Legislature(2017 - 2018)CAPITOL 106
03/06/2017 08:00 AM House EDUCATION
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| Audio | Topic |
|---|---|
| Start | |
| Presentation: Commonwealth North Operating Budget Report - K-12 Funding | |
| 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
SENATE EDUCATION STANDING COMMITTEE
HOUSE EDUCATION STANDING COMMITTEE
March 6, 2017
8:02 a.m.
MEMBERS PRESENT
SENATE EDUCATION STANDING COMMITTEE
Senator Shelley Hughes, Chair
Senator Gary Stevens
Senator Cathy Giessel
Senator John Coghill
Senator Tom Begich
HOUSE EDUCATION STANDING COMMITTEE
Representative Harriet Drummond, Chair
Representative Justin Parish, Vice Chair
Representative Zach Fansler
Representative Ivy Spohnholz
Representative Jennifer Johnston
Representative David Talerico
MEMBERS ABSENT
SENATE EDUCATION STANDING COMMITTEE
All members present
HOUSE EDUCATION STANDING COMMITTEE
Representative Chuck Kopp
Representative Lora Reinbold (Alternate)
Representative Geran Tarr (Alternate)
COMMITTEE CALENDAR
PRESENTATION: COMMONWEALTH NORTH OPERATING BUDGET REPORT - K-12
FUNDING
- HEARD
PREVIOUS COMMITTEE ACTION
No previous action to record
WITNESS REGISTER
MARK FOSTER, Consultant
Commonwealth North (CWN)
Anchorage, Alaska
POSITION STATEMENT: Presented information on a Fiscal Review of
Alaska K-12 Investments.
ACTION NARRATIVE
8:02:47 AM
CHAIR SHELLEY HUGHES called the joint meeting of the Senate and
House Education Standing Committees to order at 8:02 a.m.
Present at the call to order were Senators Giessel, Begich,
Coghill, Stevens, and Chair Hughes and Representatives Parish,
Fansler, Johnston, Spohnholz, Talerico, and Chair Drummond.
^PRESENTATION: COMMONWEALTH NORTH OPERATING BUDGET REPORT - K-12
FUNDING
PRESENTATION: COMMONWEALTH NORTH OPERATING BUDGET REPORT - K-12
FUNDING
8:03:41 AM
CHAIR HUGHES announced that the only order of business would be
a presentation by Commonwealth North Operating (CW) on the
operating budget report for K-12. She related that CWS has a
long commitment to support sound fiscal policies in Alaska.
Today's report is their latest effort toward that commitment.
She hoped it would be a valuable tool for the legislature to
consider as it looks for ways to deal with the fiscal gap and
the education system.
8:04:51 AM
MARK FOSTER, Consultant, Commonwealth North (CWN), presented
information on a Fiscal Review of Alaska K-12 Investments. He
shared his professional background as the former Chief Financial
Officer of the Anchorage School District and the Executive
Director of the Office of Budget and Management. He continues to
provide consulting services, none of which are related to K-12
finances. He said that he would present CWN's recommendations
regarding school consolidations.
He highlighted two recommendations the CWN fiscal study group
made related to K-12:
Education funding needs to refocus on direct
instruction that yields measureable improvements in
student achievement. State K-12 funding should be
reduced by 1 to 3 percent per year for four years,
during which funding would have to be reallocated from
administrative/operations, other than direct
instruction, to maintain funding for direct
instruction.
Prior to making investments in UA teacher training
programs, teacher training programs both inside and
outside Alaska should be evaluated to identify those
that have produced high quality teachers who have
generated high student achievement results.
8:08:00 AM
CHAIR HUGHES asked about the findings of the report dealing with
overall spending versus spending in the classroom.
MR. FOSTER noted that discussion would be covered shortly.
He continued with a question CWN asked about how to address the
cost and the performance of the formula programs. He stressed
looking at the quality of the programs, not whether their
funding should be increased or decreased.
He turned to two elements critical to understanding CWN's
recommendations, descriptions of the fiscal gap as it relates to
Alaska's future, and consideration of the pension funding
challenges.
8:09:53 AM
MR. FOSTER turned to graphs from Alaska's Future website on the
impact of five permanent fund earnings bills and the status quo
on the deficit, dividends, and fund growth, with and without
including pension fund challenges. The analysis by Alaska's
Future suggests that even with the use of permanent fund
earnings to help support both government and dividends, there
will still be a significant structural deficit. He said, with
that remaining gap in mind, the CWS study group looked across
state functions and concluded that the essential state functions
will need to take modest cuts, while other functions may take
deeper cuts. The rational for reducing K-12 funding by 1 percent
to 3 percent per year for four years came from looking at the
overall budget outlook.
He addressed the fiscal outlook including pension fund
obligations. He reminded the committee about the underfunded
liability related to the pension. He showed a graph that
included Moody's standard pension liability adjustments of
approximately $250 million per year. He addressed the
combination of the structural deficit and the off-book deficit.
8:12:20 AM
CHAIR DRUMMOND referred to page 7 of the presentation and noted
that Moody's Standard Pension Liability Adjustments have been
added.
8:12:48 AM
MR. FOSTER said that was correct.
8:12:57 AM
CHAIR DRUMMOND asked if it takes into consideration the annual
payments the state is making of about $250 million in pension
obligations.
MR. FOSTER opined that there is additional pension liability
that is not part of the pay down that is commonly calculated by
Moody's when trying to assess the capacity of the state. It is
based on actuarial estimates and not on the risk-adjusted
estimates that third parties use.
CHAIR DRUMMOND asked if he is suggesting the state provide an
additional $250 million.
MR. FOSTER clarified that it is another $250 million of
liability and the question is how to account for it. To estimate
the overall liability going forward, he would add it to the
consideration when thinking about the structural benefit.
8:14:12 AM
SENATOR BEGICH asked about CWN's philosophy regarding the 1
percent to 3 percent cut based on whether to use certain
revenues in lieu of other revenues.
MR. FOSTER explained that there was a wide variety of discussion
within CWN's fiscal study group. The combination of interests
led to the compromise number of 1 to 3 percent.
SENATOR BEGICH stated it is a compromise number based on a
philosophical discussion, not an evidence-based number.
MR. FOSTER disagreed. He said there was benchmark evidence on
both sides of the issue.
8:15:38 AM
SENATOR STEVENS asked for an explanation between actuarial
versus risk adjustment.
8:16:04 AM
MR. FOSTER drew attention to Moody's downgrade of state debt
found in an eight-page report from July 2016 where experts made
adjustments to the actuarial analysis to take into account what
they believe is a fair representation of liability including
future cash flow requirements. That number is significantly
different than the actuarial analysis. He offered to write a
summary of that information.
SENATOR STEVENS agreed it would be good to have it in writing.
MR. FOSTER provided an example of the actuarial analysis using
an 8 percent return assumption; Moody believes in a lower return
number.
CHAIR HUGHES requested a short brief on the topic.
8:17:30 AM
MR. FOSTER turned to a report from July 2015 by Augenblick,
Palaich and Associates (APA) consulting group entitled, "Review
of Alaska's School Funding Program." One of their findings was
the regression analysis examining the relationship between
instructional expenditures and district proficiency levels,
which showed a positive relationship between spending and
performance in both reading and math. Contrasted to
instructional expenditure per pupil, the analysis indicated that
there is no significant relationship between total district
expenditure per pupil and district proficiency levels. There is
a positive response on student performance from instructional
investment, but a negative response by investments other than
instruction. This suggests a need to examine the system of
funding to ensure a return, not losing ground.
8:19:32 AM
REPRESENTATIVE PARISH asked if it is a correlative or causal
relationship.
MR. FOSTER understood that the APA Study was correlative.
CHAIR DRUMMOND requested a copy of the study.
8:21:00 AM
REPRESENTATIVE PARISH asked if the study was controlled for any
other factors such as location, rural or urban, or spending on
connectivity.
MR. FOSTER said APA did account for a few demographic factors.
8:21:44 AM
MR. FOSTER related that the Anchorage School District hired
consultants to address the question where to focus financial
investment in education. They did a study on the number of
teachers versus support staff and found that high performing
districts were successful due to having more teachers than
support staff. They found ways to reduce administrative and
support costs in order to employ more teachers. They also found
that many rural districts have more support staff than teachers.
It was suggested that rural districts might have challenges with
teacher recruitment, so they use support staff to backfill empty
positions. The challenge was that this did not yield measurable
performance benefits in proficiency or growth.
8:24:26 AM
SENATOR BEGICH inquired if rural districts are backfilling
because they can't get teachers and the recommendation from CWN
is to reduce the amount of money available to districts, how
that would measurably improve educational outcomes. He asked if
the comparison of Alaska with Wyoming includes rural or
successful districts.
MR. FOSTER said both are compared.
SENATOR BEGICH restated his first question. He questioned the
level and depth of the analysis.
MR. FOSTER replied that rural districts may have invested in
things other than direct instruction. The challenge is to supply
quality instruction and improve compensation packages for
teachers. He noted the same phenomenon occurs in urban
districts; instead of investing in teachers, they invest in
teacher assistants and that doesn't yield benefits. It appears
to be cost effective, but it is not educationally effective.
There is a state fiscal challenge, so it makes sense to reduce
overall levels of financial support, but invest available
resources in trained teachers.
8:27:13 AM
SENATOR BEGICH asked again how a one-to-three percent reduction
is possible when teachers cannot be recruited to urban areas. He
requested evidence for a causal correlation.
MR. FOSTER replied there is no direct evidence that reducing the
budget will help education. He pointed out that a lot of money
has been spent without getting results and there is a need to
construct systems to support measurements of success and
encourage investment in areas that are getting return.
8:28:52 AM
REPRESENTATIVE JOHNSTON asked if he is suggesting that by
lowering the budget, it allows policymakers to create a vision
that provides great teachers to all of Alaska students, with
consideration of virtual education and support staff in the
classrooms to assist great virtual teachers.
MR. FOSTER said that is one model.
8:29:45 AM
REPRESENTATIVE SPOHNHOLZ said she doesn't disagree with the idea
that having more teachers will yield better outcomes, but is
confused about the strategy. Requiring cuts to the budget to
achieve an outcome that does not have a clear connection to
budget cuts is confusing. She asked if they explored any other
proposals, such as requiring a larger percentage of resources
being allocated to the classroom by district.
8:30:41 AM
MR. FOSTER clarified that their focus was on getting more
resources for teachers. The context was that the overall budget
gap appeared to be significant enough that even essential
services probably merited reductions. That is in part due to
benchmarking those essential services against other states and
concluding that even after adjusting for cost, the state is
paying at least as much as other states for education and not
getting a return on that investment.
8:31:28 AM
REPRESENTATIVE SPOHNHOLZ did not disagree with that point, but
asked how cutting the budget, overall, is supposed to inspire
districts to reallocate resources to the classroom.
MR. FOSTER explained that CWN is not arguing that the cuts
realign, but are suggesting that the legislature needs to
consider shifting monies toward direct classroom instruction by
quality teachers as a move toward best practices.
REPRESENTATIVE SPOHNHOLZ understood he is not proposing that
budget cuts would produce this outcome. Instead, the legislature
should focus on re-allocating resources from administration and
support into the classroom.
MR. FOSTER said yes.
CHAIR HUGHES commented that not reducing teachers, but reducing
administration is the bottom line. Overall spending per pupil
does not have great results, but spending for class instruction
does impact results.
8:33:26 AM
REPRESENTATIVE PARISH commented that the evidence does not
suggest results, it suggests correlation.
8:33:55 AM
MR. FOSTER continued with a graph on the support staff ratio per
100 students by school district. The evidence-based resource
model found that six support staff per 100 students was
justified. Only two districts had that suggested ratio, Mt.
Edgecumbe and Mat-Su.
8:35:35 AM
CHAIR HUGHES asked whether support staff includes teacher aides
and instructional aides in the classroom.
MR. FOSTER said yes.
He continued with a graph comparing on Alaska's K-12 investment
and performance levels with other states in FY2014-FY2015. It
showed very little correlation on spending and student
performance at the state level. Recently, Alaska has migrated
from the "middle" of spending and performance toward high
spending/low performance quadrant.
He showed a graph of proficiency versus percent of school age
children in poverty by state in January 2017. Student
performance and percentage of school age children in poverty
continues to be inversely correlated at the state level. Alaska
made modest improvements in student performance, while other
states have made more progress in that areas.
8:38:20 AM
REPRESENTATIVE PARISH referred to the extremely high R-squared
values. He thought anything that can be done to reduce child
poverty would be a good investment. He asked if Mr. Foster
agreed.
MR. FOSTER said yes.
8:39:11 AM
CHAIR DRUMMOND said the number of students in poverty in Alaska
has increased from roughly 10 percent to 13.5 percent, yet
student proficiency has increased slightly during that time.
MR. FOSTER said that was correct.
CHAIR DRUMMOND concluded that Alaska has taken some steps toward
reducing the impacts of childhood poverty.
MR. FOSTER stated that the evidence suggests that education
results have improved despite childhood poverty.
CHAIR DRUMMOND asked what has been done that has contributed to
that improvement.
MR. FOSTER said he has not done that analysis.
8:40:58 AM
REPRESENTATIVE JOHNSTON asked if student poverty is measured by
the free lunch program. She asked when Anchorage opened the
program to all students. She wondered if the poverty rate
decreased when all students were able to take free lunch.
MR. FOSTER reported that CWN's poverty numbers were independent
from the free lunch data. The school district did move to a
school-wide assessment for student free lunch eligibility.
8:42:23 AM
REPRESENTATIVE JOHNSTON asked how CWN measured the poverty rate.
MR. FOSTER explained that they used poverty estimates developed
by the Bureau of Labor and cross-checked those against the
census.
REPRESENTATIVE JOHNSTON said the graph shows that Anchorage
School District is still below the norm.
MR. FOSTER agreed. He said Alaska has only made modest
improvements in student performance and other states have made
significant improvements. Most everyone else is doing better
than Alaska is, so Alaska needs to figure out how to get back on
track and catch up.
8:43:43 AM
CHAIR DRUMMOND recognized the presence of Representative
Fansler.
8:44:24 AM
MR. FOSTER turned to another graph that depicts K-12 investment
levels and performance compared to other states after adjusting
for poverty. Several states made significant progress in student
performance with moderate increases in K-12 investment levels.
Massachusetts student performance continues to outpace the rest
of the states. Alaska and Hawaii are outliers - falling well
below expected performance for their K-12 investment and child
poverty levels. He noted the impact of the nationwide fiscal
downturn. He explained that Alaska and Hawaii have modest
increases in poverty despite spending a lot of resources; other
states show increased performance. Alaska must figure out where
to invest money to get a return.
8:49:18 AM
REPRESENTATIVE PARISH pointed out that this trend looks like it
is just barely significant. He asked how much per pupil spending
is attributable to high health care costs.
8:49:50 AM
MR. FOSTER thought it was a significant amount and much higher
than in other states. Health care costs are more than what you
might expect in Alaska, approximately $3,000 per student.
8:50:29 AM
SENATOR BEGICH used an analogy of energy inefficiency in a
house. It seems as though CWN suggests unplugging the
electricity instead of determining the reasons for the
inefficiency and changing those factors. He inquired how CWN can
suggest budget cuts as a solution to inefficiency, instead of
using and investing resources to do a better job of determining
the cause of it. He noted APA's study said the foundation
formula was doing well except how it served poverty, special
education kids, and Alaska Native kids in rural Alaska. He
questioned the relevance of the comparison between Massachusetts
and Alaska given the vast differences in size and rural
challenges.
8:52:17 AM
MR. FOSTER responded that the comparison was used due to high
performance and poverty challenges in both states. Anchorage and
Boston have similarities, such as heavy allocations of resources
for support for teachers and high health care costs. He
explained their recommendation for cuts as a way to improve
performance being due to the whole challenging fiscal situation
and the need to benchmark spending for staffing to understand
what the appropriate levels are that will result in success. CWN
is suggesting focussing on direct classroom instruction and
teacher preparation.
8:54:41 AM
MR. FOSTER listed CWN's recommendations and strategies to shift
resources toward improved performance at the district level and
state level implementation options and considerations. He spoke
of a level of fatigue districts go through during budget cycles
and he suggested seeking benchmarks of districts finding success
instead of looking at previous year benchmarks.
8:56:21 AM
MR. FOSTER reviewed school facility consolidation incentives. He
did not find evidence that the formula, per se, drove small
schools. The size of schools is driven by the neighborhood and
the geography and the distance for transportation. He did not
see that the school size factor in the top five school districts
drove small schools.
He agreed that school size is a disincentive to school
consolidation. He showed a graph of Average Daily Membership
(ADM) by schools. He did a comparison of two schools using the
foundation formula and ADM and concluded that school
consolidation saves money. From a district perspective, there
are efficiencies in administrative costs from consolidation,
however, there are negatives in terms of finances and politics.
9:00:49 AM
CHAIR DRUMMOND said she is trying to figure out how two small
rural villages, each with 200 students, that are 50 to 60 miles
apart can benefit from consolidation. She thought it might work
in a large district. She recalled presentations about
consolidation of services among districts that have resulted in
savings. She did not see consolidation working in rural
districts.
9:01:44 AM
MR. FOSTER thought it was a consideration for suburban
districts. He cautioned about spare capacity in the Anchorage
School district associated with the military base (JBER).
9:02:58 AM
REPRESENTATIVE PARISH was reminded of a Russian story when there
were plagues and many doctors, so they executed doctors as the
solution - a fundamental problem of correlation and causation.
He shared his experience as support staff and maintained that
cutting support staff is the wrong solution considering Alaska's
high rates of childhood sexual abuse and adverse childhood
experiences. He stressed that cutting support to children is
wrong. He wondered if the study considered adverse childhood
experiences (ACEs).
MR. FOSTER related that he has studied that issue at the
Anchorage-municipal level, but not at the state level. He agreed
that there are high rates of ACEs and that urban districts
nationwide have significant challenges. He offered that the
investments focused in this area have not been very effective.
9:06:04 AM
REPRESENTATIVE JOHNSTON referred to the graph comparing student
performance and investment levels in states, after adjusting for
poverty. She asked which rural western states have made greater
improvements in student performance.
9:07:15 AM
MR. FOSTER thought Minnesota was a better example than Montana
due to its diverse population.
REPRESENTATIVE JOHNSTON asked if any states with large
reservations have shown marked improvement.
9:07:58 AM
MR. FOSTER said he did not look at that detail.
9:08:17 AM
MR. FOSTER said that concludes his presentation and he thanked
the committee for hearing about the CWN Fiscal Study. He
suggested that Alaska focus investments going forward.
9:08:57 AM
CHAIR HUGHES said it was depressing to look at those graphs. She
maintained that Alaska needs to improve. She asked what
recommendations Alaska should consider to help change what we're
seeing.
9:09:54 AM
MR. FOSTER responded that the study group did not come to
consensus on the initiatives. He suggested to reduce
administrative overhead and focus resources on the classroom. It
can be done through intent language and fiscal adjustments. He
opined that, long term, the formula warrants a fresh look in
order to focus on teachers; attracting, retaining, and training
the teacher pool.
9:11:25 AM
REPRESENTATIVE PARISH appreciated the suggestion to improve
benefits for teachers and address child poverty, the strongest
predictor of childhood outcomes. He asked if the legislature
should focus on reducing childhood poverty and mitigating its
effects.
9:12:25 AM
MR. FOSTER said yes. Some efforts to improve poverty are
successful, and some are not. He suggested to be mindful of
where to make investments.
9:12:58 AM
REPRESENTATIVE PARISH asked for a report on the correlation
between high health costs and childhood traumas and lower
performance, and the need for more support staff.
9:13:29 AM
CHAIR DRUMMOND recalled that last year the legislature removed
the 70/30 split between required expenditures in the classroom
and all other school district expenditures due to rural schools
having difficulty paying heating bills. She asked whether the
CWN study took unavoidable operational costs into consideration
when recommending reducing administrative expenditures.
9:14:18 AM
MR. FOSTER replied they did look at the cost of heating,
electricity, housing, etc. in 2008. It appears that the cost of
housing in Anchorage has risen faster than in rural areas. He
said they need to redo data and list Mat-Su as the most
expensive place to live. They didn't have sufficient data to
include it in the report.
9:15:54 AM
CHAIR DRUMMOND said she is talking about the cost of running a
school building in rural Alaska and housing teachers in rural
districts. Urban housing costs have no relevance to this
question. She restated her question.
MR. FOSTER said they did not look at the 70/30 split.
9:16:58 AM
REPRESENTATIVE SPOHNHOLZ referred to Mr. Parish's earlier
question and asked what the CWN study considered as classroom
spending and if it was teachers only.
MR. FOSTER replied teachers; highly qualified professionals with
direct classroom time with students for most of their day.
REPRESENTATIVE SPOHNHOLZ noted there are a lot of support staff
in the classroom, such as paraprofessionals. She said her
daughter is an appreciated teacher assistant in a kindergarten
class. She provided another example of special education classes
where teachers have much-needed support staff.
MR. FOSTER referenced a PICA Report done in Anchorage that
reviewed the evidence whether an investment in support staff
made a difference and found that it had minimal effect on
yielding better test results. There is merit in looking at that
resource and investing in more teachers, not support staff,
especially in the lower grades.
9:20:24 AM
SENATOR BEGICH asked if energy and maintenance costs are
included in non-instructional data in the study.
MR. FOSTER said he did not know if APA included those costs. He
said he has only looked at staffing and not at energy and
maintenance costs.
SENATOR GIESSEL thanked Mr. Foster for his work on the CWN
Fiscal Study Group. She alluded to child poverty and adverse
childhood events and maintained that schools have become social
service providing entities. She thought there were creative
solutions to that problem, such as schools contracting with
private entities to provide mental health counseling. She
appreciated the emphasis of poverty's effect on the outcomes of
education. In Mat-Su one of the predictors of success in schools
is whether there is a job in the home.
9:23:44 AM
REPRESENTATIVE SPOHNHOLZ questioned the re-allocation of support
staff to lower grades. She asked how that would affect the
student/teacher ratios.
9:24:33 AM
MR. FOSTER said the comparison of teacher salary and benefits
versus support staff salary benefits would equal about 1.6
support staff to one teacher.
9:25:06 AM
SENATOR BEGICH referenced energy costs per district and read
some of those costs. He pointed out that many smaller districts
have energy costs that exceed numbers in the larger districts.
Finding out if those costs are included would make a big
difference in the outcomes of the study.
9:26:17 AM
CHAIR HUGHES asked Mr. Foster to find that information.
MR. FOSTER said he would try.
9:26:42 AM
REPRESENTATIVE FANSLER requested information about the cost of
broadband/internet access to districts.
9:27:29 AM
CHAIR HUGHES thanked Mr. Foster. She referred to Alaska's
academic achievement results and said it is hard to accept that
Alaska is not doing a great job. Factors such as poverty, the
home environment, and parents having a job can affect a child's
educational chances of success. The Education Committees can't
change what is going on in homes, however, they can create
policy to ensure access to great teachers, which can overcome
some of the poverty implications. She opined that the committee
can make sure students have access to great teachers and better
achievement. She encouraged everyone to think about opening
access to better teachers and be willing to shake things up.
Alaska is unique, but it is not alone with these challenges.
Other states have had better academic improvement. She concluded
that she believes that every student matters and can succeed if
given the opportunity. The committees must work together for
better student achievement.
9:31:40 AM
There being no further business to come before the committee,
Chair Hughes adjourned the Joint Education Standing Committees
at 9:31 a.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| Fiscal Review of AK K12 Investment Performance.pptx |
HEDC 3/6/2017 8:00:00 AM |