Legislature(2015 - 2016)HOUSE FINANCE 519

03/10/2015 07:30 AM House LEGISLATIVE BUDGET & AUDIT

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07:33:32 AM Start
07:34:00 AM Agenda: Public Input on School Funding Study
08:55:55 AM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
-- Location Change from Beltz 105 --
+ Education Funding Study: State of Alaska's TELECONFERENCED
Method of Funding K-12 Education
-- Public Testimony -- Limited to 3 minutes
Public comment to assist the education funding
study contractor in understanding the public
perspective on Alaska's current school funding
                    ALASKA STATE LEGISLATURE                                                                                  
             LEGISLATIVE BUDGET AND AUDIT COMMITTEE                                                                           
                         March 10, 2015                                                                                         
                           7:33 a.m.                                                                                            
MEMBERS PRESENT                                                                                                               
Representative Mike Hawker, Chair                                                                                               
Representative Sam Kito                                                                                                         
Senator Lyman Hoffman                                                                                                           
Senator Cathy Giessel                                                                                                           
Senator Click Bishop                                                                                                            
MEMBERS ABSENT                                                                                                                
Senator Anna MacKinnon, Vice Chair                                                                                              
Senator Bert Stedman                                                                                                            
Senator Pete Kelly (alternate)                                                                                                  
Representative Kurt Olson                                                                                                       
Representative Lance Pruitt                                                                                                     
Representative Steve Thompson                                                                                                   
Representative Mark Neuman (alternate)                                                                                          
OTHER LEGISLATORS PRESENT                                                                                                     
Representative Paul Seaton                                                                                                      
Representative Lora Reinbold                                                                                                    
COMMITTEE CALENDAR                                                                                                            
AGENDA: PUBLIC INPUT ON SCHOOL FUNDING STUDY                                                                                    
PREVIOUS COMMITTEE ACTION                                                                                                     
No previous action to record                                                                                                    
WITNESS REGISTER                                                                                                              
JUSTIN SILVERSTEIN                                                                                                              
Augenblick, Palaich and Associates (APA) Consulting                                                                             
Denver, Colorado                                                                                                                
POSITION STATEMENT:  Testified as a member of the consulting                                                                  
team reviewing the Alaska educational funding formula mechanism.                                                                
JOSEPH REEVES, Executive Director                                                                                               
Association of Alaska School Boards (AASB)                                                                                      
Juneau, Alaska                                                                                                                  
POSITION  STATEMENT:  Testified  during discussion  of the  school                                                            
funding formula.                                                                                                                
DAVID MEANS, Director of Administrative Services                                                                                
Juneau School District                                                                                                          
Juneau, Alaska                                                                                                                  
POSITION  STATEMENT:  Testified  during discussion  of the  school                                                            
funding formula.                                                                                                                
MARK MILLER, Superintendent                                                                                                     
Juneau School District                                                                                                          
Juneau, Alaska                                                                                                                  
POSITION  STATEMENT:  Testified  during discussion  of the  school                                                            
funding formula.                                                                                                                
LINCOLN SAITO, Chief Operating Officer                                                                                          
North Slope Borough School District                                                                                             
Barrow, Alaska                                                                                                                  
POSITION  STATEMENT:  Testified  during discussion  of the  school                                                            
funding formula.                                                                                                                
DAVE JONES, Assistant Superintendent                                                                                            
Instructional Support                                                                                                           
Kenai Peninsula Borough School District                                                                                         
Soldotna, Alaska                                                                                                                
POSITION  STATEMENT:  Testified  during discussion  of the  school                                                            
funding formula.                                                                                                                
DAVID PIAZZA, Superintendent                                                                                                    
Southwest Region School District                                                                                                
Dillingham, Alaska                                                                                                              
POSITION  STATEMENT:  Testified  during discussion  of the  school                                                            
funding formula.                                                                                                                
P. J. Ford Slack, Interim Superintendent                                                                                        
Hoonah City School District                                                                                                     
Hoonah, Alaska                                                                                                                  
POSITION  STATEMENT:  Testified  during discussion  of the  school                                                            
funding formula.                                                                                                                
PEGGY COWAN, Superintendent                                                                                                     
North Slope Borough School District                                                                                             
Barrow, Alaska                                                                                                                  
POSITION  STATEMENT:  Testified  during discussion  of the  school                                                            
funding formula.                                                                                                                
TODD POUGE, Superintendent                                                                                                      
Alaska Gateway School District                                                                                                  
Tok, Alaska                                                                                                                     
POSITION  STATEMENT:  Testified  during discussion  of the  school                                                            
funding formula.                                                                                                                
BOB CRUMLEY, Superintendent                                                                                                     
Chugach School District                                                                                                         
Anchorage, Alaska                                                                                                               
POSITION  STATEMENT:  Testified  during discussion  of the  school                                                            
funding formula.                                                                                                                
MARY WAGNER, Superintendent                                                                                                     
Sitka School District                                                                                                           
Sitka, Alaska                                                                                                                   
POSITION  STATEMENT:  Testified  during discussion  of the  school                                                            
funding formula.                                                                                                                
JACK WALSH, Superintendent                                                                                                      
Craig City School District                                                                                                      
Craig, Alaska                                                                                                                   
POSITION  STATEMENT:  Testified  during discussion  of the  school                                                            
funding formula.                                                                                                                
DAVID NEES                                                                                                                      
Anchorage, Alaska                                                                                                               
POSITION  STATEMENT:  Testified  during discussion  of the  school                                                            
funding formula.                                                                                                                
LISA PARODY, Executive Director                                                                                                 
Alaska Council of School Administrators                                                                                         
Alaska Superintendents Association                                                                                              
Juneau, Alaska                                                                                                                  
POSITION  STATEMENT:  Testified  during discussion  of the  school                                                            
funding formula.                                                                                                                
DAVID HERBERT, Superintendent                                                                                                   
Saint Mary's School District                                                                                                    
St. Mary's, Alaska                                                                                                              
POSITION  STATEMENT:  Testified  during discussion  of the  school                                                            
funding formula.                                                                                                                
ACTION NARRATIVE                                                                                                              
7:33:32 AM                                                                                                                    
CHAIR  MIKE  HAWKER  called  the   Legislative  Budget  and  Audit                                                            
Committee meeting  to order at  7:33 a.m.  Representatives  Hawker                                                              
and Kito  and Senator Hoffman were  present at the call  to order.                                                              
Senators  Bishop  and  Giessel  arrived  as  the  meeting  was  in                                                              
progress.   Also  in attendance  were  Representatives Seaton  and                                                              
^Agenda: Public Input on School Funding Study                                                                                 
          Agenda: Public Input on School Funding Study                                                                      
7:34:00 AM                                                                                                                    
CHAIR HAWKER  announced that the  only order of business  would be                                                              
public testimony on the school funding study.                                                                                   
CHAIR HAWKER  offered an introductory  explanation to  the funding                                                              
study.  He emphasized  that this was not a budget  hearing, but it                                                              
was required  by the study of  the state's funding  formula, which                                                              
was  being  undertaken   by  the  Legislative  Budget   and  Audit                                                              
Committee as  a result of  House Bill 278.   He reported  that the                                                              
legislature  was directed  to conduct  two studies  of the  school                                                              
funding  process, a  micro  approach looking  specifically  within                                                              
the   formula  to   determine  if   it  was   still  current   and                                                              
functioning,   and  then   a  macro   approach   looking  at   the                                                              
methodology  of  the  school funding  formula.    After  comparing                                                              
these  to other  methodologies  nationwide,  it was  essential  to                                                              
determine  if improvements  were necessary  for the  formula.   He                                                              
clarified  that  the testimony  today  would  be directed  at  the                                                              
macro approach.   He  reported that a  Request for Proposal  (RFP)                                                              
had been  issued for the  macro study,  the responses to  this RFP                                                              
had  been evaluated,  and a  contractor,  Augenblick, Palaich  and                                                              
Associates  (APA)  Consulting, had  been  selected.   He  reported                                                              
that   APA  Consulting   in   Denver,  Colorado,   had   extensive                                                              
experience  analyzing public  education  systems  nationwide.   He                                                              
shared that  this contract  included that  the Legislative  Budget                                                              
and  Audit  Committee  "would  hold   a  public  hearing  for  the                                                              
purposes  of providing  members of  the public  an opportunity  to                                                              
comment on the current  Alaska K - 12 funding formula."   He noted                                                              
that  APA   Consulting  was   listening  to  gather   foundational                                                              
information pertinent  to their work under the RFP  on the funding                                                              
formula.   He emphasized that this  hearing was for  discussion on                                                              
the actual  funding  formula mechanism,  and it  was not a  budget                                                              
hearing or a forum  to discuss school programs.   He suggested for                                                              
anyone interested to submit written testimony, as well.                                                                         
7:40:06 AM                                                                                                                    
JUSTIN  SILVERSTEIN,  Augenblick,  Palaich  and  Associates  (APA)                                                              
Consulting,  explained that  there would  be up  to 10 members  of                                                              
APA  Consulting  working on  the  study.    He reported  that  the                                                              
company had been  founded in 1983 as an education  consulting firm                                                              
focusing on  school finance policy,  although it had  now expanded                                                              
to  include the  running of  the  Regional Education  Lab for  the                                                              
central states.   He shared that APA Consulting had  worked in all                                                              
of  the states  reviewing  school finance  issues  and had  helped                                                              
many states write  their actual finance formulas.   He stated that                                                              
they  were  interested  in hearing  the  context  surrounding  the                                                              
current school  funding system and  its impact on the  schools and                                                              
the school districts.                                                                                                           
7:42:33 AM                                                                                                                    
JOSEPH REEVES,  Executive Director,  Association of  Alaska School                                                              
Boards  (AASB),  paraphrased  from  a  prepared  statement,  which                                                              
     Mr. Chairman, thank you for the opportunity to speak                                                                       
     this morning.  For the record, I'm Joseph Reeves,                                                                          
     Executive Director of the Association of Alaska School                                                                     
     AASB represents school boards across the state, and                                                                        
     individually and collectively we have a keen interest                                                                      
     in any revisions to the K-12 foundation formula.                                                                           
     Alaska's foundation formula was created by the                                                                             
     legislature and has undergone numerous revisions.                                                                          
     Education is a cornerstone in Alaska's Constitution in                                                                     
     Article 7, Section 1 and provides a guarantee that ALL                                                                     
     of Alaska's children have access to a public                                                                               
     education.  To meet this constitutional mandate the                                                                        
     foundation formula was designed to ensure that the                                                                         
     public education system would be available to those                                                                        
     children and that they would ALL be treated equitably.                                                                     
     It is a complex document taking into account:                                                                              
     • Numbers of students;                                                                                                     
     • School size;                                                                                                             
     • District cost factor or the cost of doing business                                                                       
     across our vast state;                                                                                                     
     • Special needs students;                                                                                                  
     • Vocational education;                                                                                                    
     • Bilingual students;                                                                                                      
     • Intensive needs students;                                                                                                
     • Correspondence.                                                                                                          
     The mathematical computation  through the formula is to                                                                    
     arrive at the Basic Need to deliver education in each                                                                      
     school district.  The formula  was designed to meet the                                                                    
     federal disparity test to further  ensure equity across                                                                    
     all districts.  To accomplish  this, federal impact aid                                                                    
     distributed through P.L. 874  (or payment in lieu of                                                                       
     taxes) is taken into account.  The formula recognizes                                                                      
     the importance of local support for public education                                                                       
     by including a Required Local  Support (RLS) element                                                                       
     for those communities with a tax base.  And as you                                                                         
     know, the Ketchikan Court has  called this aspect of                                                                       
     the formula unconstitutional.   Rather than eliminating                                                                    
     this important aspect of the  formula, AASB supports                                                                       
     its retention in the funding formula.                                                                                      
     Mr. Chairman, AASB encourages the Committee to ensure                                                                      
     the contractor adheres to a study process that                                                                             
     includes the following:                                                                                                    
     • The study be transparent and afford multiple                                                                             
     opportunities for stakeholder input.                                                                                       
     • The study should use relevant data from all across                                                                       
     Alaska, especially when considering the District cost                                                                      
     • The studies should promote educational best                                                                              
     practices, and,                                                                                                            
     • Result in a formula that is equitable and provides                                                                       
     an adequate education for ALL  of Alaska's children.                                                                       
     AASB members have adopted a  total of 45 resolutions                                                                       
     pertaining to education funding  at the local, state                                                                       
     and federal level.  Of those,  nine address issues that                                                                    
     directly relate to the foundation formula.  I'm                                                                            
     including copies of those resolutions in the written                                                                       
     testimony I'll provide to the committee.                                                                                   
     Specifically, the study should  consider changes to the                                                                    
     foundation formula that include the following:                                                                             
     • At a minimum, the Base Student Allocation (BSA)                                                                          
     should be established at least one, and preferably                                                                         
     three years ahead;                                                                                                         
     • There should be appropriate adjustments to the                                                                           
     District Cost Factor to ensure equity in school                                                                            
     • Include a factor for Career and Technical Education                                                                      
     (CTE) outside of the block grant;                                                                                          
     • Include an instructional technology factor;                                                                              
     • Insure partial funding for schools whose student                                                                         
     count drops to with seven to nine students for up to                                                                       
     two years;                                                                                                                 
7:47:08 AM                                                                                                                    
CHAIR  HAWKER asked  for further  explanation  to the  distinction                                                              
for 10 students.                                                                                                                
7:47:15 AM                                                                                                                    
MR.  REEVES explained  that the  previous  foundation formula  had                                                              
designated  this, pointing  out that the  funding formula  allowed                                                              
for  a school  cost factor,  except  when the  student count  went                                                              
below 10,  and then only  each student  in the school  was counted                                                              
with no additional funding for school cost.                                                                                     
MR. REEVES continued:                                                                                                           
     Provide for funding of student transportation other                                                                        
     than via school bus.                                                                                                       
     Re-configuring Alaska's K-12  foundation program is a                                                                      
     daunting task.  To make an  informed report and final                                                                      
     decision, the contractors and  the Legislature should                                                                      
     work in close proximity to Alaska's education                                                                              
     community.  That includes our 53 school districts and                                                                      
     their boards of education.  They are eager to be asked                                                                     
     their opinion and to help you do your work.                                                                                
     Thank you Mr. Chairman.                                                                                                    
7:48:27 AM                                                                                                                    
CHAIR HAWKER  asked if this testimony  format was working  for Mr.                                                              
Silverstein and his associates.                                                                                                 
MR. SILVERSTEIN  replied that this  was a good start  for context,                                                              
and  would allow  APA  Consulting to  better  align the  different                                                              
points and concerns.                                                                                                            
7:49:03 AM                                                                                                                    
CHAIR HAWKER  reiterated that  this was not  an undertaking  for a                                                              
re-write  of  the  school  funding   formula,  but  was,  instead,                                                              
testimony  to  allow  the  consultants   to  better  evaluate  the                                                              
funding  formula,   and  perhaps   make  recommendations   to  the                                                              
7:49:39 AM                                                                                                                    
DAVID MEANS,  Director of  Administrative Services,  Juneau School                                                              
District, shared  that he had been  a school business  official in                                                              
two different school  districts during the past 30  years, and had                                                              
been in  this role  when the current  funding formula  was adopted                                                              
in  the late  1990s.   He  expressed his  support  of the  current                                                              
funding formula  in the  broad perspective.   He pointed  out that                                                              
Alaska  school   districts  were   diverse  in  size   of  student                                                              
enrollment,  wealth   per  capita,   and  geographical   size  and                                                              
accessibility,  and that the  funding formula  had to  account for                                                              
these  diversities.    He  stated  that  the  data  needed  to  be                                                              
measurable,  readily obtainable,  and verifiable.   He noted  that                                                              
student enrollment  and wealth  each fit  the aforementioned  data                                                              
requirements.   He  declared his  general support  of the  current                                                              
funding formula and  suggested review of the funding  for students                                                              
eligible for  intensive needs funds  under special education.   He                                                              
reported that,  as the  formula was counted  on the  fourth Friday                                                              
in October,  many students requiring  services were moving  in and                                                              
out of districts after the October count date.                                                                                  
7:52:51 AM                                                                                                                    
MARK MILLER, Superintendent,  Juneau School District,  shared that                                                              
he  had spent  the last  three days  with the  best and  brightest                                                              
educational minds  in Alaska and he  had not heard anyone  say the                                                              
schools had  more than they needed.   He noted that,  although the                                                              
levels of  hurt varied  from school  district to school  district,                                                              
the overall  message was clear that  schools were "all  in a tough                                                              
spot."   He acknowledged  that the schools  were aware  this could                                                              
get tougher,  but that they would  all get through  this together,                                                              
"because  that's  what we  do  in Alaska."    He shared  that  the                                                              
concern  surrounding the  funding  formula, and  its proposed  re-                                                              
write, was  that it cannot and should  not be a discussion  to rob                                                              
one school  district to  pay another school  district.   He stated                                                              
that  equity  was often  in  the  eye  of the  beholder,  and  was                                                              
extremely difficult  to define geographically and  regionally.  He                                                              
offered his  belief that the key  to the formula was to  allow for                                                              
stability in  good times and bad  times.  He lauded the  state for                                                              
putting aside  funds during  the good times,  so there  were funds                                                              
in the  bad times.   He  declared that  the formula  had to  offer                                                              
stability and equity.                                                                                                           
7:57:20 AM                                                                                                                    
LINCOLN  SAITO,  Chief  Operating  Officer,  North  Slope  Borough                                                              
School  District,  discussed  his background  in  education  since                                                              
1970.    He  offered  his belief  that  the  funding  formula  was                                                              
disturbing,  and  he  suggested  a  review of  the  formula.    He                                                              
reported that educators  used to count their students  by severity                                                              
of need,  and that  would generate  the formula.   He  stated that                                                              
this had  changed so  that all  the special  education areas  were                                                              
lumped together  in a "1.2  factor times our  ADM."  Even  at that                                                              
time, he  knew this would impact  rural Alaskans.  He  stated that                                                              
it had been a  generous formula, and he declared  that the formula                                                              
would  make a  difference "in  who gets  what and  where it  comes                                                              
from."   He  explained that  changes  were made  and although  the                                                              
rural areas  did not  see any  change for  the amount of  funding,                                                              
they saw  a change for its  distribution.  He encouraged  a review                                                              
of  the late  1980s  before  there was  the  third  change in  the                                                              
formula, and a comparison  of the funding for the  rural and urban                                                              
areas.  He stated  that there were a lot of needs  that came along                                                              
with language and  culture that "make for deficits  in our ability                                                              
and  our  need  to  improve  our   teaching  and  to  develop  our                                                              
curriculum so  that it's relevant  so that  we can turn  on people                                                              
and  not alienate  people from  Rural  Alaska."   He suggested  to                                                              
look at  where the money  could come from  as there was  a "strong                                                              
feeling  of  injustice with  impact  aid."    He stated  that  the                                                              
federal impact  aid, issued  because of the  use of  federal lands                                                              
in each taxable  region, was used by the state  and distributed in                                                              
the formula.   He offered his  belief that the  federal government                                                              
and  the  school  districts should  have  their  relationship  for                                                              
distribution of this  impact aid and it should be  left out of the                                                              
formula.     He  asked   that  this  issue   be  studied   by  the                                                              
consultants.  He  expressed his concern for "the  intensive needs"                                                              
as it  was very expensive  and it took a  long time for  the barge                                                              
to have  open water  to bring  in materials  and school  supplies.                                                              
He stated  that, as one intensive  needs child was equal  to eight                                                              
[other  students], this  was "a  powerful piece  of formula."   He                                                              
expressed  his  agreement  with earlier  testimony  regarding  the                                                              
potential  disproportionate  funding   with  an  October  [student                                                              
count].   He offered  his belief that  the funding formula  should                                                              
take  into  consideration  these area  differentials  for  special                                                              
needs students.                                                                                                                 
8:06:44 AM                                                                                                                    
DAVE  JONES,  Assistant  Superintendent,   Instructional  Support,                                                              
Kenai  Peninsula Borough  School District,  summarized his  points                                                              
from a prepared statement:                                                                                                      
     Good   Morning  Chair   Hawker   and   Members  of   the                                                                   
     Committee.    My  name  is  Dave  Jones  and  I  am  the                                                                   
     Assistant  Superintendent of  Instructional Support  for                                                                   
     the  Kenai Peninsula  Borough  School  District.   Thank                                                                   
     you  for this  opportunity  to  comment on  the  current                                                                   
     Alaska state K-12 funding formula.                                                                                         
     After  spending   nine  (9)  years  in   school  finance                                                                   
     positions in  Montana and Wyoming, I moved  to Kodiak to                                                                   
     become  the Director  of Finance for  the Kodiak  Island                                                                   
     Borough  School District in  July of 1997.   I  moved to                                                                   
     the Kenai  Peninsula Borough School District  in October                                                                   
     of 2007  and am  fortunate to  continue in their  employ                                                                   
     today.   That  means I  testify  in front  of you  today                                                                   
     with roughly  twenty-seven (27)  years of experience  in                                                                   
     school  finance, with  close to eighteen  (18) of  those                                                                   
     years in Alaska.                                                                                                           
     So  do we throw  it all  out and  start over,  or do  we                                                                   
     keep what  we have and  do some additional  fine tuning?                                                                   
     That seems to be the question before us.                                                                                   
     To  properly answer  that question  I think  we need  to                                                                   
     look  at  the  history  of   our  current  K-12  funding                                                                   
     formula.   It  started with  the  1998 McDowell  "Alaska                                                                   
     School    Operating    Cost   Study"    and    resulting                                                                   
     implementation   of  SB   36  as  the   new  basis   for                                                                   
     educational  funding.   The McDowell  Group noted  "This                                                                   
     study   makes   major   advances    in   the   objective                                                                   
     measurement  of school costs  and offers solutions  that                                                                   
     result in progress toward equity".                                                                                         
     Additional  research and study  followed and  ultimately                                                                   
     led  to the  ISER  "Alaska  School District  Cost  Study                                                                   
     Update"  in   January  of  2005.     This  led   to  the                                                                   
     Legislative  Education Funding  Task Force spending  the                                                                   
     summer of 2005  in the Anchorage LIO instead  of fishing                                                                   
     like  the  rest  of  us.    (As  you  look  around  your                                                                   
     committee  today, you  should  note that  Representative                                                                   
     Mike  Hawker   Chaired  that  committee,   Senator  Bert                                                                   
     Stedman  was the  Vice-Chair and  Senator Lyman  Hoffman                                                                   
     served on  that committee as  well).  Their work  led to                                                                   
     the  passage  of HB  273  and  I believe  completed  the                                                                   
     heavy lifting  needed to adjust our funding  formula and                                                                   
     continue our progress toward equity.                                                                                       
     It took  me awhile to  get to the  point, but I  believe                                                                   
     we keep our  existing funding formula and  fine tune it.                                                                   
     With  the  time,  effort  and   money  we  have  already                                                                   
     invested  we should  retain it and  continue to  improve                                                                   
     it.   We  live in  a unique  and complex  state, and  we                                                                   
     should not be  deterred by a unique and  complex funding                                                                   
     I will suggest  that the funding formula could  use some                                                                   
     fine tuning in the following three areas:                                                                                  
     Alaska Statute 14.17.600 Student Count Periods                                                                           
     The  first area  deals with  the  student count  periods                                                                   
     found  in  Alaska Statute  14.17.600.  School  Districts                                                                   
     are  funded for  a fiscal year  based on  the number  of                                                                   
     students   enrolled  for  a   20-school-day  period   in                                                                   
     October  which  is  already  four (4)  months  into  the                                                                   
     actual  fiscal year.   A  districts largest  expenditure                                                                   
     is teacher  staffing which  occurs with the  offering of                                                                   
     contracts  sometime during the  spring depending  on the                                                                   
     funding  year.   It  is very  disconcerting  to have  to                                                                   
     make  such a  large financial  commitment  prior to  the                                                                   
     start  of  the fiscal  year,  and  not  know if  we  can                                                                   
     actually pay  the bill related to that  commitment until                                                                   
     we are well into the fiscal year in October.                                                                               
     One possible  solution to this  dilemma is to  use prior                                                                   
     year student  enrollments for  funding purposes  instead                                                                   
     of the  current year enrollment.   The State  of Wyoming                                                                   
     uses  this  type  of  model. For  any  school  year  the                                                                   
     enrollment   may   be   recomputed   to  allow   for   a                                                                   
     significant  increase in enrollment  during that  school                                                                   
     year.    A  "recalculation"  is allowed  if  during  the                                                                   
     first 60  days of  the school year  the enrollment  of a                                                                   
     district  has increased  by either 100  students or  10%                                                                   
     over  the same time  period during  the previous  school                                                                   
     year.   There  is no  "recalculation' for  a decline  in                                                                   
     students  which gives  the  districts time  to plan  and                                                                   
     budget for the decline.                                                                                                    
     Alaska Statute 14.17.450 School Size Factor                                                                              
     The second  area for  fine tuning I  would suggest  is a                                                                   
     minor  adjustment  to Alaska  Statute  14.17.450  School                                                                 
     Size Factor. Section (b) reads as follows:                                                                                 
     (b)  If the  ADM  in a  school is  less  than 10,  those                                                                   
     students shall  be included in the ADM of  the school in                                                                   
     that district  with the lowest ADM as determined  by the                                                                   
     most recent student count data for that district.                                                                          
     The intent  of Section  (b) is  to provide the  district                                                                   
     funding  associated  with those  students  less than  10                                                                   
     since  they do  not qualify  for funding  as a  separate                                                                   
     school.   However,  if the  school with  the lowest  ADM                                                                   
     falls in  the lowest category  of "At least 10  but less                                                                   
     than  20", the  district  could  receive no  funding  or                                                                   
     reduced  funding for  those  students.   To  illustrate,                                                                   
     let's  assume  that  a school  came  through  the  count                                                                   
     period with  nine (9) students, and the school  with the                                                                   
     lowest ADM  in the District was  at ten (10).   The nine                                                                   
     (9) students  would be  added to  the ten (10)  students                                                                   
     for a  total of  nineteen (19)  students.  The  combined                                                                   
     amount of  students would fall  within the "At  least 10                                                                   
     but less than  20" category and would be  given the same                                                                   
     base  allocation resulting  in  zero funding  associated                                                                   
     with the nine (9) students.                                                                                                
     To  correct  this  problem  I  would  suggest  that  the                                                                   
     language in Section (b) be changed as follows:                                                                             
     (b)  If the  ADM  in a  school is  less  than 10,  those                                                                   
     students shall  be included in the ADM of  the school in                                                                   
     that district  with the  lowest ADM of  at least  20 ADM                                                                   
     or more as  determined by the most recent  student count                                                                   
     data for that district.                                                                                                    
     This change  would assure  that districts would  receive                                                                   
     funding  for  those students  that  were less  than  ten                                                                   
     (10) and did not qualify as a school.                                                                                      
     Alaska Statute 14.17.420 Funding For Special Needs                                                                       
     Alaska Statute 14.17.420(a)(1) reads as follows:                                                                           
   (1)    Special needs funding is available to a district                                                                      
     to assist the district in providing special education,                                                                     
     gifted and talented education, vocational education,                                                                       
     and bilingual education services to its students; a                                                                        
     special needs funding factor of 1.20 shall be applied                                                                      
     as set out in AS 14.17.410(b)(1);                                                                                          
     Prior  to the  1998  McDowell "Alaska  School  Operating                                                                   
     Cost Study"  and SB 36, for funding  purposes, districts                                                                   
     individually  identified  students  that fell  into  the                                                                   
     four    categories    listed     in    Alaska    Statute                                                                   
     14.17.420(a)(1).   SB 36  eliminated individual  student                                                                   
     identification  and  instituted  a 20%  block  grant  to                                                                   
     provide for funding related to the four categories.                                                                        
     My concern is  that since the passage of SB  36 in 1998,                                                                   
     KPBSD's   general  student   population  has   decreased                                                                   
     significantly,  but  during that  same  time period,  we                                                                   
     have experienced  a substantial  increase in the  number                                                                   
     of special  education students.   From FY02 to  FY13 our                                                                   
     total student  enrollment dropped by 911 students  for a                                                                   
     9.3%  overall decrease.   During the  same time  period,                                                                   
     our  special  education  enrollment   increased  by  182                                                                   
     students  for  a 14.53%  overall  increase.   It  is  my                                                                   
     understanding  that  these  type of  changes  have  been                                                                   
     similar for districts across Alaska.                                                                                       
     I  would  hope  that  during  their  study,  Augenblick,                                                                   
     Palaich  and Associates  (APA) could  examine this  area                                                                   
     and  either  validate or  correct  the 20%  block  grant                                                                   
     funding level.                                                                                                             
     I  will be  available  to assist  this  body  or APA  as                                                                   
     needed or requested.                                                                                                       
     Thank  you once again  for this  opportunity to  provide                                                                   
CHAIR  HAWKER clarified  that  the  Legislative Budget  and  Audit                                                              
Committee was  gathering information  and was  not engaged  in any                                                              
re-write of the  foundation formula at this time;   however, there                                                              
was  nothing to  prevent other  legislators  from undertaking  the                                                              
opportunity to re-write the foundation formula.                                                                                 
8:17:48 AM                                                                                                                    
DAVID PIAZZA,  Superintendent, Southwest  Region School  District,                                                              
stated  that  the  education  funding  formula  should  contain  a                                                              
factor for  local contribution;   however, the current  method and                                                              
percentage  of utilizing  federal  impact aid  funds  needs to  be                                                              
studied and  revised.  He reported  that 75 percent of  impact aid                                                              
monies  to the Southwest  Region  were held back  for basic  need.                                                              
He  suggested  that  a factor  for  the  operation  of  facilities                                                              
should also  be considered, and it  should be based on  numbers of                                                              
buildings,  square footage,  and the  age of  the structures.   He                                                              
relayed  that the  area cost  differential should  be studied  and                                                              
re-calculated,  as fuel prices,  labor costs,  and shipping  costs                                                              
should  all  be  considered.   He  offered  an  anecdote  for  the                                                              
overall  cost  for  a  teacher  housing  unit.    He  noted  that,                                                              
although  some communities  had seen  a drop  in fuel prices,  not                                                              
all the areas had benefitted.                                                                                                   
8:20:26 AM                                                                                                                    
P.  J. Ford  Slack,  Interim  Superintendent, Hoonah  City  School                                                              
District, shared  her recollections for the discussions  about the                                                              
new  funding formula  from  many years  ago.   She  said that  she                                                              
still found  the funding  formula to be  very complex,  similar to                                                              
the federal  tax system.  She  suggested that the  funding formula                                                              
be simplified,  noting that this  would especially help  the small                                                              
school districts.   She  reported that she  had formerly  been the                                                              
Alaska  Director  of  Special  Education  and  she  expressed  her                                                              
agreement with the  previous speakers that the  issues for special                                                              
education students  had greatly increased.   She lauded  the state                                                              
support  to  school  districts with  care  for  special  education                                                              
students  and  personnel.    She   said  that,  although  she  had                                                              
experienced  a decrease  in the  student enrollment,  there was  a                                                              
rapid increase in  the special education population  in the Hoonah                                                              
schools.     She   clarified   that  this   was   not  from   over                                                              
identification  to  special  education needs,  pointing  out  that                                                              
families  had adopted special  education  students.  She  reported                                                              
that  one-third   of  the   student  population   in  Hoonah   was                                                              
identified  as  special  education  students,  and  this  increase                                                              
required personnel  that the  school district  did not have.   She                                                              
directed  attention  to  the  infrastructure  of  the  facilities,                                                              
specifically  the mechanical  infrastructure,  stating that  there                                                              
were  many  challenges  to construction  because  of  the  various                                                              
weather patterns  and systems.   She offered  an anecdote  for the                                                              
maintenance  in  her  school  district.     She  acknowledged  the                                                              
"intense   and  incredible   support"  from   the  larger   school                                                              
districts for the  smaller school districts in  Alaska, and stated                                                              
a  need  for  more collaboration  within  the  formula  among  the                                                              
8:25:44 AM                                                                                                                    
PEGGY   COWAN,   Superintendent,   North  Slope   Borough   School                                                              
District,  expressed her  agreement that  the formula was  complex                                                              
and directed  attention to  a constant  concern for travel  within                                                              
the larger  school districts,  pointing out  that the  North Slope                                                              
Borough School  District covered  89,000 square  miles.   In order                                                              
to provide  the same  opportunities and  benefits as other  school                                                              
districts, travel  became a  "big portion of  our expenses."   She                                                              
offered  an  example  for  student   activities  and  professional                                                              
development   for  staff,   noting  that   a  weekend   volleyball                                                              
tournament  for seven small  schools cost  $50,000 for  tournament                                                              
travel.   She pointed  out that  this did  not include  the travel                                                              
costs  for the  other sports,  even  though the  district did  not                                                              
offer as  many sports as  other areas.   She declared  that sports                                                              
were  an  important  opportunity   and  should  be  available  for                                                              
students.  She noted  that Barrow High School had  to go off slope                                                              
to play teams  its size, and that  the school district  had to pay                                                              
for other teams  to come play.   She shared that the  district had                                                              
had one district  wide in-service for professional  development in                                                              
20 years  because of the  travel costs.   She noted  how expensive                                                              
it was to  fly in new teachers  to the villages and  to house them                                                              
in the  rural areas.   She directed attention  to the  expense for                                                              
broadband internet access.                                                                                                      
8:30:49 AM                                                                                                                    
TODD  POUGE,  Superintendent,  Alaska   Gateway  School  District,                                                              
stated  that  within the  more  than  500  schools and  54  school                                                              
districts  in Alaska,  there were  many opinions  for the  budget.                                                              
He expressed  his support for the  current funding formula,  as it                                                              
met the  needs for  his district.   He  expressed concern  for the                                                              
negative  impact from  any  changes, and  listed  the changes  for                                                              
which he  had concern.   He stated that  any change in  the school                                                              
size  factor  would  be  an  issue,  as  his  district  had  three                                                              
successful,  community  supported   schools  with  fewer  than  25                                                              
students.    He opined  that  should  a  school close,  often  the                                                              
community  "is not  far behind."    He directed  attention to  the                                                              
district  cost  factor,  noting   that  his  district  encompassed                                                              
36,000  square miles,  and  that  fuel, electricity,  food,  staff                                                              
training,  shipping,  and  travel,  all  pieces  of  the  district                                                              
budget, were  more expensive in  Rural Alaska.  He  suggested that                                                              
another factor in  the budget should include low  income students,                                                              
as more  one star schools  were in low  income areas, and  that it                                                              
takes more  funding to bring the  needs of low income  students up                                                              
to receive an adequate education.                                                                                               
8:33:55 AM                                                                                                                    
BOB  CRUMLEY,  Superintendent, Chugach  School  District,  offered                                                              
his belief that,  from his small school district  perspective, the                                                              
current formula  was as equitable  as possible and he  offered his                                                              
support.  He cited  support for the aspect of the  formula funding                                                              
schools  with 10 or  more students,  noting that  any increase  to                                                              
this number would  be devastating to his schools  and communities.                                                              
He offered  some suggestions  to improve  the formula,  mentioning                                                              
that the  time spent in application  for impact aid was  not worth                                                              
the small  amount received  and was  therefore not beneficial  for                                                              
participation.   He stated  that, as  Chugach School District  did                                                              
not receive any  travel support from the state, it  would be "nice                                                              
to have  some support for travel."   He declared  district support                                                              
to increased  funds for  broadband, as there  was a  patchwork for                                                              
the  communities.    He  explained   that  Special  Education  and                                                              
English  as a  Second Language  (ESL)  were "extraordinarily  high                                                              
growth  areas"  in   the  district.    He  shared   that  deferred                                                              
maintenance  for  school  properties   was  also  an  issue.    He                                                              
expressed concerned  with the ripple effect for  any changes which                                                              
could  leave   them  worse  off   than  where  the   district  was                                                              
8:38:02 AM                                                                                                                    
MARY WAGNER,  Superintendent, Sitka  School District,  shared that                                                              
she was also a  council member on the Alaska State  Council on the                                                              
Arts.   She noted that  the current  funding formula  attempted to                                                              
account  for  equity  through  the  cost  factors,  and,  although                                                              
cumbersome,  it  was effective  to  meeting the  equity  standard.                                                              
She observed  that there  were "a lot  of moving parts  associated                                                              
with   calculating  the   various  cost   factors  which   impedes                                                              
transparency."   She suggested improvement  for the  areas related                                                              
to projected  enrollment for the upcoming  year, as it  was due in                                                              
early November, which  was too early to fully  analyze the current                                                              
year  student count.    She suggested  inspection  of the  current                                                              
year student  count for  trends in  enrollment and for  meaningful                                                              
conversations  at  the  school  board  level  regarding  projected                                                              
enrollment  for  the subsequent  school  year.   She  pointed  out                                                              
that, as  the current  timeline eliminated  this possibility,  the                                                              
district would  pick a very conservation  number to report  to the                                                              
Department  of   Education  and   Early  Development   which  then                                                              
impacted  the funding  allocated  to public  schools,  and to  her                                                              
district.   She pointed out that  the foundational element  of the                                                              
school board budget  was the student enrollment, and  yet the time                                                              
line prohibited  any time for any  school board involvement.   She                                                              
suggested  the  following areas  to  add  to the  current  funding                                                              
allocation:   technology,  arts  education,  and student  activity                                                              
funding, all of  which were core to a quality  educational program                                                              
and contributed to  the inequity between districts.   She declared                                                              
that these were  important components in the  discussion regarding                                                              
adequacy and  equity in educational  funding.  She pointed  to the                                                              
high  cost for  flying to  and from  Sitka, as  there was  limited                                                              
ferry service.   She noted that  any school classes missed  due to                                                              
travel  meant  a  reliance  on  technology  to  continue  academic                                                              
progress.   She stated that all  of these cost factors  were vital                                                              
to  connect  students  to  learning,  while  providing  meaningful                                                              
education that prepared  students for life beyond  graduation, and                                                              
that,  as  each  school  district   experienced  vastly  different                                                              
challenges, these factors were worthy of consideration.                                                                         
8:42:09 AM                                                                                                                    
JACK  WALSH, Superintendent,  Craig City  School District,  stated                                                              
his   support  of   the  current   foundation   formula,  and   he                                                              
acknowledged  that, as  there were  unique  considerations in  the                                                              
state,  the  formula  tried  to address  equity  and  adequacy  to                                                              
ensure  quality  and the  needed  services.    He pointed  to  the                                                              
unique geographical  and cultural  components and he  reflected on                                                              
the  challenges  to  rural  schools.     He  opined  that  it  was                                                              
important  to   allow  for  adjustments   to  the   average  daily                                                              
membership (ADM)  after the count period, especially  in the areas                                                              
of  intensive needs.    He expressed  support  for  the money  set                                                              
aside  for career  and  technical  education, and  suggested  that                                                              
this could  be expanded.   He  said that  the state needed  better                                                              
services  in  the areas  of  counseling  and  mental health.    He                                                              
agreed that there  was a need to think very carefully  about small                                                              
communities  and small  schools  scattered  throughout Alaska,  as                                                              
they  made  a  big  difference  in the  lives  of  families.    He                                                              
suggested that raising  the minimum student count in  a school put                                                              
a  lot of  really  significant schools  and  communities at  risk,                                                              
noting  that some of  these were  the highest  quality schools  in                                                              
the state.                                                                                                                      
8:47:27 AM                                                                                                                    
DAVID NEES  shared that he had been  a member of the  recent House                                                              
Sustainable  Education Task  Force.   He added  that a giant  cost                                                              
factor  was  that  school  districts   had  not  been  allowed  to                                                              
consolidate,   which   would   save    money   on   staffing   and                                                              
superintendents.  He  noted that there were almost  as many school                                                              
superintendents  as there  were  representatives  and senators  in                                                              
the legislature.   He suggested  a review of consolidation  to see                                                              
if  this  would  save  money.   He  offered  that  the  foundation                                                              
formula worked  fairly well, but  that the actual  distribution to                                                              
the schools may require review.                                                                                                 
8:49:34 AM                                                                                                                    
LISA  PARODY,   Executive  Director,  Alaska  Council   of  School                                                              
Administrators,  Alaska  Superintendents  Association,  encouraged                                                              
the  committee to  continue  to provide  an  open and  transparent                                                              
process  moving forward,  and  to seek  input  from the  education                                                              
stakeholders.     She  offered   support  for  consultation,   and                                                              
declared  that the  council wanted  to  be part  of that  process.                                                              
She said  that continuing to  provide quality, distance  education                                                              
programs  and innovative  education models  particularly to  rural                                                              
areas would require technology, broadband, and bandwidth.                                                                       
8:51:54 AM                                                                                                                    
DAVID  HERBERT,  Superintendent,  Saint  Mary's  School  District,                                                              
opined  that   the  current   foundation  formula,   although  not                                                              
perfect,  was   working  as  a   fair  and  equitable   method  to                                                              
distribute  education funds  throughout the  state.  He  expressed                                                              
his  concern for  modifications  to the  formula  which may  bring                                                              
serious  unintended   consequences  with  a  negative   impact  on                                                              
education funding  in Alaska.   He declared  that the  formula had                                                              
been vetted  over many years.   He expressed his  understanding of                                                              
the  current  economic conditions  in  the  state, but  urged  the                                                              
state and the committee to be cautious for any modifications.                                                                   
8:53:29 AM                                                                                                                    
CHAIR  HAWKER  closed  public  testimony.     He  noted  that  the                                                              
consultants  would  contact  someone  within each  of  the  school                                                              
districts, and  the committee would  do its best to  keep everyone                                                              
informed of  the progress,  as well as  the opportunity  to review                                                              
the critical preliminary benchmarks.                                                                                            
MR.  SILVERSTEIN said  that it  was  good to  hear most  testimony                                                              
that the formula  was not in such  disarray that it would  be hard                                                              
to study.   He  said that  APA Consulting  had received  some good                                                              
information to  begin some targeted  looks and that they  would be                                                              
in touch with the school districts and the stakeholders.                                                                        
REPRESENTATIVE  KITO asked  if the  Legislative  Budget and  Audit                                                              
Committee  would receive  a draft  report  or presentation  before                                                              
the final report.                                                                                                               
CHAIR HAWKER replied that this would be scheduled.                                                                              
8:55:55 AM                                                                                                                    
There being no further business before the committee, the                                                                       
Legislative Budget and Audit Committee meeting was adjourned at                                                                 
8:55 a.m.                                                                                                                       

Document Name Date/Time Subjects
Agenda_LBA_10Mar15.pdf JBUD 3/10/2015 7:30:00 AM