Legislature(1995 - 1996)
03/27/1996 01:50 PM Senate FIN
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* first hearing in first committee of referral
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= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
SENATE BILL NO. 244
An Act relating to state foundation aid and
supplementary state aid for education; and providing
for an effective date.
Co-chairman Halford directed that SB 244 be brought on for
discussion. RICK CROSS, Deputy Commissioner, Dept. of
Education, came before committee accompanied by EDDY JEANS,
School Foundation, School Finance, Dept. of Education.
END: SFC-96, #55, Side 2
BEGIN: SFC-96, #56, Side 1
Mr. Cross referenced the 20 percent test that must be met to
include $35 million in federal funds in the foundation. He
further advised that SB 244 deducts 95 percent from REAAs as
opposed to 90 percent of federal impact aid, but it also
redistributes back a $500.00 unit value to ensure that the
20 percent disparity test is met.
Senator Sharp asked how the bill would impact the current
per student rate flowing to districts. Mr. Jeans said it
would increase the per student allocation in some instances
and decrease it in others. He noted that the legislature
has traditionally provided supplemental funding for single-
site school districts. He pointed to the current $1.2
million supplemental request and said that it is equivalent
to a $500.00 allocation to REAAs, per instructional unit.
The proposed bill would increase the impact aid deduct to
offset that cost. Mr. Jeans next pointed to an accompanying
fiscal note reflecting a net general fund increase of
$224.0.
Co-chairman Frank voiced appreciation for the department's
attempt to develop an approach that is "somewhat neutral in
terms of costs and revenues." He then asked how much of the
cost is attributable to single sites and how much relates to
the new allocation for disparity. Is that fully offset by
the increased deduct, except for the $224.0? Mr. Jeans
responded that the fiscal note does not address the single-
site allocation because it is currently built into the
department K-12 operating budget. Increase of the deduct
from 90 to 95 percent saves the state slightly over $1
million. Single-site funding totals $3,149.0. In response
to a further question from Co-chairman Frank, Mr. Jeans
acknowledged disparity costs of $1.2 million in FY 96.
Co-chairman Frank asked if the department considered
increasing disparity to 97 or 98 percent to make it totally
revenue neutral. Mr. Jeans explained that the increase from
90 to 95 percent was the recommendation of the foundation
task force. That recommendation was forwarded to the state
board of education, approved, and forwarded to the
Governor's Office. Co-chairman Frank referenced resistance
to supplemental funding and a movement to make SB 244 apply
to the FY 96 allocation to produce a revenue neutral
situation for FY 96 and the future. Mr. Jeans cautioned
that the situation would not be revenue neutral for all
school districts. A small number would be adversely
impacted by that approach. The problem relates to the
increase in the 5 percent deduct versus the $500.00
allocation. Mr. Jeans next directed attention to the three-
column spread sheet attached to the fiscal note and
explained the significance of each column.
Senator Sharp noted that Anchorage receives $3,847.00 in
state funds per student while other districts receive from
$10,000.00 to $24,465.00. It appears that the proposed bill
would increase that spread rather than provide a "true fix"
for state aid. Mr. Jeans acknowledged that some districts
would benefit from increased revenue per student. If those
numbers were divided by the number of students served, the
increase would "be very minimal on a per-student basis."
Senator Sharp commented that all the increases would go to
districts that are "probably a little bit above average
already on ADM." Mr. Jeans acknowledged that might be true.
Senator Sharp next asked about the effort to revamp the
entire foundation formula. Mr. Cross said that the state
board of education had met three times, as a committee of
the whole, to work on the issue. Two more meetings are
scheduled to work on a new foundation formula that will be
significantly different from that before members today.
Senator Rieger asked if disregard of 2 mills of local effort
would achieve the same disparity numbers as those proposed
in SB 244. Mr. Jeans explained that the disparity is caused
by excess local contributions that districts are allowed to
make over and above 4 mills. Lowering that to 2 mills would
increase disparity. Local effort would have to be increased
to lower disparity. Senator Rieger suggested that the
excess could be taken off the top rather than from the
required minimum. There are a variety of ways to come
within federal guidelines.
Senator Rieger next voiced his understanding that the state
of Kansas, which is at 25 percent disparity, is planning to
"take it to Congress and get the law changed rather than try
to meet the 20 percent disparity." Mr. Jeans concurred in
that understanding.
Co-chairman Frank noted that it is difficult to increase
dollars to districts that appear to be getting the most per
student. He then asked if that results from a requirement
that disparity be calculated in the same fashion as moneys
are distributed. Mr. Jeans explained that the department
could compute the disparity test on a per-pupil basis. That
standard was computed and, excluding all exceptions allowed
under federal law, it came out worse at 27 percent. Co-
chairman Frank asked that computations be provided for
committee review.
Discussion followed concerning the possibility of changes at
the federal level. Mr. Jeans explained that the impact aid
program was reauthorized through 1999. The disparity drops
to 20 percent for FY 98 and 99. Mr. Cross stressed that the
administration believes the proposed bill is the best
solution at this time, rather than for all time. Until the
foundation is substantively changed, this is the best way to
meet present rules.
In response to a question from Co-chairman Halford regarding
funding for pupil transportation, Mr. Jeans explained that
transportation moneys are allocated to a special revenue
fund outside of the disparity standard. Disparity is
measured on the operating fund only. Capital and federal
programs are also outside.
Co-chairman Frank voiced his understanding that the single-
site issue is separate from the disparity issue. Mr. Jeans
concurred. He added, however, that the department would
encourage inclusion of the single-site allocation within the
foundation program. The federal government has taken note
of the single-site appropriation outside of the foundation
formula and has put the department on notice that it appears
Alaska is creating an entitlement program, and the state's
determination could be in jeopardy.
WANDA COOKSEY, representing single-site school districts,
came before committee and directed attention to file
materials (copies on file in the master Senate Finance
Committee file for SB 244). She explained that the formula
in Sec. 4 is the formula the single-site school district
consortium has requested for the last several years. It is
also the formula used to determine the grant amount.
Ms. Cooksey noted that there is no fiscal note relating to
single-site funding because it does not involve new money.
It is in the department budget.
Co-chairman Halford asked for a list of single-site
districts and the funding they receive. Ms. Cooksey
directed attention to the attachment to the transmittal
letter from the administration.
In response to a question from Senator Zharoff, Ms. Cooksey
said that the proposal was agreed to by all the single
sites, the state board of education, the school board
association, the school administrators association, and NEA.
Co-chairman Halford noted that additional people who signed
up to testify on the bill were no longer present and
suggested that SB 244 be set aside pending their return.
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