Legislature(2011 - 2012)BARNES 124
02/10/2012 08:00 AM House EDUCATION
| Audio | Topic |
|---|---|
| Start | |
| Education Funding from School Districts' Perspectives | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
ALASKA STATE LEGISLATURE
JOINT MEETING
HOUSE EDUCATION STANDING COMMITTEE
HOUSE EDUCATION & EARLY DEVELOPMENT FINANCE SUBCOMMITTEE
February 10, 2012
8:01 a.m.
MEMBERS PRESENT
HOUSE EDUCATION STANDING COMMITTEE
Representative Alan Dick, Chair
Representative Lance Pruitt, Vice Chair
Representative Eric Feige
Representative Paul Seaton
Representative Peggy Wilson
Representative Sharon Cissna
Representative Scott Kawasaki
HOUSE EDUCATION & EARLY DEVELOPMENT FINANCE SUBCOMMITTEE
Representative Tammy Wilson, Chair
Representative Alan Dick
Representative Cathy Munoz
Representative Paul Seaton
Representative Peggy Wilson
Representative Pete Petersen
Representative Sharon Cissna
MEMBERS ABSENT
HOUSE EDUCATION STANDING COMMITTEE
All members present
HOUSE EDUCATION & EARLY DEVELOPMENT FINANCE SUBCOMMITTEE
All members present
COMMITTEE CALENDAR
PRESENTATION: EDUCATION FUNDING FROM SCHOOL DISTRICTS'
PERSPECTIVES
HEARD
PREVIOUS COMMITTEE ACTION
No previous action to record
WITNESS REGISTER
LUKE FULP, Chief Financial Officer
Kodiak Island School District (KIBSD)
Kodiak, Alaska
POSITION STATEMENT: Presented the funding perspectives from
KIBSD.
LAURA HYLTON, Business Manager
Lake & Peninsula Borough School District (LPSD)
King Salmon, Alaska
POSITION STATEMENT: Presented the funding perspectives from
LPSD.
DAVID ARP, Business Manager
Sitka School District
Sitka, Alaska
POSITION STATEMENT: Presented the funding perspectives from
Sitka School District.
MIKE FISHER, Chief Financial Officer
Fairbanks North Star Borough School District
Fairbanks, Alaska
POSITION STATEMENT: Presented the funding perspectives from the
Fairbanks North Star Borough School District.
ACTION NARRATIVE
8:01:45 AM
CHAIR ALAN DICK called the House Education Standing Committee
meeting to order at 8:01 a.m. Representatives Dick, Seaton, and
Feige were present at the call to order, and present from the
House Education & Early Development Finance Subcommittee were T.
Wilson, Munoz, Dick, and Seaton. Representatives Kawasaki, P.
Wilson, Pruitt, Cissna, and Peterson arrived as the meeting was
in progress.
^Education Funding from School Districts' Perspectives
Education Funding from School Districts' Perspectives
8:02:24 AM
CHAIR DICK announced that the only order of business would be a
presentation and discussion regarding education funding from
school districts' perspectives.
8:05:04 AM
LUKE FULP, Chief Financial Officer, Kodiak Island School
District (KIBSD), presented an overview of the school district
which includes: approximately 2,500 students, 420 employees, 14
brick and mortar schools, one correspondence program, with
services in nine communities. Six of the largest schools are in
the Kodiak City vicinity, and eight are rural. He proceeded
with the budget assumptions for fiscal year (FY) 13, which have
four focal points regarding revenue and four regarding expense.
He said revenue is expected to reflect the following: student
count reduction of 7; city borough funding reduction, based on
recent notification; flat BSA (base student allowance) remaining
at $5,680 per; and no increase in pupil transportation funding.
He pointed out that transportation is a unique fund, in Kodiak,
and in FY 13 $500,000 will be transferred from the operating
budget to cover this account. The expense side of the budget
indicates the following: no salary schedule increases outside
of the contractually negotiated increments; 7.2 percent
estimated increase to health insurance; utilities including
augmented diesel heat costs; a 5 percent estimated increase to
property/general liability insurance. Outside of these
estimates he said the known factors are that the governor's
budget includes no new increases for K-12 education. The final
HB 273 area cost differential payment will be received for
$476,950, but the 2012, single energy funding payment under HB
108, of $425,298, will represent an offset. The other known is
that salary costs will increase as a result of the salary
schedule increments and existing contractual agreements. The
unknowns include: whether or not the assumptions will hold
true; the outcome of collective bargaining, which begins in the
coming weeks; and the actual level of funding from Kodiak Island
Borough (KIB) and the State of Alaska. He provided a chart of
the revenue versus expense operating budget projected totals for
a comparison of on-behalf and without on-behalf receipts. On-
behalf is the PERS/TRS (Public Employees' Retirement
System/Teachers' Retirement System) relief that districts are
currently receiving.
8:12:43 AM
MR. FULP presented a list of factors that contribute to the
projected deficit, which are: loss of one-time state aid, $452-
298; reduced local funding, $348,500; elimination of ARRA
(American Recovery & Reinvestment Act of 2009) Education Jobs
bill funding, used to continue positions that might have been
cut in FY 12, $346,488; use of fund balance (reserves) last
year, a one-time draw, $891,419; salary increases, $316,979;
health insurance increase of 7.2 percent, $366,928; increase in
transfer to pupil transportation, $305,938; increase in Worker's
Compensation, $57,022; increase for in-kind services (property,
general liability), $38,500; utility services, $82,304; and
other $309,146. Using a pie chart, he indicated percentages of
state, local, federal, and other indirect income shares that
contribute funding to the district; 70.28, 21.70, 4.55, and 3.42
respectively. The indirect funding includes special revenue
funds, facility use fees, and student fees. He continued with
pie charts to illustrate percentage shares of the four largest
expense areas, which are: certified salaries and non-certified
salaries, 32 and 12 respectively; employee benefits, 37; and
utilities, 11. He noted percentages of the remaining expense
areas as: professional/technical services 1/2; travel 1;
supplies 3; transfer to other funds 2; and equipment less than
1; and other expenses less than 1.
8:17:18 AM
MR. FULP referred to the committee handout, page 6, to review
the expense breakout specific to employee benefits. He said
approximately $6 million is for insurance, and over $10 million
for PERS/TRS, out of a total employee benefits cost of $18
million. The expense history was also reviewed using a bar
graph to highlight the progressive cost of benefits and
utilities from FY 09 through the projections for FY 13. It is
important to incorporate the historical aspects of the budget in
order to project future needs, he said. The Anchorage CPI-U
(Consumer Price Index for All Urban Consumers) [as established
by the U.S. Department of Labor] effects the KISD budget, he
said, and directed attention to the charted increase spanning
the years 1976-2009, as well as a chart titled "Selected
Components of Anchorage CPI, 1982-2010. The district bases the
student transportation contract on the Anchorage CPI-U, which
increases each year by .75 percent of the CPI, and the major
contributing factors to the CPI are also the factors that
comprise the district's deficit, as previously discussed. Two
line charts were presented titled "Major Benefits" and "Major
Benefits Without On-Behalf," followed by a bar graph titled
"Historical Utilities Chart" to highlight the steep rises in
these cost areas. He further underscored the increased cost for
heating the buildings with a line graph titled "Heating Fuel
History," spanning the period from FY 03 through the projected
FY 13 budget. The price of heating fuel has risen by 76
percent. The benefits and utilities are being funded by
directing money away from the classrooms, he finished.
8:24:13 AM
REPRESENTATIVE FEIGE asked why KIB is reducing school fund
contributions.
MR. FULP said the school budget is based on the preliminary
projections received from the city, which indicate no increase
to the schools.
REPRESENTATIVE FEIGE inquired whether the district is
considering reduction of insurance costs through risk management
strategies, or other means.
MR. FULP answered that the facilities unit ensures that the
pathways are cleared, sanded, and safe, to minimize slips,
trips, and falls, which represent the largest exposure for
Workmen's Compensation claims. Health insurance cost savings
may be possible via plan design changes; a discussion
anticipated in the up-coming collective bargaining negotiations.
However, he opined, any mitigation will result in minimal
effects, due to the steep rise in premium costs.
REPRESENTATIVE FEIGE pointed out that collective bargaining is
negotiated on a three year cycle, versus the annual cycle of the
budget, and asked how this lack of alignment allows employee
contracts to be entered into when there can be no certainty for
them to be fulfilled.
MR. FULP said that from a finance perspective, the current pay-
as-you-go system does not allow strategic forward planning, even
on a yearly basis. The district is provided no budgetary
certainty from the state or city appropriation methods, which
makes it difficult all the way around.
8:29:02 AM
REPRESENTATIVE CISSNA acknowledged the forward funding problems,
and asked for further clarity regarding the financial impact of
the state contributions.
MR. FULP said the state appropriations comprise 70 percent of
the district's funding. The state assistance for the TRS/PERS
results in a net of zero.
8:31:26 AM
REPRESENTATIVE T. WILSON noted that the district has nine
schools that are below capacity, and asked for capacity numbers
and whether each school has a principal.
MR. FULP responded that each school was designed for
approximately 100 students, and reported that 1.5 administrators
over-see eight schools. One full-time itinerant principal
supports the schools from an office based in the city of Kodiak,
and flies to each village location on a regular basis. Oak
Harbor is the largest village school, and does have a half-time
principal. The district has organized a staffing formula to
ensure that when a school population dips below a certain point,
staff is cut in order to maintain a balanced budget.
8:33:07 AM
REPRESENTATIVE SEATON returned to the PERS/TRS history and the
on-behalf information to point out that if the state had not
capped the costs to the district at 22 percent and assumed the
remainder, KIBSD would be faced with a cost of $10 million.
MR. FULP said the Department of Administration sets the
actuarial rate, and in years prior to 2008 a rate was
established that did not reflect the need appropriately. Thus,
today there is a need to catch-up with the benefit, and the
state is funding the on-behalf difference between the employer
rate and the actuarial rate. Without the state's payment, the
districts would be liable for the entire amount. The on-behalf
funding helps the district keep school programs intact.
8:35:27 AM
LAURA HYLTON, Business Manager, Lake & Peninsula Borough School
District (LPSD), began with a demographic of the 32,000 square
mile area. The district has 13 schools in 14 communities, and a
correspondence program. The communities are small and remote
with school year access limited to air service at 13 of the
locations; one community has year round barge service. She said
that enrollment peaked in 1999, at approximately 550, and has
since continually declined to the current 325 students,
resulting in the closure of two schools. The buildings were
built for a capacity of 75, but some have as few as 10 students,
which keeps the building maintenance costs high throughout the
district. She reported that 10 years ago, LPSD adopted a
standards based system, and the benchmarks attained, in math,
reading and writing, indicate significant improvement. Other
factors that contribute to student success include: individual
education plans (IEPs) as part of the standards based system;
recruitment and retention of quality teachers - in 2010 LPSD
implemented a longevity bonus for teachers; targeted
professional development and research-based curriculum; early
literacy programs distribute age appropriate books to children
from birth-three years of age; literacy coaches providing
classroom instructional support; and certified tutors providing
intensive individual instruction for students. She reviewed the
revenue assumptions, which are: no base student allocation
(BSA) increase; federal impact aid program reduction by 8-10
percent; increase in borough funding due to increase in property
valuation; ISER (Institute of Social and Economic Research)
increase from 1.941 to 1.994; hold harmless payment for Pedro
Bay School closure reduced by 5 percent; reduction in federal
grant funding and other grants ending; and E-Rate subsidies
decreasing from 86 to 81 percent. She moved onto the revenue
sources, listed as: borough appropriation, local revenue, state
foundation formula, one-time energy funding, and federal impact
aid and E-Rate. The anticipated reductions are: $356,704 in
general funds and $873,925 in federal grants, totaling an
anticipated overall FY 13 program shortfall of $844,387. She
directed attention to the committee handout, page 5, and the
document titled "The Lake and Peninsula School District
Expenditures by Function," to point out that energy costs have
skyrocketed. Options are being explored, and hydro power is
used when available, along with the waste heat from the
community boilers, but she opined, it remains difficult to keep
pace with the cost increases. The food service program is also
expensive but has proven to be key to student achievement
levels. The contributing factors to the overall budget
shortfall are: expected reductions in impact aid, no anticipated
increase in the BSA, continued increases in utility and energy
costs, the expected loss of the one-time FY 12 energy funding,
expiring federal grants, and increases in general transportation
and postal expenses for transporting staff and shipping
educational material due to the districts reliance on airplane
service. ': outsourcing the food service; reduce the number of
principals by 1 full-time employee (FTE), from 5 to 4; reduce
the number of teachers by 5.26 FTE, from 48 to 43.74; reduce
reading coach positions by 1.5 FTE, from 2.64 to .5; eliminate
district counselors, 2 FTE; reduce supplies and materials by
$100,000; reduce travel of district itinerant staff; and reduce
professional development travel. Despite reduced usage, the
increasing costs of utilities and energy is burdensome, she
said, and noted that fuel costs have spiked to $8.00 per gallon.
The district continues to work on means for minimizing expenses;
however, rising inflationary costs require cutting classroom
staff and reducing educational programs, which will result in
fewer opportunities for students. Finally, she stressed that
LPSD strives to operate as effectively as possible and absorb
budget reductions in non-instructional areas. With anticipated
reductions necessary for FY 13, the core of the instructional
program will be impacted.
8:46:55 AM
REPRESENTATIVE P. WILSON asked how LPSD applied the federal
American Recovery and Reinvestment Act of 2009 (ARRA) funds.
MS. HYLTON said the ARRA money was focused on one-time expenses,
such as purchase of curriculum, replacement and updates of
technology items, as well as targeted tutoring opportunities and
in 2011-12 it provided part the salary for a counselor.
REPRESENTATIVE P. WILSON noted that the required budget cuts
will have a major effect on the students, and she asked whether
contract negotiations will include discussion of salary freezes
to maintain positions.
MS. HYLTON answered that the principal contract was recently
completed and the teacher contracts will be negotiated in the
spring of 2013. The contracts call for an annual two percent
increase. One saving has been in the area of employee health
insurance benefits, and the January 2012 renewal cost was
maintained at 2011 rates. The coming teacher negotiations will
include health care coverage, and she said the costs may change.
REPRESENTATIVE P. WILSON asked what the incremental step
increase is for teachers.
MS. HYLTON responded that it is 2 percent on the salary scale.
8:51:29 AM
REPRESENTATIVE CISSNA asked if school space can be rented out
when enrollment is low; such as to a clinic. Also, she queried
if the district has resources which could be leveraged to create
revenue.
MS. HYLTON said that schools are not currently renting out
space, as the communities being served are small and cannot
support full-time services; however, itinerant health care
providers are allowed to conduct clinics in the facilities.
Teacher housing is leased on a long-term basis for community
work projects when housing is needed for workers. She described
economic developments that have doubled the borough valuation
between FY 10-11.
REPRESENTATIVE CISSNA inquired about commercial fishing in the
area.
MS. HYLTON replied that the borough does levy fish tax to some
of the communities.
8:57:06 AM
REPRESENTATIVE FEIGE asked where the hydro plant is located.
MS. HYLTON said it is in Iliamna.
REPRESENTATIVE FEIGE referred to the bypass mail movement being
proposed in Congress, and asked what impact it might have on the
district.
MS. HYLTON stressed that the effect would be immense, and
explained how the bypass mail system is utilized, which
includes: all food service operations, school supplies, and
janitorial goods.
8:58:29 AM
REPRESENTATIVE MUNOZ directed attention to the committee handout
titled "Presentation to House Education Committee and House
Finance Subcommittee for Education, February 10, 2012" page 4,
to note the anticipated FY 13 shortfall of $844,387, and asked
if that includes the planned cost savings that are projected.
MS. HYLTON said, yes.
REPRESENTATIVE MUNOZ inquired what the BSA level would need to
be raised to in order to curb the shortfall, and what the
average is for base and mid-career teacher salaries.
MS. HYLTON answered that the BSA would need to be increased by
$320.00 per student per year. Further, the base teacher salary
is $42,000, costing the district about $75,000, and a mid-range
teacher makes up to $60,000, at a district cost of about
$100,000.
REPRESENTATIVE MUNOZ turned to page 5, of the handout, and asked
what the $791,000 for transfers represents, and, also whether
board members are paid.
MS. HYLTON said the transfer amount is money that goes to other
funds, such as food service. Further, she said the school board
members receive a stipend of $100.00 for attending a board
meeting, as well as $90.00 per diem.
9:01:01 AM
REPRESENTATIVE T. WILSON asked her to provide the committee with
the cost for operating each of the district schools. Further,
she reminded the committee that the BSA varies between
districts. She asked what precise benefit the $320.00 would
represent to LPSD.
MS. HYLTON said she would forward the details to the committee.
9:02:29 AM
DAVID ARP, Business Manager, Sitka School District, began with
the demographics of the Sitka area. All of the schools are
located on the island and within the City and Borough of Sitka.
The major industries are commercial fishing, tourism, health
care, education, and government agencies. Access is via the
Alaska State Ferry system or through jet and small airplane
services. The population has remained at a steady 8,800 since
the year 2000, with 1,306 students. The district employs
approximately 200 full-time staff in five school locations, and
supports one home school program based out of one of the
elementary schools. He said that all of the schools are
centrally located, which has managerial advantages. Mr. Arp
addressed the question regarding renting school facilities for
profit, and suggested that because of the municipal dollars
provided to the district, it would seem incongruent to charge
the local citizens a use rental fee. The swimming pool does
have a use fee attached, but the revenues collected are not
enough to cover the heating bill, or other maintenance costs.
The district does pursue revenue opportunities and attention is
currently being brought to the educational tax credit. The
district expects a decline in enrollment of 11 students,
including 3 intensive need individuals, but an increase in the
ISER percentage allowance, from 17.5 to 19 will help offset the
adjusted enrollment. Another decrease is the one-time energy
assistance, provided through HB 108, which boosted the FY 12
budget. He said the district anticipates that the city will
continue funding education at the same level as 2012. Finally,
the largest loss to the district budget is the loss of the
$500,000 from the timber receipts provided under the Secure
Rural Schools and Community Self-Determination Act [of 2000].
The bottom line indicates a total revenue decrease in FY 13 of
approximately $850,000. Directing attention to the committee
handout, titled "Sitka School District FY2013 Preliminary
Operating Budget," page 3, he indicated the pie chart
illustrating the FY 13 revenues and approximated the funding in
percentages as: state 70, local 30, and federal .17. He moved
on to the projected employee costs, which comprise 81 percent of
expenses, and said education is a personnel driven industry.
The teacher contracts will be negotiated next winter. Referring
to Representative Wilson's question regarding elimination of
increment and step increases, he said it is important to
maintain a competitive wage system, but the increases have not
exceeded three percent in the last several years. Reviewing the
employee expense chart, page three of the handout, he indicated
that the benefits cost have been kept in check by partnering
with the city for health care; however, one expensive medevac
flight per year can crush the insurance rate. The classified
staff has undergone a 22 percent increase, which is due to the
intensive need program, he explained, and indicated how the
enrollment count has risen in 10 years from 15 to 37. The total
increase in employee costs is expected to be about $324,000, or
2.2 percent, over the FY 12 budget, and he provided a pie chart
to illustrate the cost distribution in percentages: teachers
50, benefits 27, classified employees 12, administration 9, and
substitutes 2.
9:11:02 AM
MR. ARP reviewed the non-employee expenses, totaling
approximately $3.5 million. Utility costs dominate taking half
of the budgeted funds. Although hydroelectric is the primary
energy source, diesel is once again going to be used to make-up
for the deficit in the burgeoning power needs of the community.
The ARRA Education Jobs funding was used entirely for technology
upgrades and purchases. The board worked with the district to
create a five year technology plan, which then requires
maintenance, as indicated by the two line items in the
projection chart totaling about $500,000. He reported that the
bottom line indicates a drop in non-employee costs of
approximately $42,000, or 1.2 percent. Reviewing the pie chart
illustration, the non-employee percentages are: maintenance 47,
school/program 19, district administration 13, technology 12,
contract 4, activities 3, transfers 1, and school board 1. He
reviewed the final pie chart illustrating total expenditures in
percentages, which are: salaries and benefits 81, maintenance
9, other 4, program 3, and district administration 3. The
school activities program is funded for $600,000, but the budget
contribution is only $100,000, as $500,000 will be deposited
from private fund raising efforts within the community.
Referring to a previous committee question, he said the board
members are volunteers and receive no compensation. In summary,
he said that the bottom line budget figure shows a $1.29 million
deficit. The district maintains a reserve fund, with a current
estimated balance of $1.2 million. To soften the blow of the
expected deficit, a $500,000 draw down is anticipated in FY 13,
which equates to maintaining 14 teaching positions. He
explained that the district's process will be to submit the
projected FY 13 budget to the community and stakeholders for
review, and receive feedback prior to making final cuts.
Turning to the final chart, page 6, he reviewed the differences
in the FY 12 actual, versus the FY 13 projected budgets.
Finally, he recalled Representative Cissna's question regarding
PERS/TRS on behalf funding and said it was used to pay the
unfunded aspect, and indicated that the district assumes payment
to the level of 22 percent.
9:17:29 AM
REPRESENTATIVE CISSNA noted the high cost of utilities in every
community and suggested how it can negatively impact students
when they arrive at school from a home that may not be able to
afford heat or adequate food. She referred to the expenditures
for the upgraded communication technology and asked how it has
helped in uniting the community and expanding learning
opportunities for students. Also, does the telecommunication
network provide a benefit between Sitka and other districts;
possibly lowering travel costs.
MR. ARP described the technological upgrades and the support
costs involved, including Skype capabilities which have proven
especially helpful for interviewing employee candidates.
Additionally, he reported that Google Earth has allowed the
students to walk through Europe, which is a great experience
compared to the traditional canvas map. Finally, he stressed
that nothing replaces face-to-face communication, but using the
technology and reducing travel costs has been helpful.
9:22:10 AM
REPRESENTATIVE P. WILSON inquired whether the property values
have risen, and whether the changes in the mill rate, as
connected to the property taxes, has any influence on the school
budget.
MR. ARP responded that the school foundation formula is affected
by property value increases, and said that the City of Sitka
funds the schools above the required amount, but not to the cap.
The process is negotiated each year with the city, and many
factors influence the outcome including: property evaluations,
sales tax, and revenues. He reported that the city is
experiencing declining revenues, primarily due to a decrease in
the tourism industry.
9:23:57 AM
REPRESENTATIVE PRUITT questioned why the volunteer school board
budget nearly doubled in one year, from $37,000 in 2011 to
$57,000 in 2012.
MR. ARP assured the committee that it is a volunteer school
board; however media costs for promotional materials and hiring
advertisements are also accounted for under this heading.
Additionally, he said that the board members recently received
new computer devices, and noted that all travel costs are paid,
save per diem. He pointed out that the board is budgeted for
$10,000 less in FY 2013.
9:25:26 AM
REPRESENTATIVE T. WILSON asked about the average class size,
estimating it to be between 6 and 14, and acknowledged that
intensive special needs students would skew the number.
MR. ARP estimated it to be about an 11:1 ratio.
REPRESENTATIVE T. WILSON recalled that the budget deficit
represents 14 teacher positions and queried what the ratio would
become if staff is cut and classes reconfigured.
MR. ARP said information would be provided to the committee.
REPRESENTATIVE P. WILSON interjected a reminder to committee
members that Sitka has a high number of intensive needs
students.
9:28:05 AM
MIKE FISHER, Chief Financial Officer, Fairbanks North Star Borough
School District, described the district as follows: encompasses 7,361
square miles, serves a population of 98,660, supporting an enrollment
of 14,300 students with 35 schools. The schools range in size from an
elementary with 88, to a high school of about 1,200 students. The
dropout rate has been on a steady decline for several years,
decreasing from 7.3 percent in 2005, to 3.9 percent in 2011; for
students less than 16 years of age it is .6 percent. The four year
cumulative graduation rate has increased from 54.4 percent, in 2007,
to 71.1 percent for 2011. He said students are encouraged and
supported to complete high school, and as such the five year
cumulative graduation rate for 2011 is 75.5 percent. He continued to
report 2011 percentages, and other statistics that are not directly
attached to a monetary value, which included: 92.8, the average daily
attendance (ADA) for all students; 90.0, the ADA rate for the Class of
2011 graduating seniors; 2.9, the average cumulative GPA for the Class
of 2011 graduating seniors; 80.0, the Class of 2011 seniors who rated
the overall quality of their education at their school as good or very
good; 90.0, parents satisfied with the quality of their elementary
child's education in language arts; 86.0, parents satisfied with the
quality of their elementary child's education in mathematics; 54.0,
teachers who have at least a master's degree; and 25.0, teachers who
have achieved National Board Certification. He reported that district
students have scored at or above the national average in reading,
language, math, science, and social studies on the Terra-Nova national
standardized tests, and have yielded higher average results on the
Scholastic Achievement Test (SAT) and American College Testing (ACT)
exams than students in the remainder of the state and in other parts
of the nation. The successes are attributable to a number of
innovative programs and school choices, which include: Lathrop High
Engineering Academy, Hutchison High Construction Academy, James T.
Hutchison Career Technical High School (partner with UAF), Barnette K-
8 Magnet School, Chinook Montessori Charter School (K-8), Effie
Kokrine Early College Charter School (9-12), Star of the North
Secondary Charter School (7-12, credit recovery), Watershed Charter
School (K-8, place based), Building Educational Success Together
(BEST) correspondence program, and the Students Making a Right Turn
(SMART) program.
9:32:46 AM
MR. FISHER said that success requires financial support from many
sources and the 2012-2013 proposed budget of $216,947,820, includes:
$180,114,020 operating funds; $16,409,850 local, state, and federal
grants; $12,055,660 transportation; $6,025,520 nutrition services; and
$2,342,772 school activity fund raising. The PERS/TRS on behalf
figure was consciously not included in the visual pie chart of the
funding sources, but does represent $35 million. Continued
educational success requires funding to be increased and sustained.
However, the 2012-13 proposed budget is based on the expected flat
funding, which will not allow for the same experiences as have
occurred, and similar success levels may not be realized. The current
operating fund budget is $180.9 million, and to maintain the same
level of services in 2013, the projected need is for $192.4 million;
an increase of $11.5 million. The projected revenue for 2013 is
$180.1 million, leaving a $12.3 projected shortfall based on the
following assumptions: flat local funding, no increase to the BSA,
loss of the one-time state energy funding, flat federal funding,
minimal enrollment increases, and a final adjustment to the DCF
(district cost factor). He accounted for the increase in the
maintenance level budget, as follows: salary, wage, health, and other
benefit cost increases of $4.0 million; inflationary pressures on
energy and utilities, supplies, materials, maintenance, and other
service contracts of $0.8 million; absorbing the cost for 22 jobs bill
teachers at $2.0 million; adding over 23 special education specialists
to meet mandated level of services for $2.3 million; increased subsidy
to the pupil transportation fund of $1.0; purchase of social studies
and career technical curriculum materials for $1.4 million; equaling a
total 2012-13 maintenance level budget increase of $11.5 million. He
pointed out that the care was taken in implementing the jobs bill
funding, in order to not create programs that would be unsustainable.
The 2012 jobs bill indicated that it should be used to sustain
positions that might otherwise be cut, and 22 existing positions were
maintained, essentially deferring cuts for one year. Further, he
elaborated that Fairbanks is a hub for intensive needs students, and
mandated services must be met. A reserve fund will be zeroed out to
offset the student transportation costs. Also, the curriculum is
reviewed and replaced on a six year rotation cycle, but was deferred
from the current year, he explained.
9:42:09 AM
MR. FISHER compared the funding source totals of the 2011-12 and the
projected 2012-13 budgets to arrive at total reduced revenue
projections of $0.8 million, and cost increase totals of $11.5
million, for a bottom-line shortfall of $12.3. He said that the
district does not expect the state or any one funding body to make the
shortfall go away, and program adjustments and cuts will be made to
attain a sustainable level of service. The cuts will impact all areas
including the classrooms, and he stressed, the need for a reasonable
and permanent increase to state funding in order continue the
educational successes gained over the past few years. Continued flat
funding of the BSA or one-time funding from the state will likely
result in larger class sizes, place programs in jeopardy, defer
problems to succeeding years, and do little to help address the $12.3
million shortfall, he opined. Actions necessary to accommodate the
$12.3 million deficit could include the following: eliminate 29
district-wide positions including assistant superintendents,
management, maintenance staff, support staff, teachers, and reading
and math tutors, saving $3.5 million; eliminate 28 elementary school
positions, including a principal and 27 teaching positions and
increase kindergarten class size by one student, grades 1-3 by one and
one half students, and grades 4-6 by two students, saving $6.5
million; eliminate 21.8 middle school and Jr./Sr. high school
positions, including an assistant principal and 20.8 teaching
positions, as well as eliminate middle school team collaboration time
and increase grade 7-8 class size by one and one half students, and
Jr./Sr. high classes by two students, saving $2.2; eliminate 16.2
senior high school positions, including 3 counselors, 3 library
assistants, and 10.2 teaching positions, as well as increase grades 9-
12 class sizes by two students, saving $1.4 million; across the board
non-personnel cuts in most programs and services, including legal and
risk support, recruiting travel, advertising, operation and
maintenance supplies and services, library support, professional
development, instructional technology, school activities and supplies,
and lobbying services, saving $2.1 million. He pointed out that these
proposed cuts may undergo some changes by the citizens review
committee. In closing he said that, "Continued flat funding of the
BSA will impact classrooms, programs, and the educational experience
that we can provide and the results we strive to achieve."
9:49:06 AM
REPRESENTATIVE FEIGE asked whether altering the timing of the annual
student count, now conducted in October, and the timeframe for
applying it to the budget, would have a positive effect on the
planning process.
MR. FISHER responded that it could make a big difference depending on
specific situations and how the mechanism might work.
REPRESENTATIVE FEIGE solicited the district's comments on HB 313.
9:51:27 AM
REPRESENTATIVE CISSNA asked whether the district is increasing or
decreasing technical trade skill training, such as shop class. Also,
she queried whether rural student populations have increased in the
Fairbanks area.
MR. FISHER answered that Hutchison is a district wide high school
dedicated to vocational/technical training and is partnered directly
with UAF; however, every high school has some trade class offerings.
He pointed out that Hutchison is home to the Construction Academy but
offers a spectrum of career pathways.
9:54:34 AM
REPRESENTATIVE P. WILSON noted that a significant number of positions
may need to be cut, and asked what percentage would be teacher staff.
MR. FISHER said that of the 95 proposed position cuts, approximately
60 are teachers.
9:55:54 AM
REPRESENTATIVE FEIGE said that HB 145 is a bill addressing school
choice, and asked what impact it may have on the financing of the
district.
MR. FISHER answered that he has not analyzed the bill, and pointed out
that the district funding is based on enrollment.
9:57:22 AM
REPRESENTATIVE T. WILSON suggested that additional cuts at the
administrative level may need to be considered, and asked for further
information. Finally, she said that the finance sub-committee has
limited power and cannot change formula funded programs such as the
BSA or transportation. However, purview of the sub-committee does
cover program review to determine district benefit and viability.
Mentoring specialists, literacy programs, and other positions may be
funded through grants, or eliminated, based on recommendations from
the district, and she asked for follow-up information.
9:58:27 AM
CHAIR DICK thanked the participants and announced the upcoming
meeting.
ADJOURNMENT
There being no further business before the committees, the joint
meeting of the House Education Standing Committee and the House
Education & Early Development Finance Subcommittee was adjourned
at 9:58 a.m.
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