Legislature(1999 - 2000)

04/03/2000 09:05 AM Senate FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
txt
SENATE BILL NO. 290                                                                                                             
"An Act relating to state funding for transportation                                                                            
of public school students; and providing for an                                                                                 
effective date."                                                                                                                
                                                                                                                                
                                                                                                                                
This was the second hearing for this bill in the Senate                                                                         
Finance Committee. The original version of the bill, 1-                                                                         
LS1555\A, was unchanged.                                                                                                        
                                                                                                                                
DAN BECK, Superintendent of Schools, Delta Junction,                                                                            
testified via teleconference from Delta Junction to ask                                                                         
what would happen if a new route were established and if                                                                        
the district would have to pay 50 percent of that cost.                                                                         
                                                                                                                                
Co-Chair Torgerson answered that according to the                                                                               
legislation, the district would pay 50-percent of all new                                                                       
costs incurred after the FY 01 base was established.                                                                            
                                                                                                                                
Mr. Beck stated that he therefore did not support the bill.                                                                     
He said that during this time when the state is trying to                                                                       
put more money directly into instruction, this bill would                                                                       
hamper that effort.                                                                                                             
                                                                                                                                
Co-Chair Torgerson commented that recent Alaska Board of                                                                        
Education action gave districts more flexibility in                                                                             
classifying administrative costs as instructional. The                                                                          
board adopted regulations allowing the entire                                                                                   
administrative expenditure category of the uniform                                                                              
accounting system to be considered as instructional rather                                                                      
than administrative.                                                                                                            
                                                                                                                                
Amendment #1: This amendment inserts new language into the                                                                      
title of the bill and adds a new section as follows:                                                                            
                                                                                                                                
Page 1, line 1, following "students;":                                                                                          
Insert "and to minimum expenditure for                                                                                          
instruction;"                                                                                                                   
                                                                                                                                
Page 1, following line 13:                                                                                                      
 Insert a new bill section to read:                                                                                             
  "Section 2. AS 14.17.520 is amended to read:                                                                                  
  (a) A district shall budget for and spend a                                                                                   
minimum of 80 [70] percent of its school operating                                                                              
expenditures in each fiscal year on the instructional                                                                           
component of the district budget."                                                                                              
                                                                                                                                
New text underlined [DELETED TEXT BRACKETED]                                                                                    
                                                                                                                                
[Note: This amendment was never offered but was discussed.]                                                                     
                                                                                                                                
MIKE FISHER, Assistant Superintendent, Business Finance,                                                                        
Fairbanks School District, testified via teleconference                                                                         
from Fairbanks talked about the district's pride in the low                                                                     
percentage spent on administrative costs and how this bill                                                                      
would adversely affect their efforts. He spoke of the                                                                           
district's efforts to meet an 80-percent for instruction                                                                        
goal, saying that for some districts this figure could be                                                                       
unrealistic.                                                                                                                    
                                                                                                                                
Co-Chair Torgerson agreed that 80 percent of funds as a                                                                         
minimum allowed for instructional costs was "a shot in the                                                                      
dark." He again referred to the Board of Education's                                                                            
actions, which essentially lowered the percentage to 75.5.                                                                      
                                                                                                                                
Senator Wilken asked the witness if there was a principal                                                                       
for every school.                                                                                                               
                                                                                                                                
Mr. Fisher responded there is.                                                                                                  
                                                                                                                                
Senator Wilken wanted to know who decides on the number of                                                                      
assistant principals and support staff for the assistant                                                                        
principals.                                                                                                                     
                                                                                                                                
Mr. Fisher answered the number of assistant principal                                                                           
positions was a school board decision and that the                                                                              
principal of each school has discretion as to how many                                                                          
support staff positions are incurred. He noted these                                                                            
positions along with the principal are a strong component                                                                       
of the school level administration.                                                                                             
                                                                                                                                
Senator Wilken spoke of the accounting methods for showing                                                                      
these administrative costs. He asked if a new category                                                                          
"405" could be added to list assistant principals and their                                                                     
support staff separately.                                                                                                       
                                                                                                                                
Mr. Fisher assured that the district would have no problem                                                                      
accounting for those positions separately. He said that it                                                                      
could affect the instructional percentage by 2.5 to three                                                                       
percent.                                                                                                                        
                                                                                                                                
Senator Wilken asked if the witness thought that most other                                                                     
school districts in the state could also follow this                                                                            
method.                                                                                                                         
                                                                                                                                
Mr. Fisher replied that most districts could adjust their                                                                       
system to separately account for their assistant principals                                                                     
and support staff.                                                                                                              
                                                                                                                                
Senator Wilken commented that was the same issue he and Co-                                                                     
Chair Torgerson talked about when testifying before the                                                                         
Board of Education. Senator Wilken stressed this was simply                                                                     
a function of cost accounting to isolate the cost of                                                                            
administration. He warned that if the legislature allows                                                                        
school districts, school boards and principals to determine                                                                     
what qualifies as an instructional component, the system is                                                                     
opened up to creative accounting. That was the reason he                                                                        
was in support of a sub-account to account for principals                                                                       
and assistant principals.                                                                                                       
                                                                                                                                
Senator Green asked if this matter was before the                                                                               
Committee.                                                                                                                      
                                                                                                                                
Co-Chair Torgerson replied that a proposed amendment was                                                                        
distributed but that a motion was not on the table.                                                                             
                                                                                                                                
RICHARD CROSS, Commissioner, Department of Education and                                                                        
Early Development, spoke to the proposed amendment to                                                                           
increase the percentage of expenditures for instructional                                                                       
purposed from 70 percent to 80 percent. He urged the                                                                            
Committee not adopt the amendment, in part because the                                                                          
department has supported the legislature's efforts to                                                                           
reduce administrative costs. He stressed that school                                                                            
districts did not support this provision in SB 36 from the                                                                      
20th legislative session, saying it was an oversimplified                                                                       
answer to a complex problem. He said the department could                                                                       
not oppose the concept of moving administrative                                                                                 
expenditures to instructional areas.                                                                                            
                                                                                                                                
Mr. Cross disagreed with Senator Wilken's statement that a                                                                      
sub-account for assistant principals and support staff is a                                                                     
matter of cost accounting, saying it is instead a matter of                                                                     
how schools work. He stressed that the principals directly                                                                      
supervise the teachers, which improves the quality of                                                                           
instruction. He stated that creative accounting is already                                                                      
occurring with some districts that list their assistant                                                                         
principals as head teachers. He said that head teachers are                                                                     
not required to hold an Alaska Type B certificate but that                                                                      
without this certificate, the teacher cannot evaluate other                                                                     
teachers. As a result, he lamented, teachers are being                                                                          
evaluated by people who do not work in the same school                                                                          
building but rather central office administrators, thus                                                                         
there is no direct supervision. He cautioned that this is                                                                       
not effective supervision of instruction. He said that the                                                                      
department is attempting to remedy this by including those                                                                      
positions that are directly involved in the supervision of                                                                      
instruction as a part of the instruction component. The                                                                         
current categories are too broad in his opinion. He                                                                             
suggested further delineation, as proposed by Senator                                                                           
Wilken to separate those administrators that directly                                                                           
supervise instruction. Other costs that are not directly                                                                        
related to instruction, he felt should not be classified as                                                                     
instructional.                                                                                                                  
                                                                                                                                
Mr. Cross spoke of the progress made with the school                                                                            
districts in their willingness to strive toward the 70                                                                          
percent for instruction provision. He urged that this sub-                                                                      
account be created and that those costs be considered                                                                           
instructional to allow the districts to meet the 70 percent                                                                     
goal. He warned that by simply raising the percentage, most                                                                     
districts would be unable to meet that goal and that so                                                                         
many would require waivers, the test would not be taken                                                                         
seriously.                                                                                                                      
                                                                                                                                
Co-Chair Torgerson interjected saying that the witness's                                                                        
proposed sub-account method was not what the Board of                                                                           
Education implemented. Instead, he admonished, the board                                                                        
allowed the entire "400" component, to be considered                                                                            
instructional, which includes supplies, travel expenses and                                                                     
all support staff working in a central administrative                                                                           
facility. He stated that if the board had made allowances                                                                       
only for principals and assistant principals, the proposed                                                                      
amendment would not have been drafted.                                                                                          
                                                                                                                                
Mr. Cross defended the board's action saying the "400"                                                                          
component was not delineated at this time to allow for                                                                          
specific instructional expenditures. He said the board gave                                                                     
specific direction to the department to break down the                                                                          
expenditures afterwards to ensure that those administrators                                                                     
directly involved with instruction were classified                                                                              
separately.                                                                                                                     
                                                                                                                                
Co-Chair Torgerson accused the department of counting the                                                                       
administrative costs twice, once as instructional and again                                                                     
as administrative.                                                                                                              
                                                                                                                                
Mr. Cross disagreed with the assessment.                                                                                        
                                                                                                                                
Co-Chair Torgerson asked what deductions are being made to                                                                      
teachers and instruction costs versus administrators and                                                                        
administrative costs under the current school budget                                                                            
deliberations.                                                                                                                  
                                                                                                                                
Mr. Cross responded that school districts were making                                                                           
decisions to reclassify personnel in include them in                                                                            
instruction costs.  He thought those decisions were not in                                                                      
the best interest of improving the quality of teacher                                                                           
performance. He gave the replacement of assistant                                                                               
principals with head teachers as an example. He stressed                                                                        
that the department's interest was not cost accounting but                                                                      
placing those administrators who make decisions regarding                                                                       
improving teachers' performance in the school rather than                                                                       
at a central office.                                                                                                            
                                                                                                                                
Senator Wilken gave a scenario of a district currently at                                                                       
68 percent for instruction and its attempt at reaching 70                                                                       
percent the next year by simply hiring an assistant                                                                             
principal and support staff and classifying them as                                                                             
instructional expenditures.                                                                                                     
                                                                                                                                
Mr. Cross replied that would be a decision that could work                                                                      
under the Board of Education's recent action to allow                                                                           
principals to be classified as instructional expenditures.                                                                      
                                                                                                                                
Senator Wilken asked if the department was working to                                                                           
develop sub-accounts for principals and support staff                                                                           
within the "400" category.                                                                                                      
                                                                                                                                
Mr. Cross responded that the Board of Education when                                                                            
adopting the aforementioned regulations, gave the                                                                               
department specific instructions to separate the costs of                                                                       
those personnel directly related to instruction. He said                                                                        
the board does not agree that the other costs should be                                                                         
considered instructional and directed the department to                                                                         
report back with the specific figures.                                                                                          
                                                                                                                                
Co-Chair Torgerson remarked that the board adopted                                                                              
regulations to allow the entire "400" category anyway.                                                                          
                                                                                                                                
Mr. Cross agreed the board did allow the entire category,                                                                       
but that it was the only option available to them.                                                                              
                                                                                                                                
Senator Leman asked if the Board of Education's                                                                                 
deliberations suggested that a principal could be both                                                                          
supervising instruction and also performing other non-                                                                          
instruction related administrative duties.  He wanted to                                                                        
know if accounting of the position could be broken down to                                                                      
reflect the amount of time spend on each area.                                                                                  
                                                                                                                                
Mr. Cross answered that the breakdown can be done and that                                                                      
principals in many small schools supervise instruction and                                                                      
also directly provide instruction. In larger schools, he                                                                        
said, it was unreasonable to expect one principal to                                                                            
provide supervision to all the teachers and that a vice-                                                                        
principal is also necessary to assist with supervision. He                                                                      
continued that an additional vice-principal might be                                                                            
necessary to provide discipline or over see other                                                                               
activities. He stressed that school leaders' efforts to                                                                         
improve the quality of teaching are an important part of                                                                        
instruction.                                                                                                                    
                                                                                                                                
Senator Leman asked if those personnel who perform duel                                                                         
roles could break down the time spent on each function.                                                                         
                                                                                                                                
Mr. Cross responded that kind of cost accounting can be                                                                         
done, but should be avoided. He talked about federal                                                                            
requirements for timesheets and the need to account                                                                             
incremental minutes for each federal program. He cautioned                                                                      
that too much time spent on cost accounting wastes money                                                                        
and negates any efficiency gained.                                                                                              
                                                                                                                                
Senator Adams commented that while we all want the most                                                                         
money spent in classroom as possible, there were problems                                                                       
getting funding for students in rural Alaska. He asked how                                                                      
many waivers were granted in the previous year for those                                                                        
districts meeting 65 percent of expenditures to                                                                                 
instruction. He then asked if this amendment were adopted                                                                       
how many waivers would be necessary.                                                                                            
                                                                                                                                
Mr. Cross believed that 13 waivers were considered in the                                                                       
current year to schools meeting 65 percent of expenditures                                                                      
for instruction.                                                                                                                
                                                                                                                                
Senator Adams wanted to know how many school districts met                                                                      
the 80 percent to instruction criteria.                                                                                         
                                                                                                                                
Mr. Cross answered that almost all of districts met this                                                                        
goal.                                                                                                                           
                                                                                                                                
Senator Green commented that all staff is included in the                                                                       
formula when miscellaneous school expenditures are                                                                              
calculated using the Pupil Teacher Ratio (PTR)                                                                                  
calculations, a process she has questioned. She suggested                                                                       
that if the PTR calculation process was used in preparing                                                                       
SB 36 it may have been a mistake.                                                                                               
                                                                                                                                
Co-Chair Torgerson replied that the calculations used were                                                                      
recommended in the McDowell study on school funding and                                                                         
that he did not think PTR was considered.                                                                                       
                                                                                                                                
Senator Wilken noted that the Committee had found in its                                                                        
consideration of SB 36, that four school districts had more                                                                     
money going to administration than to the classroom.                                                                            
                                                                                                                                
Senator Wilken next relayed the two important elements of                                                                       
cost accounting. First, he said is the need for clear                                                                           
definitions of the uniform chart of accounts and the second                                                                     
element is to analyze as a function of time and track                                                                           
changes. Therefore, he stated that if the legislature                                                                           
allows school districts, school boards or individual                                                                            
schools to vary the definitions, the changes over time are                                                                      
meaningless. He understood the importance of assistant                                                                          
principals, but thought those positions need to be in a                                                                         
sub-account category that could be observed and compared                                                                        
against other districts.                                                                                                        
                                                                                                                                
For Senator Green's benefit, Mr. Cross repeated the earlier                                                                     
conversation regarding the B certificates required by                                                                           
evaluating teachers but not by head teachers. He again                                                                          
stressed the department's belief that teachers need to be                                                                       
supervised on a daily basis by someone working in the same                                                                      
school rather than a removed central administration                                                                             
facility.                                                                                                                       
                                                                                                                                
Co-Chair Torgerson noted that some rural schools were                                                                           
showing zero percentage of expenditures spent on                                                                                
administrative costs because they were already shifting                                                                         
their accounts.                                                                                                                 
                                                                                                                                
Senator Green wondered if the administrative percent                                                                            
includes superintendents hired under contract.                                                                                  
                                                                                                                                
GARY BATER, Superintendent of Schools, Juneau School                                                                            
District, spoke in opposition to the bill. He stressed that                                                                     
the hardest addition to a school district's budget is an                                                                        
administrative position. He stated that whenever cuts are                                                                       
proposed, the public clamors to eliminate administrators.                                                                       
He thought school districts were under constraint with or                                                                       
without the 70 percent for instruction restrictions.                                                                            
                                                                                                                                
He stated that SB 290 is about shifting future increases of                                                                     
pupil transportation to local school districts and away                                                                         
from the state. He said pupil transportation was an                                                                             
essential component of education. He thought the current                                                                        
law has worked well. He believed the Juneau School                                                                              
District's rate of growth and pupil transportation costs                                                                        
have been below the rate of inflation once adjusted for                                                                         
increased enrollment.                                                                                                           
                                                                                                                                
Senator Wilken asked how the school district views its                                                                          
participation with pupil transportation.                                                                                        
                                                                                                                                
Mr. Bater responded that the district does not make any                                                                         
changes without approval from the Department of Education                                                                       
and Early Development. Rather, he said the district                                                                             
proposes to the department for approval of a new route when                                                                     
enrollment increases and busses become overcrowded. He                                                                          
asserted the department asks tough questions and is                                                                             
thorough in its review. He detailed the process to obtain a                                                                     
new bus route. He stated that the district views itself as                                                                      
an agent of the department.                                                                                                     
                                                                                                                                
Senator Wilken and the witness discussed the levels of bus                                                                      
routes and the ability to change from a three-tier system                                                                       
to a two-tier system and the expense involved.                                                                                  
                                                                                                                                
Senator Green pointed out that the state is not required to                                                                     
cover the pupil transportation costs, noting the word,                                                                          
"may" rather than "shall" in statute.                                                                                           
                                                                                                                                
CARL ROSE, Executive Director, Association of Alaska School                                                                     
Boards spoke specifically to the issue of requiring the                                                                         
districts to co-pay any increased costs, saying it was                                                                          
inappropriate at this time. He spoke of aligned contracts,                                                                      
which were too recent to see any realized savings. He also                                                                      
stressed how funds allocated to classroom instruction would                                                                     
be further stretched to cover pupil transportation costs.                                                                       
He called the bill an unfunded mandate.                                                                                         
                                                                                                                                
Mr. Rose continued that when the co-pay issue is raised in                                                                      
the future, the foundation formula should be adjusted to                                                                        
increase revenue to cover the district's costs of pupil                                                                         
transportation. He suggested that an incentive should be                                                                        
created to allow any realized pupil transportation savings                                                                      
to be retained by the district.                                                                                                 
                                                                                                                                
Co-Chair Torgerson interrupted to ask if the witness                                                                            
believed that a 48 percent increase to the cost of pupil                                                                        
transportation was entirely attributable to an adjustment                                                                       
to the contracts.                                                                                                               
                                                                                                                                
Mr. Rose responded that he thought there were a number of                                                                       
reasons the costs increased. He pointed out that other                                                                          
costs incurred in the previous contracts were omitted from                                                                      
the new contracts.                                                                                                              
                                                                                                                                
Co-Chair Torgerson said he has offered to all parties the                                                                       
opportunity to present a better system. However, he said                                                                        
there has been no suggestions other than having the state                                                                       
pay the entire cost and if savings can be identified with                                                                       
the contracts, having the state pay to the district the                                                                         
difference.                                                                                                                     
                                                                                                                                
Mr. Rose appreciated the co-chair's concerns but warned                                                                         
about later costs and an unfunded mandate.                                                                                      
                                                                                                                                
Mr. Rose commented on the accounting of assistant principal                                                                     
positions separately saying he agreed with this suggestion,                                                                     
but that he did not see any advantage to a breakdown                                                                            
between assistant principal and principal positions. He                                                                         
also opposed changing the total instructional percentage to                                                                     
80 percent of expenditures. He asked the Committee to have                                                                      
patience in allowing the 70 percent goal to be reached.                                                                         
                                                                                                                                
Amendment #2: This amendment inserts language on page 1,                                                                        
line 13, following "district" as follows:                                                                                       
                                                                                                                                
"; the 50 percent limitation imposed under this                                                                                 
paragraph does not apply to student transportation                                                                              
system operating costs that are incurred as a result                                                                            
of an increase in student enrollment"                                                                                           
                                                                                                                                
[Note: This amendment was never offered but was discussed.]                                                                     
                                                                                                                                
Mr. Rose stated that he supported this amendment. He                                                                            
commented that the overall impact of the bill was yet to be                                                                     
seen and listed figures of recent student enrollment.                                                                           
                                                                                                                                
Co-Chair Torgerson asked for explanation of the witness's                                                                       
implication that costs have been passed along to local                                                                          
communities.                                                                                                                    
                                                                                                                                
Mr. Rose listed the reduction of state revenues provided to                                                                     
the school districts and the possible reduction in                                                                              
municipal assistance grants. He predicted that the local                                                                        
residents could be required to pay an additional $6                                                                             
million.                                                                                                                        
                                                                                                                                
Co-Chair Torgerson asked if the witness was suggesting                                                                          
throwing the entire foundation funding formula out.                                                                             
                                                                                                                                
Mr. Rose clarified that was not his suggestion but that the                                                                     
association wanted a certain percentage of funds spent on                                                                       
instruction. However, he stated that the state is                                                                               
allocating less money to districts by the state and that                                                                        
the percentage of local contributions is subsequently                                                                           
rising.                                                                                                                         
                                                                                                                                
Mr. Rose then asked the co-chair if SB 105, relating to                                                                         
public school buildings was being considered for inclusion                                                                      
in SB 290.                                                                                                                      
                                                                                                                                
Co-Chair Torgerson answered that it may be.                                                                                     
                                                                                                                                
Co-Chair Torgerson ordered the bill HELD in Committee.                                                                          
                                                                                                                                
                                                                                                                                
Tape: SFC - 00 #75, Side A    10:42 AM.                                                                                         
                                                                                                                                

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