Legislature(1993 - 1994)
02/18/1993 09:00 AM CRA
* first hearing in first committee of referral
= bill was previously heard/scheduled
= 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 issue. 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 community." 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.