Legislature(1997 - 1998)
11/18/1997 05:00 PM HES
* first hearing in first committee of referral
= bill was previously heard/scheduled
= 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 fixed. 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 that. 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 budgeted. 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 members. 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 needs. 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 know. 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 bigger. 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 services. 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 required. 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 that. 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 House. 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 Alaska. 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 control. 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 other. 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 district. 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 resources. 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 Valdez. MS. WEILAND replied class size, programs, and facilities. In Valdez there are 20 - 21 students per class and they have new text books. 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 fairness. 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.