Legislature(1997 - 1998)

11/18/1997 05:00 PM HES

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
         SB 146  PUBLIC SCHOOL FUNDING/CHILD CARE GRANTS                       
CHAIRMAN WILKEN called the Joint Senate HESS and Finance Committee             
meeting to order at 5:00 p.m. and announced they would discuss                 
education funding reform.  He said that the education formula is               
one of the top three priorities of the majority caucus.  He said it            
is his intent to put a bill on the Governor's desk that changes the            
foundation formula.  He asked for their support in writing the                 
Governor saying they want a new formula that is simple, fair, and              
SENATOR HALFORD said he would not vote for more money for the                  
existing formula unless some progress is made.                                 
CHAIRMAN WILKEN said he wanted people to understand why Senator                
Halford feels that way and said he would begin by explaining SB 146            
with the use of over-heads.                                                    
He said that people aren't happy with what's going in education and            
are asking what they are getting for their money.  Fairbanks voted             
three times on a 30% bond issue to build new schools.  People were             
commenting that there were places they could drive to that had more            
money, but the residents don't pay anything for their schools.  The            
foundation formula is part of the problem that makes people say                
CHAIRMAN WILKEN said he thought they could agree on simplicity and             
fairness in education funding, for everyone to pay their fair                  
share, on government to live up to its responsibility to educate               
its citizens, and for all to participate.                                      
He explained the four components of public school funding are State            
support, required local contribution, optional local contribution,             
and assessment normalization (Statewide mill leveling).  Forty-three school dis
Per student funding has long-term benefit to education.  He said               
its not true that the formula takes money away from the rural areas            
and gives it to the urban areas.                                               
He said it's also not the case that education dollars shrank by                
50%.  In the last 10 years the amount of money that has been put               
into the education formula has increased 51%.  At the same time,               
the number of students has increased by 26%.  So, it looks like the            
rate of increased has doubled the number of students.  He                      
reiterated that the problem is with the formula.                               
The instructional unit is the vehicle by which the legislature                 
funds education.  It is multiplied by $61,000 and that's what is               
A survey conducted by the State Board of Education said 81% wanted             
education to be funded by a per student dollar.  There are only                
seven states that fund education by instructional unit; the others             
fund by student dollar.  SB 146 is a student dollar proposal.  It              
also requires local contribution before State support is given.                
The student dollar times the number of students, plus State dollars            
for developmentally disabled, minus required local participation               
equals the State public school foundation support.  The student                
number is to be adjusted for the size of school, area cost                     
differential (ACD), and special needs.                                         
CHAIRMAN WILKEN said that people understand the concept of a                   
student dollar.  He said that organized areas have give 4 mills of             
full assessed value or 35% of basic need.  Here, Senator Wilken                
explained a number of charts on assessed value before the committee            
He explained the federal disparity test limits a 25% spread between            
the highest and lowest per student in the State.  There are                    
communities that want to give more, but can't because of the                   
federal disparity test.                                                        
CHAIRMAN WILKEN said his definition of fair share is equal funding             
based on assessed value of the organized area.  This is an arm's               
length evaluation of the wealth of the community.  Because                     
education is one of the priorities for government, everyone should             
be funding it equally.  He referred to a chart of assessed values              
for 1996.  The "spread" is $4.5 million - $13.3 billion.    This               
should be adjusted according to ACDs, size of schools, and special             
SB 146 requires a 3 mill local contribution instead of a 4 mill                
qualifier not to exceed 100% of the district's State support, and              
then asks if a district can fund its total education requirement               
based on their assessed value.  In the North Slope's case, there's             
an additional $11 million next year.                                           
He asked if anyone had a better way to find a fair share to let him            
CHAIRMAN WILKEN displayed a chart of earned wages from the                     
Department of Labor and noted the REAAs in which $460,991,899 was              
earned by 18,341 people.  In 1996 this group received $135 million             
for education.  So 8% of our students get 22% of State education               
money with no return.                                                          
Two unorganized areas in Alaska have tried to figure out what this             
means to them and they have figured that a 1% sales tax in their               
area would raise $700,000 and pay for their complete education                 
requirement.  Another area found that a 4 mill levy or 2% sales tax            
would pay for their education - which is not a lot - compared to               
what the rest are doing.  They also have to realize that some areas            
just don't have the asset base to pay for their education.  In SB
146, under the assessment normalization provision, $90 million                 
dollars is spread around on the basis of relative wealth versus                
number of students.                                                            
SENATOR WARD asked for the status of the ACD study.                            
CHAIRMAN WILKEN said the ACD is a component of the foundation                  
formula.  The McDowell group is conducting a study to determine                
what it costs to run a school and the study is due February 1.                 
SENATOR ADAMS said he thought Senator Wilken's presentation was                
basically "the right to steal in daylight."  He said the North                 
Slope Borough receives 1 1/2% of education dollars and SB 146 and              
the other legislation takes money away from the North Slope                    
Borough.  The Alaska Constitution states that every Alaskan should             
have an education.  If there are problems in the school districts,             
they should be taken care of.                                                  
The North Slope Borough pays the second highest tax rate in the                
State.  Twenty-four percent of their taxes go to primary education             
while they are the second to last in the State's funding.  He                  
thought the majority's legislation robbed one school district to               
serve another and that was wrong.  It is wrong to say that REAAs               
are getting a free ride.  Rural Alaska provides all the State with             
natural resources like Prudhoe Bay and provides jobs for all                   
Alaskans.  He saw it as a partnership.                                         
SENATOR ADAMS agreed that they needed to look at fairness and                  
equity, but Senator Wilken's slide presentation was not it.  He                
said that if schools with a large student enrollment need more                 
funding money, it could come possibly from the tobacco tax.  He                
also urged adopting an education endowment fund which is needed in             
the long run.                                                                  
SENATOR WARD noted that the formula was created by politicians and             
he thought it was time to look at it to see if it does still work.             
He applauded Senator Wilken and Senator Phillips for trying to                 
figure out what is fair and make it understandable.  He hoped that             
whatever the legislature approved would be good for at least 10                
years.  The ACD is what it's all about, he said.  He suggested that            
the legislature caused the problems and they have an obligation at             
this point to fix it.                                                          
TAPE 97-54, SIDE B                                                             
MR. JOHN FAIRFIELD, parent and school board member, remarked that              
the four criteria Senator Wilken outlined in his sponsor statement             
said there is no new money for a new formula.  He supported the                
fairness issue and said that SB 146 alone would not solve the                  
schools' problems.  The consensus of Mat-Su, Kenai, Fairbanks, and             
Anchorage school districts was that while the funding formula needs            
to be addressed because it hasn't met their needs in the recent                
past, they cannot be satisfied with the "pie" being the same size              
that it is now.  It has to be expanded somehow, quite possibly                 
through income or sales taxes.                                                 
MR. FAIRFIELD clarified that he supported the idea of fairness in              
changing the formula, but the number of dollars needed to be                   
SENATOR ADAMS stated that his bill reintroduces the school tax and             
makes it $25.  Before the tax was repealed, it was $10.  Everyone              
who works in Alaska would pay for use of the State's vital                     
MR. FAIRFIELD said he supported it.                                            
SENATOR HALFORD asked how much more money would be enough.                     
MR. FAIRFIELD replied that recently every year they have been                  
cutting vital programs in education.  He has good reasons to spend             
50% more than the districts are getting.                                       
SENATOR HALFORD asked if the figure should be $120,000 for each                
instructional unit.                                                            
MR. FAIRFIELD replied that $120,000 would be enough.                           
CHAIRMAN WILKEN explained that he had to assume, when working on               
this legislation, that there would be no new dollars to expand                 
with.  The legislature needed to learn to trust the formula so they            
could put more money into the pot.                                             
MR. FAIRFIELD responded that he understood what they are saying,               
but he was afraid when they say there is no new money that                     
education has a very low priority in the legislature.                          
SENATOR LEMAN commented that education wasn't a low priority.  When            
there were budget reductions across the board, education received              
an increase.                                                                   
MR. CARL SLACK, school principal, commended them for tackling the              
foundation formula.  He agreed with the fairness issue, but feared             
that Senator Wilken's plan pitted one district against another.  He            
asked if SB 36 or SB 146 would pass a court challenge that would be            
inevitable from the North Slope Borough.                                       
He supported the educational endowment fund.  He thought a payroll             
tax where everyone who works in Alaska contributes was fair.  If               
the present formula had kept up with inflation, it would be $87,000            
per unit.  He agreed that the formula needed to be fair, but the               
pie needs to be larger also.  He said that the needs of the many               
children who are coming into their schools are changing                        
significantly from when he first came 13 years ago.                            
He said he thought their plan took from one government and gave to             
another, but not from individual school districts.                             
CHAIRMAN WILKEN proposed a payroll tax in the unincorporated areas,            
not across the State.  He added that the legislature put $628                  
million into the foundation last year and in 1986 they put $409                
million in.  The problem is making the instructional unit reflect              
the educational needs of the State.                                            
SENATOR TORGERSON explained legislation that required one school               
district per model borough.  Local funding efforts would be                    
MS. ANNETTE RUCKER, Mat-Su school board member, asked how to get               
money into the schools to get teachers the supplies they need.  She            
said she is sick of selling chocolate bars and running raffles.  It            
makes her angry to have to revert to this kind of fund raising to              
provide an education for our children.                                         
She stated that she is also a tax-preparer and that teachers are               
the only employees she sees who are asked to provide expendable                
supplies on a yearly basis.  Mechanics can buy tools and keep them             
from year to year.  She sees routinely elementary school teachers              
spend $2 - $4 thousand per year on stickers, books, and maps, etc.             
She read a letter from the Borough Manager and Borough Mayor that              
was given to the Governor three weeks ago.  The letter says there              
was a 40% increase in students since 1990.  They should have had               
the equivalent of eight schools built there, but they have had one.            
She said that all the PTAs are standing together to urge the                   
legislature to do something this year that is acceptable to                    
everyone.  They were elected to do that and they are expected to do            
She wanted to know why a payroll tax couldn't be done state-wide.              
She urged the legislators to quite fighting and to work with the               
Governor on an acceptable solution.  She offered to help in any way            
she could.                                                                     
SENATOR HALFORD thanked her for her comments and said that SB 11,              
relating to school construction, is not dead and that it's in the              
MS. RUCKER said that her children need the funding in schools right            
now.  In five years it will be too late for them.                              
CHAIRMAN WILKEN said he thought there was a good chance that the               
legislature would pass legisaltion providing for the construction              
of schools this year.                                                          
MR. JOHN CYR, President, NEA Alaska, said that it's true that the              
raw dollars going into the foundation formula has increased by 51%             
and the student population has increased 26%.  But he thought it               
was clear that the extra money went towards categorical funding for            
special education students, increased transportation, bi-lingual               
education which sorely needed the money.  He didn't think there                
were more dollars for regular education.                                       
He said kids have the same right to education no matter where they             
live.  They have a right to take classes that don't have 50 kids in            
them and to take classes with real science equipment in them.  The             
ACD study is absolutely critical because fairness is important, but            
it is against reason to expect that they don't also need more money            
to keep students competitive.                                                  
CHAIRMAN WILKEN responded that no one is suggesting that the                   
legislature doesn't want to put new money into the formula.                    
MR. CYR responded that he didn't mean taking new money from Senator            
Adams' district to give to his.                                                
SENATOR TORGERSON asked what he thought about equalization across              
MR. CYR said he wouldn't comment until he knew what exactly that               
means.  One of keys they have dealt with across the State is local             
SENATOR LEMAN said the delivery of government education is the most            
expensive education they have.  He asked if Mr. Cyr had done                   
studies on why it's expensive and why it's increasing.                         
MR. CYR said he didn't think private schools were held to the same             
standard as public education.  They don't need certified teachers,             
their buildings don't have to conform to the same codes.  He                   
thought it was hard to quantify what private education costs were              
because the differences are so vast.                                           
SENATOR LEMAN said he thought everyone should look at the                      
requirements that aren't improving the delivery of education.                  
MR. CYR said if improve education could be delivered at a reduced              
cost, it should be done.                                                       
MR. ERIC HENDERSON, Principal, Wasilla Middle School, said he                  
thought there was plenty of money to go around the State.                      
TAPE 97-55, SIDE A                                                             
He liked the idea of a payroll tax.  He said our children are our              
best renewable resource and that should be our top priority.  He               
applauded SB 11; although he thought it should be 70%/30% rather               
than 50%/50%.  The valley cannot afford a 50%/50% because there                
just aren't the buisnesses.  He said that he spends a lot of time              
in the classroom and he wanted to know what administrative costs               
the legislators were talking about when saying administration is               
top heavy.                                                                     
MR. HENDERSON said that no other system in the world deals as well             
as we do working with a "total society."  No other school system               
has to do that in the world. Our system takes all kids, no matter              
what level or ability and tell them they can be successful.                    
He said the valley schools are having a lot of growing problems                
explaining his school's addition and still needing five portables              
to accommodate the number of students that jumped from 650 to 875              
kids.  He thought that anyone in the valley would want to pay a tax            
that is earmarked for schools and kids.                                        
SENATOR ADAMS commented that along with the money in the Permanent             
Fund, there is an easier funding source, the Constitutional Budget             
Reserve which is surplus of $3.3 billion.  All it takes is 15 votes            
in the Senate and 30 votes in the House to solve the problems.  He             
said there was money around, but it was a matter of people sitting             
down and trying to solve the problem instead of fighting each                  
SENATOR WARD commented that the money the legislators appropriate              
absolutely belongs to the people of Alaska and they are elected to             
spend it on their behalf.                                                      
MR. HENDERSON responded that the legislators' job was to provide               
for their children.                                                            
MR. PETER PERSCHALL said the works with kids who sometimes don't               
fit into the regular school system.  The Mat-Su, like other                    
districts, has a lot of kids who are in a lot of different crisis.             
It's not just an educational issue; it's community issues.  He said            
he is proud of the 19 districts he has worked with in the last 10              
years to establish programs for at-risk kids.  Some people may                 
question the integrity of three students in Unalaska and how                   
unimportant it might seem, unless one of those three children were             
one their biological children that wasn't fitting in.                          
He said the costs of education have gone up since 1988.  There is              
an amount of money that has to go to quality programs.  He said his            
major expense is teachers, but the teachers are the ones who work              
with the kids.                                                                 
He commented on the costs to incarcerate and educate one youth in              
McGloughlin.  With the same amount of money two of his graduates               
could go to Harvard University.  This is the kind of disparity that            
happens when you ignore kids or don't meet their needs.  You can               
run cheap, but you can't run on nothing, he concluded.                         
MS. KATHY WHITE MURPHY said she is a parent of a second grader and             
an eighth grader and is a first grade teacher at Finger Lake                   
Elementary School.  As citizens of the valley, they are willing to             
take fiscal and character responsibility to improve education                  
there.  She has heard that it is not enough to reorganize the                  
foundation formula and that it is important to simplify things.                
She supported fairness and equity.  She thought any solution would             
have to be multi-faceted and that more money was needed in the pot             
and people are saying they are willing to pay more.                            
MS. MURPHY said it would be easy for legislators to listen to a                
vocal minority that is saying they are paying too many taxes and               
the schools aren't doing their job, but she has taught in the                  
valley for 12 years and has worked extensively with parents and                
that is not the view that she hears.  Nine out of ten people favor             
looking at ways to utilize in a responsible way the resources we               
have in this State.  We are the wealthiest State in the union and              
there is no reason we can't have current and up-to-date text books.            
There is no reason that she has to spend $5,000 out of her own                 
pocket every year to supplement the educational budget within her              
Regarding salaries, she has received very little additional                    
compensation over the 12 years she has worked here.  She thought               
that school employees took a responsibility in the eighties when               
there were some revenue short-falls within their own profession to             
share that.  There were no additional raises or getting recognized             
for additional time or education served.                                       
She urged the legislators to work together, not take resources away            
from one area of the State and give it to another, and to take a               
leadership role and make some decisions on how to use our                      
SENATOR GREEN asked what things her own private money was going for            
that would typically be paid for out of the school budget and what             
would happen if she didn't do it.                                              
MS. MURPHY answered that she and other teachers try to have an                 
integrated curriculum and to do this they sometimes need text books            
that aren't available within the school.  Her allocation for                   
discretionary funds is about $200 per year and sometimes she finds             
reading supplies that are around $500.                                         
SENATOR GREEN asked if she would have gotten help 10 years ago for             
similar requests.                                                              
MS. MURPHY replied that she probably would have, but she was                   
teaching special education at the time which had a bigger budget.              
She now needs bulletin boards, a lot of art supplies, and rewards              
and incentives.                                                                
SENATOR HALFORD asked where Mat-Su was regarding the cap.                      
CHAIRMAN WILKEN responded that Mat-Su was at about 80%.                        
SENATOR HALFORD replied that they have the capacity at the local               
level to put more into education.                                              
MR. DESI MAYO, Finance Director, Mat-Su Borough, said they have                
provided a little over $23 million of local support to the Mat-Su              
school district, $1 million in renovation and renewals, and                    
$600,000 in unreimbursed debts.  They are within a half million                
dollars of the cap, he said.                                                   
CHAIRMAN WILKEN said he had heard the same testimony from many                 
people and that's why he was here to address it.                               
MS. LELA AYERS, President, Mat-Su Education Association, said that             
she is proud to represent those teachers and they are very                     
energetic and talented.  She supported the comments the committee              
had already heard.                                                             
MS. WENDY WEILAND said she taught for over 20 years and there are              
inequities in the facilities between here and Valdez.  She noted               
that charter schools and private schools don't have to take                    
children with diverse needs.  This changes, not only the cost, but             
the kind of educational opportunities they can provide.                        
SENATOR LEMAN asked her to identify some of the differences in                 
MS. WEILAND replied class size, programs, and facilities.  In                  
Valdez there are 20 - 21 students per class and they have new text             
DR. ROBERT LEHMAN, Superintendent, Mat-Su Borough, said the  issue             
for all kids is to have a quality educational program.  He agreed              
that there needs to be some equity and fairness in the formula, but            
not at the expense of anyone else.  It also makes sense to do                  
something about the size of the pie.                                           
TAPE 97-55, SIDE B                                                             
He thought there needed to be equity in contributions from both                
local and State sources.                                                       
MS. LINDA MENARD, School Board Member, said she liked the 3 mill               
qualifier, the school tax, and supported year-round schooling                  
because the population was growing so fast.  She said they would               
need dollars for transportation, too, since there are lots and lots            
of roads.  She urged them to fund SB 7.                                        
SENATOR WARD commented that information he has says that year-round            
schooling saves money.                                                         
MS. MENARD responded that it is an expensive process and is more               
expensive.  The operating costs are more than the capital savings.             
SENATOR HALFORD noted that the problem they have with the Municipal            
League is that they don't want to argue among themselves.  So, they            
come to the legislature with one thing they can agree on - that                
they need more money.                                                          
MR. KEN FALLON, School Board Member, supported equitability and                
SENATOR LEMAN asked what the costs were that were not adding that              
much benefit to education.  He noted an expenditure by the State of            
$30,000 for construction of an outhouse.                                       
MR. VONCILLE GREGOIRE, newscaster, said he attended school in                  
luxembourg, Belgium, and Britain.  When he attended school in                  
Luxembourg and Britain he went from 7:00 a.m. to 6:00 p.m., not                
2:30 p.m. like in the U.S.  He didn't think kids in the U.S. put in            
enough time to learn the things they should know.                              
SENATOR TORGERSON said there is a subcommittee in Finance looking              
into these issues.                                                             
SENATOR HALFORD commented that the formula was changed 10 years ago            
and was changed less than 5%.  He informed them of how hard the                
formula had been to change then, politically.                                  
SENATOR GREEN said that everyone's input and continuing solutions              
to the state of education are very, very important.                            

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