Legislature(1997 - 1998)

03/19/1997 09:05 AM Senate HES

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                  SB  36 PUBLIC SCHOOL FUNDING                                
         SB  85 PUBLIC SCHOOL FUNDING/CHILD CARE GRANTS                        
 Number 225                                                                    
  CHAIRMAN WILKEN  introduced  SB 36  and  SB 85  as the next order of         
 business before the committee.                                                
  COMMISSIONER   SHIRLEY HOLLOWAY , Department of Education, noted that        
 many present have been part of the numerous efforts to rewrite the            
 formula.  Commissioner Holloway said that Deputy Commissioner Cross           
 would inform the committee of what the department views as                    
 strengths and areas of concern with the CS.                                   
  RICK CROSS , Deputy Commissioner of the Department of Education,             
 identified the following areas as strengths of the bill:                      
  Allocating money on a per student basis.                                     
  The 20 percent indicator for funding special needs students.                 
  Separating the funding for intensive needs students.                         
  The minimum school size at 10 students.                                      
  Addressing single site schools within the formula.                           
  The expansion of the area cost differential study.                           
  Assigning area cost differentials to funding communities.                    
  The elimination of considering impact aid.                                   
 Mr. Cross said that there are four areas of significant difference            
 between SB 85 and CSSB 36(HES).  Each of these four areas will                
 shift money from districts with little or no ability to provide               
 funding to those districts with the ability to provide funding.               
 The first area of difference is the required local effort.  Under             
 SB 85 the required local effort is maintained at the current 4                
 mills.  Under CSSB 36(HES), the required local effort is dropped to           
 3 mills.  This drop decreases the size of funding school districts            
 that are allowed from the required local sources.  If the pie                 
 remains the same as Mr. Cross believed to be the intent of CSSB
 36(HES), then the local portion is smaller and therefore the                  
 state's share is larger.  If the state's share is kept constant,              
 then money will be shifted from those districts without the ability           
 to pay, REAAs, to those districts with the ability to pay.                    
 Secondly, SB 85 contains a supplemental equalization factor.                  
 Supplemental equalization is the ratio of a district's wealth to a            
 statewide average which is inversely proportional to the amount of            
 money the district receives from the state.  The wealthier a                  
 district is, the less that district receives from the state.  This            
 factor would compensate poor districts.  The third area of                    
 difference is transportation.  CSSB 36(HES) keeps the                         
 transportation factor outside the formula as under the current                
 formula.  Transportation is the only area in education which has              
 been compensated for inflation.  As written, the transportation               
 regulations and statutes provide that as the cost of providing                
 education increases the compensation to districts that have                   
 transportation programs increases.  Mr. Cross said that was not               
 true for the foundation formula.  Those districts with                        
 transportation programs have received an inflationary increase, but           
 those districts without a significant transportation program have             
 not which would be continued under CSSB 36(HES).  Mr. Cross noted             
 that those districts with transportation programs tend to be the              
 wealthier districts with the ability to pay.  Therefore, this is a            
 third mechanism which would shift funding from poorer districts to            
 wealthier districts.                                                          
 Number 341                                                                    
 The fourth difference is the taxation.  Mr. Cross said that he                
 would be discussing the impact of taxing REAAs.  Currently, the               
 REAA pie has only one piece, state aid.  Federal aid is ignored               
 under SB 85 and CSSB 36(HES).  Under CSSB 36(HES), there would be             
 a method of taxation requiring the REAA to provide the equivalent             
 of a minimum local effort.  Therefore the REAA's pie has a state              
 and a local piece.  Mr. Cross understood that CSSB 36(HES) would              
 leave the state funding constant which would mean that the REAA               
 local piece would be placed in the pot and be redistributed.  This            
 is the fourth manner in which dollars would be shifted from poorer            
 districts to those districts with the capacity to pay.                        
 Mr. Cross did not believe there had been any discussion allowing              
 REAAs to have excess capacity.  The purpose of the taxation is to             
 provide for the REAA's local effort and supplant state effort.  The           
 REAA would not be able to generate additional funds beyond the                
 required minimum local effort as all organized boroughs are allowed           
 and under CSSB 36(HES) without limit.  Currently, the minimum                 
 required local effort is 4 mills.  On a statewide basis, the                  
 organized boroughs are contributing to education on average over 7            
 mills.  There is significant additional effort provided in areas              
 where people have the capacity to pay which the method of taxation            
 under CSSB 36(HES) would not provide to REAAs.  In conclusion, Mr.            
 Cross emphasized that the impact of the four mechanisms he                    
 discussed is excessive and would not fairly distribute dollars to             
 Number 387                                                                    
  COMMISSIONER HOLLOWAY  discussed the incentive level of additional           
 funds for those schools who try to achieve the Quality School                 
 Initiatives under SB 85.  The Quality School Initiatives has the              
 following four components:  high academic standards for students as           
 well as a mechanism to assess those standards, high professional              
 standards from an evaluation and licensure perspective, networking            
 between the school, the community and other agencies, and school              
 excellence standards driving the new accreditation system.                    
 Commissioner Holloway emphasized the need to stop giving dollars to           
 districts without the expectation of an increase in student                   
 learning.  Across the nation, struggles to improve the quality of             
 schools are occurring.  Commissioner Holloway informed the                    
 committee that she had just returned from the Chiefs States School            
 Officers meetings where one of the major topics was regarding                 
 improving schools and fixing the failing schools.  No matter the              
 political affiliation, those at the meeting agreed that high                  
 learning standards and assessing those standards must happen.                 
 Commissioner Holloway urged the committee to include in any                   
 foundation formula, core learnings and a mechanism to assess that             
 learning.  Everyone has an obligation to ensure that every student            
 leaves the system with the skill and knowledge to make choices                
 about their lives.  Commissioner Holloway quoted statute that                 
 supported this obligation.  Unless the expectation is tied to the             
 funding, that expectation will not be achieved.                               
 Number 433                                                                    
  SENATOR WARD  said that he had not heard from anyone that supported          
 SB 85.   COMMISSIONER HOLLOWAY  did not believe that anyone would             
 support a bill in which his/her school district is not perceived as           
 a winner.  Historically, that has been the problem with any                   
 foundation formula.  Many would like to maintain the current                  
 formula and request more dollars.  Commissioner Holloway was                  
 frustrated that no support could be garnered even for a proposal              
 that adds money to the foundation formula.                                    
  SENATOR WARD  understood Mr. Cross' comments to mean that CSSB
 36(HES) attacks the rural or poor in favor of the rich portions of            
 the state.  Does the current formula treat everyone fairly?     RICK          
 CROSS  explained that currently, there are areas that do not have             
 the capacity to generate revenue while other areas have that                  
 capacity.  Until that is changed, that must be accepted when                  
 developing a foundation formula.  CSSB 36(HES) has four powerful              
 mechanisms which shift money from those areas without the ability             
 to generate revenue under the current laws to areas that do.  The             
 compounding of those four mechanisms will have a marked and                   
 dramatic effect.  With regards to the lack of support for SB 85,              
 Mr. Cross said that some had stated support of SB 85 to him.  He              
 credited the Governor and the committee with accepting that the               
 current formula cannot continue.  Mr. Cross offered to work with              
 the committee.                                                                
  SENATOR WARD  reiterated that he had not found anyone that supported         
 SB 85.  If there is something out of balance, why was it not fixed            
 before.  Senator Ward suggested that the department submit                    
 recommended changes to the CS.                                                
 Number 501                                                                    
  CHAIRMAN WILKEN  believed that the initiative was Level III.  If             
 this type of initiative is necessary, why imbed such an initiative            
 in a yearly entitlement where it would be lost.  Chairman Wilken              
 asked if it would be better to take the concept of the Quality                
 Schools Initiative outside the foundation, review how it works on             
 a test basis.  If it improves some schools, then the initiative               
 could be brought back.                                                        
  COMMISSIONER HOLLOWAY  stated that the connection between the money          
 provided and the expectations of the school should be reviewed.               
 Commissioner Holloway looked forward to future conversations with             
 the committee regarding that issue.                                           
  CHAIRMAN WILKEN  believed that Level III was a variable that did not         
 add to the current goal.  Chairman Wilken requested that Mr. Cross            
 explain the transportation mechanism sometime.  Chairman Wilken               
 asked Mr. Cross if he meant that if the four components are left              
 untouched, there is concern that the educational opportunity would            
 be diminished for some in different regions of the state.   RICK              
 CROSS  agreed that was his concern.  When there are multiple factors          
 that do the same thing within a complicated system, compounding               
 occurs and a greater impact results.  Mr. Cross believed that to be           
 the case.                                                                     
  COMMISSIONER HOLLOWAY  mentioned that during the shift to                    
 unorganized boroughs, the Legislature committed to being the REAA's           
 borough assembly.  That commitment has not been upheld.                       
  SENATOR LEMAN  noted that Mr. Cross said that the current formula is         
 inequitable, yet the attempts to create greater equity as Mr. Cross           
 says creates shifts in the same direction.  Senator Leman said that           
 Mr. Cross may be right that the correction may be occurring in one            
 direction, but suggested that review of the current situation and             
 the end result is necessary.  The corrections are fairly small.               
 For example, Hydaburg receives $8,400 per student per year,                   
 Anchorage receives $4,000 and Ketchikan receives $2,900.  Those               
 numbers still illustrate the inequity in distribution, but not by             
 taking from the poor and giving to the rich.  If a correction is              
 applied, whoever wins supports the correction while whoever losses            
 complains.  For that reason, there has been no significant change             
 in the formula in the past.                                                   
  RICK CROSS  realized the need to correct, however there may be a             
 greater level of correction occurring than anticipated due to                 
 multiple factors with the same effect.  As the formula ages, the              
 correction may be more than anticipated.   SENATOR LEMAN  agreed that         
 Mr. Cross may be correct and said that he wanted to review that.              
  TAPE 97-28, SIDE B                                                           
 Number 586                                                                    
  ROBERT HERRON , President of the Lower Kuskokwim School Board,               
 believed that all testimony has echoed the same basic message                 
 voters last Fall supported:  take care of education.  Mr. Herron              
 said that the ground rules of simplicity, equity, and timing                  
 encompassed in CSSB 36(HES) are sound.  However, the fourth ground            
 rule of no new dollars is flawed.  Mr. Herron stated that no new              
 dollars will not work.                                                        
  PATRICK DOYLE , Superintendent of the Copper River School District,          
 informed the committee of the seven communities with schools in the           
 district which serve a total of 600 students.  Two of the schools             
 are one room schools.  Additionally, a correspondence school is               
 operated with approximately 170 students of which over 100 are from           
 outside the borders of the Copper River district.  Mr. Doyle stated           
 that over the past 15 years, the Copper River district has                    
 undertaken every possible conservation measure to reduce the costs            
 of operation without affecting the educational opportunities of its           
 students.  Staff was asked to do more and accept less. The staff              
 has given up many of the things that most teachers take for                   
 granted.  The Copper River district operates its extra-curricular             
 activities with volunteers.  In spite of all the obstacles, the               
 students in the Copper River School District perform among the best           
 in the state and continue on to high levels of success.                       
 The latest reverse "Robin Hood" strategies of the Legislature may             
 deliver the proverbial straw that breaks the back of the Copper               
 River School District.  The school districts of Alaska have been              
 reduced to competing with one another for a pool of dollars that is           
 too small to meet the educational needs of the students of Alaska.            
 Mr. Doyle indicated opposition to the concepts of CSSB 36(HES).               
 What is the equity in shifting inadequate financial support from              
 one group to another?  Where is the accountability from those who             
 provide the funding to produce quality education?  Mr. Doyle noted            
 that he would forward his comments to the committee.                          
 Number 513                                                                    
  ROBERT MCCLORY , parent and counselor in Ketchikan, did not believe          
 that his testimony was significantly different than others, but he            
 felt compelled to share his thoughts with the committee.  He                  
 discussed the impacts of the pulp mill's closure, particularly the            
 sizable cuts to the schools.  Mr. McClory mentioned the hold                  
 harmless clause and urged the committee to make the Educational               
 Endowment Fund a reality.  Mr. McClory informed the committee of              
 the following statistics found in the Educational Background &                
 Economic Status of the Spring of 1990.  Those with a degree beyond            
 high school on average earn $2,231 per month as compared to $1,077            
 for those with a high school diploma.  High school dropouts on                
 average earn $492 per month.  Doctoral degrees boost earnings to              
 $3,855 per month and those with special degrees earn about $5,000             
 per month. Mr. McClory urged the committee to show students that              
 just as politics can negatively impact the job market, so too can             
 the leaders positively shape the future.                                      
  TAMMY MORRIS , parent in Ketchikan, informed the committee that she          
 and her family had moved to Ketchikan from Fairbanks one and-a-half           
 years ago.  Ms. Morris noted that she had visited the schools in              
 Ketchikan to determine whether the move would be good for her                 
 children.  However there was a flaw in the planning, Ms. Morris did           
 not consider inquiring about the funding status of Ketchikan                  
 schools.  Only after relocating, when Ms. Morris' children began              
 attending the Ketchikan schools did she realize there was a                   
 problem.  The schools in Ketchikan were not equal to those in                 
 Fairbanks.  Ms. Morris informed the committee that Ketchikan                  
 schools do not have a nurse while Fairbanks schools do.  Ketchikan            
 students only receive one half hour of music each week.  Ms. Morris           
 noted the lack of physical education and current learning materials           
 in Ketchikan.  Ketchikan elementary schools do not receive any                
 counseling services while Fairbanks schools do.  One librarian in             
 Ketchikan divides her time among four elementary schools while each           
 Fairbanks school has a librarian.  If funding continues in the same           
 manner, the list will be longer.  Ms. Morris was ashamed that there           
 is adequate money in Alaska, but not all Alaskan children have                
 equal funding for education.  The Ketchikan district has been                 
 supporting the school district with as much as allowed, the                   
 difference can only be made by the state.                                     
  DIANE GUBATAYAO , parent and Ketchikan Gateway School Board Member,          
 informed the committee of the January 1997 Education Week which               
 grades Alaska with a D+ in equity and an F on allocation.  With               
 regards to the ties between quality education and teacher funding             
 and higher standards, Ms. Gubatayao asked if there have been                  
 studies that show flat funding in education lead to a decline in              
 education.  She mentioned the increase in oil prices and permanent            
 fund dividends.  In conclusion, Ms. Gubatayao said that she was               
 looking for someone to realize that funding is inequitable.                   
 Number 415                                                                    
  MIKE MURPHY , Chairman of the Nome School Board, stated that none of         
 the proposals solve the issues of accountability, equity, fairness,           
 and simplicity.  Mr. Murphy suggested that schools be funded in a             
 two tier system.  The operations and maintenance of the schools               
 should be funded first and then education.  Depending upon a                  
 schools location in Alaska, the cost of operation is different.               
 For example, if $5,000 per student is received for school A and it            
 costs $1,000 per student to maintain school A while school B only             
 needs $500 to operate and maintain school B, then school B is able            
 to spend $500 more on education.  That is not fair or equitable.              
 If costs for operation and maintenance are taken care of statewide,           
 that would be fair because those are fixed costs.  Mr. Murphy                 
 proposed that an average of operations and maintenance costs be               
 taken from the past five years in order to establish the state's              
 share.  However, the state must be willing to fund increases or               
 decreases as they occur.  Also incentives should be offered to                
 those school districts that work to lower costs.  If a district               
 saves $50,000 by reducing energy costs, the state could give the              
 district a percentage of the savings.                                         
 Now that operations and maintenance costs have been funded,                   
 education can be funded.  Mr. Murphy pointed out that several                 
 problems in the current proposals will disappear once the cost of             
 operations and maintenance are dealt with.  First, the dollars for            
 education become more equitable and fair because education is being           
 funded alone.  Second, the area cost differential battle becomes              
 smaller.  The figures are no longer skewed for the high cost of               
 operation and maintenance in rural Alaska.  The cost of education             
 is fairly average statewide when comparing teacher's salaries.  Mr.           
 Murphy did acknowledge differences in the cost of freight.  Mr.               
 Murphy stressed that education becomes more accountable when funded           
 alone.  Mr. Murphy also mentioned that the foundation formula has             
 not kept up with inflation.                                                   
  DAVID STONE , testifying from Point Hope, informed the committee of          
 Resolution 97-13 which requests $10 million for annual educational            
 support for the North Slope Borough School District.  This amount             
 would not even pay for operating two of the larger schools in the             
 district.  Mr. Stone opposed any reduction to the already                     
 inadequate educational funding from the State of Alaska.  He also             
 opposed any legislation changing the foundation formula such that             
 the North Slope Borough would be required to provide financial                
 support to the rest of the state.  The City Council of Point Hope             
 is opposed to any action by the Legislature that would reduce or              
 redistribute the current foundation funding of the North Slope                
 Borough.  The City Council of Point Hope supported the current                
 foundation funding formula.  Mr. Stone said that any decrease in              
 funds would be devastating, especially in the Point Hope area.  Mr.           
 Stone noted the air travel necessary in the North Slope.                      
  CHAIRMAN WILKEN  commented that the students from the North Slope            
 did a great job testifying before the committee last week.                    
 Number 325                                                                    
  KIM FRANKSON , Parent and School Advisory Council member from Point          
 Hope, discussed the impacts that would result with the loss of                
 funding to the North Slope.  The loss in funding would result in              
 the loss of services, such as access to libraries, to the students            
 and residents of the North Slope.  Ms. Frankson indicated that the            
 loss of funding could result in an increase in the welfare, social            
 service, and unemployment rolls.  Ms. Frankson pointed out that               
 people can lose their jobs as a result of the proposals before the            
  CHAIRMAN WILKEN  inquired as to the number of people wanting to              
 testify in Point Hope.  After discovering that four or five more              
 desired to testify, Chairman Wilken invited those folks to fax                
 their testimony or have one person speak for those remaining.                 
  OLIVER LEAVITT , North Slope Borough Assembly member, noted that the         
 committee had the full text of his testimony.  The North Slope has            
 been painted into a corner.  The people of the North Slope are                
 opposed to being zeroed out.  Mr. Leavitt noted that the Mayor and            
 the Assembly members believed that the foundation funding proposals           
 are unlawful under the Alaska State Constitution as well as federal           
 laws.  Mr. Leavitt quoted Article VII, Section 1 of the Alaska                
 State Constitution, the public school provision, which does not               
 permit the Legislature or the state to arbitrarily deny the school            
 children of the North Slope any and all state aid for education.              
 Most of the state education budget is produced by taxes and royalty           
 on the North Slope oil.  Although the Inupiat Eskimo people opposed           
 the North Slope oil development in the 1960s, an informal                     
 accommodation was reached between the residents of the North Slope,           
 the oil industry and the state.  Mr. Leavitt stressed that now a              
 major effort to deny any state education benefits to the residents            
 of the North Slope is underway.  This is mean spirited, short                 
 sighted, harmful to our children, and contrary to the state's long            
 term economic interests.  Mr Leavitt contended that this foundation           
 formula effort is diverting the borough's scarce resources from               
 projects that could generate revenue for the state, the borough,              
 and for the children.  In conclusion, Mr. Leavitt emphasized that             
 the quality of education of the children of the North Slope will be           
 protected.  Other local funding sources for North Slope schools               
 will have to be found if K-12 education funds are eliminated.  Mr.            
 Leavitt identified the following options if state aid is lost:                
 raising the millage rate from 18.5 to 20 mills, imposing annual               
 regulatory and license fees on new energy projects, and increasing            
 other tax and license fees on the oil industry.  Mr. Leavitt                  
 requested that the committee work with the borough on this issue.             
  CHAIRMAN WILKEN  noted that Barrow had just joined the meeting via           
 teleconference.  He asked that those wishing to testify fax their             
 testimony because there would not be time today to hear from                  
 Barrow.  Chairman Wilken asked if Point Hope had chosen a speaker.            
 Number 195                                                                    
  CAROLINE CANNON , Mayor of Point Hope, opposed any changes to the            
 current foundation formula in the North Slope School District.                
 Mayor Cannon discussed the community uses of the school facilities            
 and the high cost of living in the North Slope.  Mayor Cannon                 
 identified adequate funding by the state as the problem.  Alaska              
 has a constitutional responsibility to provide adequate funding for           
 all.  Mayor Cannon also pointed out that this proposal may be                 
 unconstitutional because it may discriminate against a community              
 that is 95 percent minority.                                                  

Document Name Date/Time Subjects