Legislature(1999 - 2000)
04/12/2000 09:07 AM Senate FIN
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
SENATE BILL NO. 290
"An Act relating to state funding for transportation
of public school students; and providing for an
effective date."
PATRICK HICKEY testified via teleconference from Kenai to
address Amendment #1, increasing the minimum percentage of
school operating expenses to 80 percent from 70 percent,
which was not offered. He requested that the Committee give
the Association of School District Officials the
opportunity to divide the "section 400" accounting
component to reflect the shared classroom and
administrative duties of school principals.
DAVE JONES, Director of Finance, Kodiak School District
testified via teleconference from Kodiak to address his
concerns with the fifty-fifty clause for reimbursement of
increased pupil transportation costs. He said the Kodiak
School District was a good example of why this would not
work. He spoke about the minimum wage required to pay
school bus drivers. He stressed the only way the district
could cover the costs would be to take money from the
classroom, which would be contrary to the intent of the
formula funding program. He described the school district's
efforts along with other districts to encourage competition
to bring the costs down.
ELIZABETH BACOM, President, Petersburg School Board,
testified via teleconference from Petersburg about her
understanding that this legislation would apply to the Cost
of Living Allowance (COLA) portion of the pupil
transportation contracts. She spoke of the hardship of
declining funding due to declining enrollment and how this
additional funding reduction would force the district to
take money from the classrooms.
DARRYL HARGRAVES, Executive Director, Alaska Council for
School Administrators testified in Juneau about the matter
of fairness across the state. He remarked that most of the
Committee members represented large school districts and
that other smaller communities would have difficulties
meeting the matching fund requirements. He stressed that
the bus driver contracts were strictly negotiated following
many requirements imposed by the Board of Education. He
talked about the complexities of the contracts and the
required routes.
SENATOR ROBIN TAYLOR thanked the Committee for including
Section 3 in the bill. [Description forthcoming.]
Senator Wilken moved to adopt CS SB 290, 1-LS1555\N as a
workdraft.
Co-Chair Torgerson objected for an explanation.
Senator Wilken detailed the changes made to the bill in the
committee substitute as follows.
Section 2 - provides that school district pupil
transportation costs eligible for state reimbursement
are subject for following adjustments:
(1) sets the funding level received by the school
district for student transportation in FY 01 is
considered the limit for future reimbursement.
(2) stipulates that costs resulting from new
school facilities, increased enrollment or imposed by
state or federal law are excluded from the
reimbursement calculation
(3) allows the reimbursement limit to increase
each fiscal year by four percent or the Anchorage
Consumer Price Index (CPU), whichever is less.
(4) sets out the pupil transportation cost excess
of the limit, shall be reimbursable by 50 percent.
Section 3 - addresses the 70-30 percent split of
operating versus administrative expenditure issue. It
clarifies the definition of the instructional
component for the purpose of determining the school
district's operating budget's minimum expenditure for
instruction. It sets out that expenditures for school
administration, principals, assistant principals or
other assistants employed to supervise administrative
operations of a school bay not be considered
instructional expenditures.
Section 4 - lowers the Average Daily Membership (ADM)
threshold upon which a school district can count a
facility as a separate school from 750 to 450.
Sections 5 and 6 - set out the effective dates
Senator Phillips asked which communities are allowed under
the provisions of Section 4.
EDDY JEANS, Manager, School Finance and Facilities Section,
Education Support Services, Department of Education and
Early Development, answered that Section 4 would apply to
Delta Junction/Greely, Petersburg and Wrangell school
districts.
Senator Phillips asked if the legislature was not the
"assembly" for delta junction
Mr. Jeans responded that he believed in essence, that was
correct.
Senator Phillips asked why the legislature could therefore
not mandate that community to form its own borough by
making school funding a contingency.
Mr. Jeans responded that AS 14.17.905. Facilities
Constituting a School., applies to school districts whether
they are a municipality or a Rural Education Attendance
Area (REAA). He stated that Section 4 of the committee
substitute therefore establishes a threshold of how the
department can determine how communities can make school-
size adjustments.
Senator Phillips repeated his question of what was
preventing the legislature from mandating Delta Junction to
form a borough.
Co-Chair Torgerson said Mr. Jeans was not the person to
address that question. Co-Chair Torgerson stressed that
certainly the legislature had the power to mandate
boroughs.
Senator Phillips said he had concerns with Petersburg and
Wrangell paying for the services and Delta Junction not
paying.
Co-Chair Torgerson remarked he had concerns with the entire
Section 4.
Co-Chair Parnell asked if Delta Junction/Greely is the
first unorganized area that would qualify for funding under
this section.
Mr. Jeans replied there were other REAA communities that
would be affected by the Section 4 clause.
Co-Chair Parnell commented that this was a much bigger
issue than just this one school.
Senator Adams addressed the language in Section 2 (4),
"only 50 percent of these costs reimbursable under this
section that are in excess of the sum calculated under (1)
- (3) of this subsection shall be reimbursed to a school
district." He asked if this bill increased the "floor" of
pupil transportation by reviewing the CPI, which is not
used in the foundation formula. He wanted to know if the
differences had been calculated.
Senator Wilken answered that figures had not been
calculated.
Senator Adams asked if therefore the increases were
unknown.
Senator Wilken replied that the floor would be the amount
set in the FY 00 budget, which may change with the FY 01
budget if the requested $5 million increase is funded.
Senator Adams wanted to see the figures because he thought
the costs could be higher.
Senator Adams then asked if Section 3 applies to rural
districts where some principals not only run the school but
also teach courses.
Senator Wilken shared that there is a formula the
department can use for small school districts to classify
the principal as a working teacher. However, he said
schools with more than 50 students would not qualify for
this consideration because the principal or assistant is
responsible for managing the school.
Senator Adams spoke of fair and equitable funding for
students. He noted Amendment #2 of the previous committee
substitute and Amendment #6 for the current version, both
of which he sponsored. These amendments he explained,
address the issue that rural school districts receive only
60 cents on the dollar. He referred to the McDowell study
that showed teachers in rural districts were paid
differently because of their high cost of living. He wanted
the Committee to consider
Senator Wilken replied that he had not considered the first
amendment when drafting this committee substitute and had
only just seen the second.
Co-Chair Torgerson asked if the department had calculated
the impact of Section 4 on the fiscal note.
Mr. Jeans had and said the added cost would be
approximately $1,009,800. He noted that the department
would be opposed to the changes in the committee substitute
because of the requirement of SB 36 to evaluate the
effectiveness of that bill and report back to the
legislature with recommendations in 2001. Constant changes
to SB 36 would make the assessments difficult, he asserted.
Senator Adams asked what the cost would be of the proposed
Amendment #6 to "stop the eroding floor" and whether the
department supports or opposes that amendment.
Mr. Jeans replied that the erosion of the floor went from
approximately $17 million in FY 99 to $15 million in 2000.
The overall fiscal impact, he said would be the $15 million
on the floor at this time. He said it would be hard to
project how long it would take for that full amount to
erode.
In response to the question on the department's position on
the amendment, Mr. Jeans repeated that the department would
be opposed to any changes to the foundation funding formula
as set by SB 36.
Senator Adams objected to the adoption of the committee
substitute on two points. The first is the unknown costs of
Section 2, and the second is the absence of the provisions
of Amendment #6.
A roll call was taken on the motion.
IN FAVOR: Senator Green, Senator Donley, Senator Leman,
Senator Wilken, Co-Chair Parnell,
OPPOSED: Senator P. Kelly, Senator Phillips, Senator Adams,
and Co-Chair Torgerson
The motion PASSED (5-4)
The committee substitute version "N" was adopted as a
workdraft.
Co-Chair Torgerson established that the proposed amendments
#1 through # 4 were to a different version of the bill and
would not be offered. [Copies on file.]
AT EASE
Amendment #5: This amendment deletes, "principals" from
page 2 line 21 of the committee substitute. The amended
language in Section 3 reads as follows.
(1) "instructional component" means [INCLUDES]
expenditures for teachers and [FOR] pupil support
services, but does not include expenditures for school
administration or for assistant principals, or other
assistants employed to generally supervise
administrative operations of a school;
New Text Underlined [DELETED TEXT BRACKETED]
Senator Green moved for adoption. Co-Chair Torgerson
objected.
Senator Green spoke to earlier discussions regarding the
need for classroom supervisors to provide assessment on the
teacher performance in the classroom. She stressed that if
a principal position was removed she thought the progress
of improved performance would go backward. While she did
not think 100 percent of the principal salary should go to
instruction, she thought that the portion of time spent on
instructional duties should be accounted for accordingly.
Co-Chair Torgerson replied this was the reason for the 70-
30 rule. He stated that this provision changed the intent
back to the original SB 36 rather than the recent Board of
Education regulation. He warned that if the percentages
were constantly changed, the board would be unable to
provide adequate assessments of the foundation formula-
funding program.
Senator Wilken explained that there are two conflicts
occurring at once. First, he said was the placement of the
principal in the organizational structure of the school as
a manager. However, he shared, the issue before the
Committee is how the principal position is accounted for in
the expenditures of the school district. He stated that
only the accounting component is changed. He stressed that
in order to follow the 70-30 requirement the procedures
need to remain constant.
A roll call was taken on the motion.
IN FAVOR: Senator Green
OPPOSED: Senator P. Kelly, Senator Wilken, Senator
Phillips, Senator Donley, Senator Leman, Senator Adams, Co-
Chair Parnell, Co-Chair Torgerson
The motion FAILED (1-8)
The amendment FAILED to be adopted.
Amendment #6: This amendment deletes "transportation of"
from the title on page 1 line 1. The amended language reads
as follows.
"An Act relating to state funding for public school
students; relating to a minimum amount of expenditures
by school districts for instruction; determining the
facilities constituting a school for purposes of
public school funding; and providing for an effective
date."
The amendment also inserts a new bill section on page 3,
following line 8 with an effective date of July 1, 2000, to
read as follows.
"Sec. 5. AS 14.18.490(d) is repealed."
Senator Adams moved for adoption. Co-Chair Torgerson
objected.
Senator Adams expressed that all students, regardless of
where they live, should receive the same amount of funding.
He stressed this is the worst kind of discrimination.
AT EASE 6:43 PM / 6:47 PM
Senator Wilken made a statement about Senator Adams's
comments regarding the color of one's skin that disturbed
him. He said the intent of SB 36 was to instill fairness.
He listed the several rural districts that actually
benefited from the formula funding formula. He suggested
that removing this floor would cause the funding mechanism
to revert back to the previously flawed formula.
Senator Adams responded the school districts cited by
Senator Wilken were short-funded beforehand and were only
now starting to receive fair funding. He asserted that if
Senator Wilken's explanation was so good, then the figures
should be reversed and urban schools should receive 60
cents on the dollar and rural schools receive the full
dollar.
A roll call was taken on the motion.
IN FAVOR: Senator Adams
OPPOSED: Senator Phillips, Senator Green, Senator Donley,
Senator Leman, Senator Wilken, Co-Chair Parnell, Co-Chair
Torgerson
ABSENT: Senator P. Kelly
The motion FAILED (7-1-1)
The amendment FAILED to be adopted.
Senator Green commented that she appreciated the efforts
that went into this legislation. However she needed to
understand the impact on those districts that did not have
an opportunity to renegotiate their pupil transportation
contracts before the floor was set. She referred to a
survey that showed those that had negotiated new contracts
had an advantage of several million dollars over those
districts that had not yet renegotiated.
Co-Chair Torgerson commented that the new committee
substitute negated all the 50-50 efforts since it allowed
for multiple adjustments. He noted that about the only item
not accounted for was the COLA.
Senator Green did not understand it that way. She would
prefer to be a district that had already renegotiated
rather than one that had not yet done so.
Co-Chair Torgerson stated that the costs of the new
contracts would not be known, but if the total were for $7
million, the state would be required to pay the $7 million.
Senator Donley wanted to see progress made towards the
charter school problem, but he noted he did not have an
amendment drafted to address this issue.
Senator Adams restated his request for calculations from
the department.
Mr. Jeans responded that to calculate that would be very
difficult and listed reasons why. He was able to say that
the COLA increases in Anchorage had been less than four
percent since 1982. This would make Senator Green's
concerns mute, he stated.
Senator Adams asked if the witness could tell the Committee
if the cost would be higher or lower than the Committee's
calculation of $5 million.
Mr. Jeans could not predict exactly what the increases
would be but that all current contracts contain COLA
provisions. He noted that the Railbelt area districts had
issued Requests for Proposal (RFP), which he thought, would
bring down the costs by encouraging outside competition.
Senator Adams asked if that would be the case only if there
was outside competition.
Mr. Jeans affirmed.
Senator Adams addressed Senator Green's concerns about the
effective dates of contracts. He asked if expiring
contracts would be taken care of because of the staggered
effective dates of Sections 5 and 6.
Mr. Jeans responded that Section 6 establishes FY 01 as a
base year that any increases will be measured. If fiscal
note of over $1 million accompanied the bill, he said, the
entire pupil transportation would be fully funded at the
Department of Education and Early Development's request and
that would establish the base line for the future.
Senator Green asked if Mr. Jeans could assure her that
those districts that have not yet renegotiated their pupil
transportation contract would not be at a detriment.
Mr. Jeans answered that was correct, provided the Anchorage
COLA did not exceed four percent over the term of the
contract. If did go above four, he explained, the increase
would be split 50-50 between the district and the state.
Co-Chair Torgerson clarified the COLA would be the only
expense reimbursable under normal contract provisions and
that increased enrollment would not be impacted.
Mr. Jeans stated that in his understanding of the committee
substitute's language FY 00 would be established as the
base year. He continued that if a district required
additional routes or added a new school or increased
student population would increase the base and set a new
threshold for the following years. He qualified that, if
this were not the case, he needed to know.
Co-Chair Torgerson assured the witness that was the
Committee's intent.
Senator Green spoke of the efforts made by some districts
to combine their contracts with other districts to
encourage competitive bidding. She would contend that after
one or two years, the state would be back to having only
one provider. She did not think this was a competitive
arena and therefore, this approach was not a long-term
solution.
Mr. Jeans agreed that could be the result, but that by not
making the step forward, the state was locking into the
existing contractors. He relayed that in conversations with
Outside contractors, he was told they could not break into
the Alaska market with the small routes. Therefore, he
stated, aligning these contracts makes the market more
appealing to competitors.
Tape: SFC - 00 #85, Side B 7:03 PM
Mr. Jeans continued that contracts must consist of more
than 100 busses in order to make it worthwhile for Outside
providers to enter the market.
Senator Green gave a scenario of high oil prices resulting
in high fuel prices to operate the busses and asked if
those increased costs were included in the price of the
contracts
Mr. Jeans answered that was his interpretation as well.
Senator Wilken moved to report CS SB 290, 1-LS1555\N from
Committee with forthcoming Department of Education and
Early Development fiscal note.
Senator Green objected.
Co-Chair Torgerson objected saying that while he would not
prevent the bill from reporting out of Committee, he could
not support Section 4. He stressed that he could not agree
to a million-dollar increase to the operating budget
already agreed upon by the legislature.
A roll call was taken on the motion.
IN FAVOR: Senator Wilken, Senator P. Kelly, Senator
Phillips, Senator Donley, and Co-Chair Parnell
OPPOSED: Senator Adams, Senator Green, and Co-Chair
Torgerson
ABSENT: Senator Leman
The motion PASSED (5-3-1)
The bill was MOVED from Committee.
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