have                                                               
been expected  to provide  everything that  is requested  of them                                                               
even though  there has  been a  steady erosion  in funding.   She                                                               
stated that  she believes the  inclusion of a 2  percent increase                                                               
may be  viewed by some  as a  conclusive solution to  the funding                                                               
shortage.                                                                                                                       
                                                                                                                                
Number 2291                                                                                                                     
                                                                                                                                
REPRESENTATIVE GATTO  said that  every year  about this  time the                                                               
school  districts  try  to  issue contracts  and  right  now  the                                                               
schools do not know how much  money will be funded for education.                                                               
The districts expect that it will  be less than what was received                                                               
last  year.   He  said  he hopes  this  2  percent increase  will                                                               
provide  the districts  with the  assurance that  it will  not be                                                               
necessary to  issue so many pink  slips.  This kind  of assurance                                                               
for the  previous year's allocation,  plus a 2  percent increase,                                                               
may  make  it  easier  for   the  districts'  to  issue  teaching                                                               
contracts, plan on insurance and  utility increases, and plan for                                                               
maintenance costs.   Representative  Gatto told the  members that                                                               
he hopes the  percentage will be 4 percent, but  at least it will                                                               
be  2 percent  under  Alaska  statute rather  than  nothing.   He                                                               
agreed with Mr.  Rose's statement that over the  last seven years                                                               
all that  has been  done is  to "manage the  decline."   The $210                                                               
increase is only  arresting the decline and is  not repairing the                                                               
damage.  He summarized his comments  by saying that the 2 percent                                                               
annual increase provides the districts  with some hope that there                                                               
will not be further decline.                                                                                                    
                                                                                                                                
Number 2207                                                                                                                     
                                                                                                                                
REPRESENTATIVE  SEATON  told the  members  that  he is  concerned                                                               
about  the  2 percent  increase  language  in  the bill  for  two                                                               
reasons.   The  first is  that  it may  be a  magnet for  drawing                                                               
negative votes for the bill because  there are a number of people                                                               
who  are opposed  to inflation  proofing  any budgets.   So  this                                                               
language  would provide  a good  excuse for  some members  not to                                                               
support  the bill,  he  said.   The second  concern  is that  the                                                               
language says  "by 2 percent."   He told the member  that if this                                                               
amendment fails, he will be  offering an amendment that would say                                                               
"by at least 2 percent" so that  the mind set is changed that the                                                               
increase will be 2 percent.                                                                                                     
                                                                                                                                
REPRESENTATIVE   SEATON  said   he   would  like   to  get   some                                                               
clarification  from  the administration  on  the  effect of  this                                                               
language on the base student  allocation.  The committee has been                                                               
told that fully funding education  means meeting the base student                                                               
allocation.    Representative   Seaton  questioned  whether  this                                                               
change would mean that fully  funding education means meeting the                                                               
base student  allocation last year  or the previous year,  plus 2                                                               
percent.                                                                                                                        
                                                                                                                                
Number 2140                                                                                                                     
                                                                                                                                
EDDIE  JEANS,  Finance  Manager, School  Finance  and  Facilities                                                               
Section,   Department  of   Education   and  Early   Development,                                                               
testified on HB 471 and answered  questions from the members.  He                                                               
responded that  the department's interpretation of  the 2 percent                                                               
provision would be to build that  2 percent into the budget which                                                               
would be  submitted to the  legislature in December.   That would                                                               
be the full funding amount, he said.                                                                                            
                                                                                                                                
REPRESENTATIVE GATTO said  he believes that if  steps and columns                                                               
didn't change, there were no  raises, no insurance increases, and                                                               
no  PERS/TRS  shortfall  then education  funding  could  probably                                                               
manage  with the  2 percent  annual increase.   He  asked if  Mr.                                                               
Jeans would agree with that statement.                                                                                          
                                                                                                                                
Number 2110                                                                                                                     
                                                                                                                                
MR. JEANS  replied that he could  not answer that questions.   He                                                               
added  that he  did look  at the  Anchorage Consumer  Price Index                                                               
(CPI) over the last five years,  and over that period the CPI has                                                               
averaged about  2 percent.   Mr. Jeans  commented that  2 percent                                                               
seems like a reasonable number at this point.                                                                                   
                                                                                                                                
CHAIR  WILSON said  she  is sure  that for  some  schools that  2                                                               
percent would not be enough.                                                                                                    
                                                                                                                                
REPRESENTATIVE SEATON explained to the  members that based on Mr.                                                               
Jeans'  response  to  questions,  he will  not  be  offering  the                                                               
amendment  he mentioned  earlier  because the  2  percent can  be                                                               
built into the formula.  He  said that if he changed the language                                                               
to "at least 2 percent" he  does not believe it would be possible                                                               
for the department to build it into the formula.                                                                                
                                                                                                                                
REPRESENTATIVE  COGHILL  questioned  how  this  will  affect  the                                                               
hiring practices  that Representative  Gatto mentioned.   He said                                                               
that  he was  under  the assumption  that  hiring decisions  were                                                               
based  on student  count.   The committee  has discussed  forward                                                               
funding of  education and  there has always  been a  snag because                                                               
the  student count  needed  to be  taken  into consideration,  he                                                               
recalled.                                                                                                                       
                                                                                                                                
CHAIR  WILSON said  that it  has always  been very  difficult for                                                               
schools  to  know  how  many  teachers to  hire  because  of  the                                                               
uncertainty of  funding.   Tenured teachers  must be  notified by                                                               
March 15  if there is a  possibility of a layoff.   She explained                                                               
that for many of the schools  where funding has been severely cut                                                               
all that remains are tenured teachers.                                                                                          
                                                                                                                                
REPRESENTATIVE COGHILL said  that he does not believe  that the 2                                                               
percent annual  increase would make  a difference  in determining                                                               
how many teachers may be retained.                                                                                              
                                                                                                                                
Number 2000                                                                                                                     
                                                                                                                                
CHAIR WILSON  clarified that the  schools also must  determine if                                                               
there will  be the same number  of students.  If  there are fewer                                                               
students, the  schools will  receive less  money.   She commented                                                               
that when  the schools do not  have enough money to  provide good                                                               
educational opportunities, people move away.                                                                                    
                                                                                                                                
MR. JEANS commented  that the members know  the budgeting process                                                               
is  a difficult  one.   He explained  that school  districts base                                                               
there budgets on the base student  dollar amount in statute.  The                                                               
districts assume  that is what  will be  received.  He  said most                                                               
districts  will  not  budget  based on  a  higher  dollar  amount                                                               
because that  is the element  that is unknown.   If there is  a 2                                                               
percent increase automatically built  into the foundation program                                                               
the school districts will budget  for it, expect it, and pressure                                                               
will be put  on the legislature to  fund it, Mr. Jeans  said.  He                                                               
added that  the foundation  program has  been fully  funded since                                                               
1987.  There was a huge decline  in oil revenue that year and the                                                               
state  took a  10  percent  cut across  the  board including  the                                                               
foundation  program.   He clarified  that was  after the  budgets                                                               
were approved and appropriated by the legislature.                                                                              
                                                                                                                                
Number 1961                                                                                                                     
                                                                                                                                
MR. JEANS  told the  members that the  2 percent  annual increase                                                               
would help  the school  districts determine  how many  pink slips                                                               
need to be issued.  For  example, if a school district knew today                                                               
that it  could count on $4,010  then pink slips would  need to be                                                               
issued because it  could not assume there would  be more funding.                                                               
If there  is a 2 percent  increase, then it is  likely that fewer                                                               
pink slips would be issued, he said.                                                                                            
                                                                                                                                
REPRESENTATIVE WOLF  said he  agrees with  Representative Gatto's                                                               
statement.   He  explained that  he had  the opportunity  to work                                                               
with  the superintendent  of schools  while decisions  were being                                                               
made  about the  issuance  of pink  slips.   Representative  Wolf                                                               
commented  that  the   2  percent  increase  could   make  a  big                                                               
difference in some people's lives.                                                                                              
                                                                                                                                
REPRESENTATIVE COGHILL  commented that he does  not disagree with                                                               
Representative Wolf's statement.   He said, however,  that if the                                                               
base  student  allocation were  set  at  an adequate  level  then                                                               
school  districts  could   plan  appropriately.    Representative                                                               
Coghill pointed  out that there could  be an argument that  if an                                                               
annual  percentage   increase  is  placed  in   statute  for  the                                                               
foundation  formula, then  there are  other areas  of the  budget                                                               
where annual budgeting  processes also impact people's  jobs.  He                                                               
commented that if this is  something the legislature really wants                                                               
to do, then perhaps there should  be a 2 percent escalator on the                                                               
budget bill as a whole.                                                                                                         
                                                                                                                                
REPRESENTATIVE COGHILL stated that he  believes the better way to                                                               
approach the  problem is to look  at the formula to  see what the                                                               
real number is and if it really  works.  Every two years there is                                                               
an election process where the people  of Alaska tell us what they                                                               
want.    He commented  that  he  rides  the breaks  on  education                                                               
funding even  though he has a  bill which asks for  more funding.                                                               
Representative Coghill commented that  he will likely get slapped                                                               
around for that.  In summary, he  said that if the funding is not                                                               
accurate it  is because the  people who elect legislators  do not                                                               
reflect that increased funding is necessary.                                                                                    
                                                                                                                                
Number 1800                                                                                                                     
                                                                                                                                
REPRESENTATIVE GATTO  commented that  as the  chair of  the House                                                               
Special Committee on Education if he  could be king for a day and                                                               
come up with  a number that meets the needs  for education, there                                                               
would  be no  need for  a 2  percent escalator.   He  stated that                                                               
there was a great deal of  time and effort from committee members                                                               
this year  to come up with  an additional $210, exclusive  of the                                                               
PERS/TRS  shortfall  which  is  addressed  in  a  separate  bill.                                                               
Representative Gatto  explained that  the committee came  up with                                                               
the right number  which does nothing more than  stop the decline.                                                               
It  is for  this reason  that he  is opposing  the amendment,  he                                                               
said.                                                                                                                           
                                                                                                                                
A  roll call  vote was  taken.   Representative Coghill  voted in                                                               
favor  of Amendment  1.   Representatives  Wilson, Wolf,  Seaton,                                                               
Cissna,  and Gatto  voted  against it.    Therefore, Amendment  1                                                               
failed to be adopted by a vote of 1-5.                                                                                          
                                                                                                                                
REPRESENTATIVES SEATON proposed that a  memorandum be drawn up to                                                               
accompany  the  bill  which  would say  that  the  House  Health,                                                               
Education and  Social Services Standing Committee  recognizes the                                                               
need  to  identify  sources  of  available  funds  to  cover  the                                                               
increase in  education funding.  It  would go on to  say that the                                                               
committee has  identified the remaining  authorized CBR  draw for                                                               
2004 and the  Alaska Permanent Fund earnings as  sources that can                                                               
be used for the education funding increase.                                                                                     
                                                                                                                                
REPRESENTATIVE COGHILL  objected for  purposes of  discussion and                                                               
clarification.                                                                                                                  
                                                                                                                                
REPRESENTATIVE SEATON  read the following text  which he suggests                                                               
be included in a memorandum which would accompany HB 471:                                                                       
                                                                                                                                
     The  House   Health,  Education  and   Social  Services                                                                    
     Standing  Committee  recognizes  the need  to  identify                                                                    
     sources  of  available  funds   for  this  increase  in                                                                    
     education   funding.     We   identify  the   remaining                                                                    
     authorized  CBR draw  for 2004  and the  permanent fund                                                                    
     earnings reserve as  sources that can be  used for this                                                                    
     educational funding increase.                                                                                              
                                                                                                                                
REPRESENTATIVE SEATON  added that the language  is conceptual and                                                               
would not object to the language being slightly modified.                                                                       
                                                                                                                                
CHAIR WILSON  commented that this  language was developed  in the                                                               
House Special Committee  on Education, but did not  come with the                                                               
bill in error.                                                                                                                  
                                                                                                                                
Number 1657                                                                                                                     
                                                                                                                                
REPRESENTATIVE GATTO  explained that the letter  should accompany                                                               
the bill when it goes to  the House Finance Committee so that the                                                               
members there are not faced with  a bill that has a $42.3 million                                                               
fiscal note  without identifying some available  funding sources.                                                               
He clarified  that the  letter was written  by the  House Special                                                               
Committee on Education  to accompany the bill, but not  be a part                                                               
of the bill.                                                                                                                    
                                                                                                                                
CHAIR WILSON asked what the  committee wishes with respect to the                                                               
letter to accompany the bill.                                                                                                   
                                                                                                                                
REPRESENTATIVE  COGHILL  said  that he  maintains  his  objection                                                               
because it narrows  down the sources of funding  from last year's                                                               
CBR draw.  He said he is open to a suggestion.                                                                                  
                                                                                                                                
REPRESENTATIVE SEATON clarified that  the only reason this letter                                                               
specifies the CBR draw and the  permanent fund earnings is due to                                                               
the fact  that these  are the only  funds currently  available to                                                               
this legislature that  can be appropriated.  He  said that future                                                               
tax sources  require another bill  to pass  which may or  may not                                                               
pass.    He  said  that  he believes  it  is  important  for  the                                                               
committee to say that this  education funding is important enough                                                               
to us that sources have been identified to fund this bill.                                                                      
                                                                                                                                
REPRESENTATIVE COGHILL suggested that  the language including the                                                               
CBR draw  for 2004 be  removed and  just have the  permanent fund                                                               
earnings reserve in the letter.   He commented that House Health,                                                               
Education and Social Services Standing  Committee is not going to                                                               
be  advising  the House  Finance  Committee  of any  new  revenue                                                               
sources.  He  commented that if the committee really  wants to be                                                               
daring why not insert an income tax as a source of revenue.                                                                     
                                                                                                                                
REPRESENTATIVE SEATON explained that  the reason he is suggesting                                                               
this letter and  the language in it  is due to the  fact that the                                                               
committee was  told that  if it  put forth  a bill  that included                                                               
increased funding,  the House Finance Committee  would like those                                                               
sources of funding  to be identified.  This  letter would reflect                                                               
the members' commitment to education funding, he added.                                                                         
                                                                                                                                
Number 1490                                                                                                                     
                                                                                                                                
REPRESENTATIVE COGHILL  commented that  while he is  the majority                                                               
leader, nine  times out of  ten he is in  the minority.   He told                                                               
the members  he maintains his objection.   Representative Coghill                                                               
said  he  believes the  committee  chair's  statement before  the                                                               
House Finance  Committee would be adequate,  unless the committee                                                               
wants to promote a head tax or income tax.                                                                                      
                                                                                                                                
A  roll call  vote was  taken.   Representatives Wilson,  Seaton,                                                               
Cissna,  and Gatto  voted in  favor  of including  the letter  of                                                               
intent  with HB  471.   Representatives  Coghill  and Wolf  voted                                                               
against it.   Therefore, the  letter of intent was  included with                                                               
HB 471 by a vote of 4-2.                                                                                                        
                                                                                                                                
Number 1399                                                                                                                     
                                                                                                                                
REPRESENTATIVE GATTO moved to  report CSHB 471(EDU), 23-LS1645\I,                                                               
out   of   committee   with   individual   recommendations,   the                                                               
accompanying fiscal notes, and an  accompanying letter of intent.                                                               
There  being no  objection,  CSHB 471(EDU)  was  reported out  of                                                               
House Health, Education and Social Services Standing Committee.                                                                 
                                                                                                                                

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