Legislature(1993 - 1994)

02/18/1993 09:00 AM CRA

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
  CHAIRMAN  RANDY  PHILLIPS introduced  SB  62  (PUBLIC SCHOOL                 
  FOUNDATION PROGRAM) as the next order of business.                           
  DUANE  GUILEY, Director  of  School  Finance, Department  of                 
  Education, said one major criticism  of the existing formula                 
  for distributing state  aid is  the area cost  differential.                 
  In  response  to  this  concern,  the  Alaska  2000  Finance                 
  Committee recommended formulation of the Alaska School Price                 
  Index Committee.  He highlighted six primary areas of change                 
  that were recommended  by that  committee and are  contained                 
  within SB 62.                                                                
  First, it would  change the Alaska School Price  Index which                 
  would  serve  as a  replacement  for the  current  area cost                 
  differential.   The ASPI  is a  weighted price  differential                 
  based on expenditures as reported by districts  during FY 89                 
  and FY 92.  The districts in  the base were the eight school                 
  districts that currently  have an  area differential of  1.0                 
  under the area cost differential.                                            
  SENATOR TAYLOR commented that prior to the last major change                 
  in the foundation  formula, Southeast Alaska did not  have a                 
  school in it  that was at 1.0.   Anchorage was the  only one                 
  that was 1.0.  When the foundation formula passed, Southeast                 
  Alaska got lumped in with Anchorage and has been stuck there                 
  ever since, and that's  where a major portion of  the single                 
  site problem came from.                                                      
  DUANE GUILEY said there two very  positive things about this                 
  approach as  compared to other  studies to try  to determine                 
  differences in cost.   One is  that this approach was  based                 
  upon  total expenditures  incurred  by  the district,  which                 
  includes local  contributions.   So  those communities  that                 
  have contributed heavily  to the  education of the  students                 
  are awarded  through this system because those contributions                 
  are reflected in salaries  passed to staff, prices paid  for                 
  good  and services  and  choices made  at  the local  level.                 
  Those  communities  that did  not contribute  at the  max or                 
  anywhere close are not rewarded in this system  because they                 
  did  not  have the  dollars  which  to  flow the  negotiated                 
  agreements, to the  data points that were measured for staff                 
  salaries and for the benefits afforded to those staff.                       
  Secondly, other  studies in  the past  have concentrated  as                 
  Anchorage as the  base.   By expanding the  base out  beyond                 
  Anchorage, it allows  the opportunity for even  Anchorage to                 
  come up above  1.0.  Mr. Guiley  said every district in  the                 
  state was afforded the opportunity to be placed at something                 
  greater than 1.0.                                                            
  TAPE 93-7, SIDE B                                                            
  Number 001                                                                   
  There  was  brief  discussion on  teacher  salaries  and the                 
  number  of  unemployed  teachers  looking  for work  in  the                 
  various communities.                                                         
  Number 040                                                                   
  DUANE  GUILEY continued  his overview  on changes in  SB 62.                 
  Vocational education  instructions units will  be calculated                 
  by  multiplying  enrollment  in  grades  9-12 by  a  revenue                 
  weighing factor.   Gifted and  talented instructional  units                 
  will be calculated  by multiplying the enrollment  in grades                 
  K-12 by 4 1/2 percent, and  then multiplying that product by                 
  a revenue weighing  factor.   This is an  attempt to  remove                 
  gifted and talented from special education and treat it as a                 
  separate unit.                                                               
  The  bill  also  establishes a  hold  harmless  provision to                 
  ensure that no district would receive  less as the change is                 
  made to the new funding formula.  The provision would remain                 
  in effect for three years.                                                   
  The due date  of the student enrollment  projection is being                 
  changed to a  later date in  order to provide more  accurate                 
  information to the legislature and  to the Governor's office                 
  in establishing a budget for the following year.                             
  Mr.  Guiley  said they  have established  a type  of forward                 
  funding by  asking that  a district  be allowed  to use  the                 
  greater of  the current  year enrollment or  the prior  year                 
  enrollment,  whichever would  generate  more  money for  the                 
  school district.  This would provide an opportunity that the                 
  school district  would know  their minimum  level of  budget                 
  dollars at  the time they are making  staffing decisions and                 
  budget plans.                                                                
  SENATOR TAYLOR asked if there was a change made in the  caps                 
  in the  tax equivalents.   DUANE GUILEY  answered that  they                 
  were not recommending  any changes  in the tax  equivalents.                 
  As  the basic  need calculation  is raised,  the  basic need                 
  drives the cap,  and as the basic need goes up, the cap goes                 
  up.  It will  change the calculation in the  following years                 
  for the  three districts  that are  at the  35 percent  cap.                 
  However, they did  not adjust  the 35 percent  base at  all.                 
  SENATOR TAYLOR requested that Mr.  Guiley draft an amendment                 
  adjusting that 35 percent  base so that he can insert  it in                 
  the  bill.   He said people  in his  community pay 10  or 11                 
  mills  and  maybe  have  a  third  or  fourth  of  it  go to                 
  education, whereas in the North Slope Borough they pay a lot                 
  less in taxes  and yet  they receive five  to six times  the                 
  amount of money they need to run their schools.                              
  Number 110                                                                   
  CARL ROSE,  Executive Director, Association of Alaska School                 
  Boards, stated their support for SB 62.                                      
  Mr.  Rose  was a  member of  the  Alaska School  Price Index                 
  Committee.  He  said the methodology  that was used and  the                 
  points that were  considered in reviewing the  Alaska School                 
  Price  Index  were valid  considering  the disparity  in the                 
  state.  The attempt was to  try to provide equity.  He  said                 
  there were  some problems in  trying to provide  a statewide                 
  perspective, but it  was felt  that the attempt  was a  good                 
  one.  The Department  of Education is working on  some minor                 
  adjustments to address some of the  needs of the single site                 
  Mr.  Rose  said the  Association  is concerned  that current                 
  enrollment figures be used in the state budget planning.                     
  Speaking to the hold harmless provision, Mr. Rose asked that                 
  the department consider  being more clear  on the review  in                 
  three years.   He said the  three-year review leads some  to                 
  believe  that this issue  would be reviewed  in three years,                 
  but he thinks,  more accurately, we're trying  to transition                 
  from where  we are now  to where we  think we have  to be in                 
  three years.                                                                 
  Number 220                                                                   
  SHARON MACKLIN, representing the  Anchorage School District,                 
  said the school district has taken  a position that if there                 
  is a rewrite to the foundation formula this year, they would                 
  like it to  be equitable to  the Anchorage School  District.                 
  The school district feels that the  proposal on the table is                 
  not equitable.   Although there  are some parts of the  bill                 
  that they support,  they feel that  overall they are  coming                 
  out on the short end of the stick.                                           
  Ms. Macklin directed  attention to a  graph provided to  the                 
  committee by the  district outlining the areas  they believe                 
  are not  equitable.   She said  they go  from three  funding                 
  communities to one  which results in  a large loss, as  does                 
  the change in the formula for gifted children.                               
  Number 276                                                                   
  DUANE GUILEY clarified  that the board felt  that vocational                 
  education is significantly short-funded across the state and                 
  they  wanted  to increase  the  funding level  to vocational                 
  education to all school districts, so the amount per student                 
  was  increased  by  approximately  50  percent  from  what's                 
  currently provided.  The board felt the  gifted and talented                 
  program was  over-funded and  they wanted  to decrease  that                 
  level of funding.   He added  that special education is  the                 
  fastest growing program  in Alaska with basically  no limits                 
  on it,  and this is an attempt to  establish a limit on that                 
  program and to provide a flat rate of funding.                               
  Mr.  Guiley  also  clarified that  by  existing  regulation,                 
  Anchorage  is a unified city  borough and by regulation they                 
  are one  funding community.   He  said the  Anchorage School                 
  District  has been granted  exceptions in the  past, and, as                 
  they  move  to  the new  funding  formula,  the Commissioner                 
  wanted to dissolve all exceptions  that have been previously                 
  awarded  and  go by  the  regulatory definition  of "funding                 
  Number 305                                                                   
  CHAIRMAN RANDY PHILLIPS told Ms.  Macklin that he shared her                 
  concerns.  As he understand the new  formula, Anchorage will                 
  get 30.1  percent, and under the existing  formula, they get                 
  30.7 percent.   This  is an  overall state  increase of  $12                 
  million of which Anchorage only  gets $476,000, and yet they                 
  have 38 percent of the school  enrollment, but they are only                 
  getting about 29 percent of the funding.                                     
  Number 335                                                                   
  WILLIE  ANDERSON, representing  NEA-Alaska, stated  they are                 
  supportive of  parts of the bill, but  have serious concerns                 
  about other parts of the bill.                                               
  Mr. Anderson said the school price index issue is one of the                 
  areas where they are generally supportive of the  attempt to                 
  equalize the funding process.  They  don't agree with all of                 
  the conclusions made, but they think it can be worked out so                 
  that  it becomes  a  better area  of  differentials than  it                 
  currently is.                                                                
  NEA-Alaska is  supportive of the  centralized correspondence                 
  secondary funding.                                                           
  NEA-Alaska has serious concerns about the area of gifted and                 
  talented  funding.   It  is  their  belief  that the  gifted                 
  program  is  a program  that  is  population  driven.    The                 
  students who are in the  special education program are there                 
  because they are  certified and qualified for  that program,                 
  and that's the way to get  to the cost issue he said.   They                 
  believe  the  gifted program  should  be covered  and should                 
  continue under the  same level of funding that it  is at now                 
  as opposed to a flat rate  of funding.                                       
  NEA-Alaska  supports  the  transition  period  in  the  hold                 
  harmless provision.                                                          
  Mr. Anderson said it is  NEA-Alaska's belief that the  issue                 
  of single and small site districts should be addressed  once                 
  and for all on a long term basis.                                            
  There being no  further witnesses present  to testify on  SB
  62, CHAIRMAN RANDY  PHILLIPS closed  the public hearing  and                 
  stated it would be back before the  committee in the next of                 
  couple of weeks.                                                             

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