Legislature(1997 - 1998)

05/11/1998 12:10 PM House FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
txt
                                                                               
             HOUSE FINANCE COMMITTEE                                           
    May 11, 1998                                                               
                          12:10 P.M.                                           
                                                                               
TAPE HFC 98 - 168, Side 1.                                                     
TAPE HFC 98 - 168, Side 2.                                                     
TAPE HFC 98 - 169, Side 1.                                                     
                                                                               
CALL TO ORDER                                                                  
                                                                               
Co-Chair Therriault called the House Finance Committee                         
meeting to order at 12:10 P.M.                                                 
                                                                               
PRESENT                                                                        
                                                                               
Co-Chair Hanley   Representative Kelly                                         
Co-Chair Therriault   Representative Kohring                                   
Representative J. Davies  Representative Martin                                
Representative G. Davis  Representative Moses                                  
Representative Foster  Representative Mulder                                   
Representative Grussendorf                                                     
                                                                               
ALSO PRESENT                                                                   
                                                                               
Representative Scott Ogan; Representative Con Bunde; Larry                     
La Bolle, Staff, Representative Richard Foster; Rick Cross,                    
Deputy Commissioner, Department of Education; Eddy Jeans,                      
Manager, School Finance Section, Education Support                             
Services, Department of Education; Bob Doyle, Executive                        
Director, Business and Operations, Mat-Su School District,                     
Mat-Su.                                                                        
                                                                               
SUMMARY                                                                        
                                                                               
SB 36 An Act relating to transportation of public                              
school students; relating to school construction                               
grants; relating to the public school foundation                               
program and to local aid for education; and                                    
providing for an effective date.                                               
                                                                               
HCS CS SB 36 (FIN) was reported out of Committee                               
with a "do pass" recommendation and with five                                  
fiscal notes by the Department of Education and a                              
zero note by the Department of Labor dated                                     
3/10/98.                                                                       
SENATE BILL NO. 36                                                             
                                                                               
"An Act relating to transportation of public school                            
students; relating to school construction grants;                              
relating to the public school foundation program and                           
to local aid for education; and providing for an                               
effective date."                                                               
                                                                               
Co-Chair Therriault MOVED to ADOPT Amendment #6 which would                    
provide the definition of schools containing an average                        
daily membership break-number of 100 students.                                 
Representative Foster OBJECTED.                                                
                                                                               
LARRY LA BOLLE, STAFF, REPRESENTATIVE RICHARD FOSTER,                          
explained that the computer spread specifying the funding                      
indicates that schools within their district will be                           
negatively impacted.  The final impact is not clear,                           
consequently, Representative Foster will not support the                       
amendment.                                                                     
                                                                               
Co-Chair Therriault reminded Representative Foster that all                    
districts would be preserved at a previous year's funding;                     
he reiterated that no district will see a decline in                           
funding.  Mr. La Bolle replied that it could mean that none                    
of the "additional" funding going into the foundation                          
program would flow to these districts.                                         
                                                                               
Representative J. Davies interjected that the 50 student                       
cut-off would more closely match current distribution of                       
schools.                                                                       
                                                                               
Representative Kohring advised that Amendment #6 will                          
create a problem for the Mat-Su Borough school district.                       
He requested that the Committee modify the definition of                       
"facility".  The alternative site schools in the Mat-Su                        
area should be counted as school sites and should qualify                      
for additional funding.  Amendment #6 would require that                       
the alternative school be merged into the high school and                      
that revenues would be lost for students which represent                       
that school.  He continued, because of overcrowding, there                     
are now additional leased facilities at Big Lake.  He                          
requested that consideration be given to this concern.                         
Also, there is a third school in the Russian Village which                     
would not be counted as part of the facility definition in                     
Amendment #6.                                                                  
                                                                               
Representative Kohring distributed an amendment to                             
Amendment #6.  [Copy on File].                                                 
                                                                               
BOB DOYLE, EXECUTIVE DIRECTOR, BUSINESS AND OPERATIONS,                        
MAT-SU SCHOOL DISTRICT, MAT-SU, spoke to the amended                           
Amendment #6, which would expand the definition of                             
Amendment #6 to include alternative sites.  He explained                       
the "separate facility" situation referenced by                                
Representative Kohring.                                                        
                                                                               
Representative Martin commented that every person in every                     
school district wants the State to pay the bill.  He                           
emphasized that the State no longer has that money.                            
                                                                               
Representative G. Davis suggested that the proposed                            
legislation would simplify the process and that the                            
amendment to Amendment #6 would add further complexity when                    
addressing special needs.                                                      
                                                                               
Representative J. Davies agreed with Representative G.                         
Davis and added that the amended amendment would suggest                       
negative incentives when creating smaller schools.  He                         
pointed out that in a larger community, there would                            
continue to be administrative efficiency of scale.                             
                                                                               
Representative Kohring explained that the Mat-Su School                        
District has a 55% increased population since 1989.  He                        
maintained that the area is in a severe crisis and that the                    
proposed formula will not help, although, noted that SB 11                     
will help by building additional schools.  Representative                      
Kelly commented that Mat-Su is not the only place in the                       
State which has gone through rapid periods growth,                             
suggesting that it is a short-term problem which could be                      
addressed through a bonding package.                                           
                                                                               
Representative Kohring MOVED to ADOPT the amendment to                         
Amendment #6.  Co-Chair Therriault OBJECTED.                                   
                                                                               
A roll call vote was taken on the motion.                                      
                                                                               
IN FAVOR:  Kohring, Moses, Hanley                                              
OPPOSED: Mulder, J. Davies, G. Davis, Grussendorf,                             
Foster, Kelly, Martin, Therriault                                              
                                                                               
The MOTION FAILED (3-8).                                                       
                                                                               
Representative Kohring OBJECTED to passage of Amendment #6.                    
                                                                               
A roll call vote was taken on the motion.                                      
                                                                               
IN FAVOR: G. Davis, Kelly, Martin, Mulder, Hanley,                             
Therriault                                                                     
OPPOSED: J. Davies, Foster, Grussendorf, Kohring,                              
Moses                                                                          
                                                                               
The MOTION PASSED (6-5).                                                       
                                                                               
Representative Grussendorf MOVED to ADOPT Amendment #9.                        
[Copy on File].  He explained that the amendment would                         
address concerns in the North Slope Borough transition in                      
public school funding and the current system of good will.                     
                                                                               
Representative Mulder OBJECTED.  He stated that the                            
amendment would create a third category option for the                         
North Slope Borough.  Legal drafters were concerned that                       
this would create a disparity problem, which must be                           
resolved before passage of the amendment.                                      
                                                                               
Representative Grussendorf explained that the amendment                        
would address the "ability" of the North Slope Borough to                      
arrive at what was deposited into educational funding                          
during the past year.  The North Slope Borough is aware of                     
the problems which could occur with the disparity test.  He                    
acknowledged that this is an unique situation.                                 
                                                                               
Co-Chair Therriault suggested that if a specific problem                       
arises, the Legislature can then address that concern and                      
that until there is an absolute need, the concern should                       
not be brought forward.  Representative Grussendorf                            
recommended referencing the disparity test.  Representative                    
G. Davis commented that it would be an option to use the                       
local effort.                                                                  
                                                                               
EDDY JEANS, MANAGER, SCHOOL FINANCE SECTION, EDUCATION                         
SUPPORT SERVICES, DEPARTMENT OF EDUCATION, spoke to work                       
draft version "J", Page 3, Line #9.  He commented that                         
language indicates that in addition to the local                               
contribution required, the city and borough districts,                         
throughout a fiscal year, may make a contribution of not                       
more than the greater of or the equivalent of:                                 
                                                                               
? A two-mill tax levy on the full and true value.  He                          
understood that language would be inserted into                                
Section #1; or                                                                 
? 23% of that districts basic need for that year,                              
maintaining the State's ability to meet the federal                            
disparity test.                                                                
                                                                               
He added that #1 would allow those districts which have                        
extreme property wealth, to contribute money that allows                       
them to be in the top 5%, excluded from the disparity                          
calculations.  Mr. Jeans pointed out that as Amendment #9                      
is written, it would not affect the disparity test, but                        
instead would allow the North Slope Borough to continue to                     
make contributions, keeping them in the top 5%.                                
                                                                               
Mr. Jeans noted that there are four districts at the 2-mill                    
provision: North Slope, Valdez, Unalaska, and Skagway.                         
                                                                               
Co-Chair Hanley voiced concern on the overall effectiveness                    
of the North Slope Borough's taxing ability.  He believed                      
that the amendment would be establishing a precedent to tax                    
in order to make the local effort.  Representative J.                          
Davies questioned how this amendment would provide                             
authorization for the North Slope Borough to collect any                       
more taxes.  Co-Chair Hanley noted that the amendment                          
states that they "may make a local contribution".  He                          
stated that it should be clear for the record that the                         
amendment will not allow them to exceed other existing                         
caps.  Representative J. Davies emphasized that the                            
language was permission and would not allow them to collect                    
other taxes.                                                                   
                                                                               
RICK CROSS, DEPUTY COMMISSIONER, DEPARTMENT OF EDUCATION,                      
commented that the mechanism is unique and specific to the                     
school foundation funding formula.  The amendment is                           
written simply to determine the excess local effort which a                    
district can contribute.  The amendment would be specific                      
to this law and not to the tax code.                                           
                                                                               
(Tape Change HFC 98- 168, Side 2).                                             
                                                                               
A roll call vote was taken on the motion.                                      
                                                                               
IN FAVOR:  Grussendorf, Moses, J. Davies                                       
OPPOSED: G. Davis, Kelly, Kohring, Martin, Mulder,                             
Therriault, Hanley                                                             
                                                                               
Representative Foster was not present for the vote.                            
                                                                               
The MOTION FAILED (3-7).                                                       
                                                                               
Co-Chair Therriault MOVED to ADOPT Amendment #10.  [Copy on                    
File].  He stated that the amendment would address the                         
modifiers to the floor mechanism.  Should a district fall                      
below 95% of the district's average daily membership (ADM),                    
they would begin to lose at a per capita rate.                                 
                                                                               
Representative Martin believed that the amendment could                        
exasperate the problem of double counting students.  Co-                       
Chair Therriault explained that the proposed mechanism does                    
not deal with freezing them or providing extra money                           
through the formula.  It would apply only to those                             
districts which have an established "floor" and would serve                    
to decrease that amount as those districts loose students.                     
It would not impact the amount of money received through                       
the formula.  The trigger for the erosion of the floor is                      
at a lower threshold than the current statutory figure on                      
the current funding formula.                                                   
                                                                               
Representative J. Davies advised that by adopting the                          
amendment, the bottom line is that when a district looses a                    
student, they will loose more than the ADM amount and that                     
when there is an increase in the student population, the                       
district will gain less.  Representative J. Davies MOVED to                    
ADOPT an amendment to the amendment, changing Line #14 to                      
90%.  Co-Chair Therriault OBJECTED.                                            
                                                                               
Representative J. Davies explained that a floor is meant to                    
be a base line adjustment.  The operation on the ADM should                    
sit on top of that adjustment.  In the past, the floor                         
incorporated such aspects as bilingual and bicultural,                         
which will be removed with passage of the proposed                             
amendment.  It will enter a 20% compromise into the block.                     
                                                                               
A roll call vote was taken on the motion.                                      
                                                                               
IN FAVOR: Foster, Grussendorf, Martin, Moses, J.                               
Davies                                                                         
OPPOSED: Kelly, Kohring, Mulder, G. Davis, Hanley,                             
Therriault                                                                     
                                                                               
The MOTION FAILED (5-6).                                                       
                                                                               
Representative J. Davies MOVED to change Line 10 to 90%.                       
There being NO OBJECTION, it was amended.                                      
                                                                               
Co-Chair Therriault asked if there was OBJECTION to                            
Amendment #10 as amended.  Representative J. Davies                            
maintained his OBJECTION.                                                      
                                                                               
Representative J. Davies clarified how Section (e) would                       
work.  Co-Chair Therriault acknowledged that there would be                    
erosion of the floor and once it was gone, then 100% would                     
occur.  Representative J. Davies inquired the initial                          
purpose of the floor.  Co-Chair Therriault replied that it                     
was to help bridge from one formula to the next.                               
Representative J. Davies believed that it would help to                        
preserve whatever funding level currently exists.                              
                                                                               
Co-Chair Hanley pointed out that as the formula currently                      
exists, there are districts which will loose money; those                      
districts are not loosing money under the proposed                             
amendment and that they will be held harmless.                                 
Representative J. Davies argued that would depend on "where                    
one sits", whether or not a district was to loose or gain.                     
He stressed that the amendment would "compromise the                           
compromise" and that a rural student would only be worth                       
60% of what an urban student is worth.                                         
                                                                               
Co-Chair Hanley interjected that current formula indicates                     
that a rural student is worth 2 to 4 times that which a                        
urban student is worth.  He stressed that this is not                          
equitable.                                                                     
                                                                               
Representative Martin stated that the floor creates a weak                     
situation.  Representative J. Davies stated that Amendment                     
Committee members that it does cost more to run schools in                     
rural Alaska.  To calculate what is equitable should be                        
based on how much "education" is being given per student.                      
Under the new formula, the State will be reducing the                          
amount of dollars that a new student gets in rural Alaska                      
and shifting that benefit to urban Alaska.                                     
                                                                               
Representative J. Davies MOVED to DIVIDE the question                          
between Lines #11 and #12.  Co-Chair Therriault agreed,                        
asking the Committee to vote on Amendment #10(a).                              
                                                                               
A roll call vote was taken on the motion.                                      
                                                                               
IN FAVOR: Kelly, Kohring, Martin, Mulder, G. Davis,                            
Therriault, Hanley                                                             
OPPOSED:  Grussendorf, Moses, J. Davies, Foster                                
                                                                               
The MOTION PASSED (7-4).                                                       
                                                                               
A roll call vote was taken on the motion to adopt Amendment                    
                                                                               
IN FAVOR: Kelly, Kohring, Martin, Mulder, G. Davis,                            
Hanley, Therriault                                                             
OPPOSED:  Moses, J. Davies, Grussendorf, Foster                                
                                                                               
The MOTION PASSED (7-4), Amendment #10 was adopted as                          
amended.                                                                       
                                                                               
Representative J. Davies MOVED to ADOPT Amendment #11.                         
[Copy on File].  Co-Chair Therriault OBJECTED.                                 
                                                                               
Representative J. Davies explained that the amendment would                    
allow the base student allocation to increase by 1% per                        
year.  Co-Chair Therriault pointed out that it would be an                     
automatic cost-of-living allowance (COLA) adjuster.                            
                                                                               
A roll call vote was taken on the motion.                                      
                                                                               
IN FAVOR:  Moses, J. Davies, Grussendorf, Foster                               
OPPOSED: Kohring, Martin, Mulder, G. Davis, Kelly,                             
Therriault, Hanley                                                             
                                                                               
The MOTION FAILED (4-7).                                                       
                                                                               
Representative Kohring MOVED to ADOPT Amendment #12.  [Copy                    
on File].  Co-Chair Therriault OBJECTED.  Representative                       
Kohring explained his concerns regarding State funding for                     
correspondence study.  Co-Chair Therriault noted that in                       
the bill, a flat rate would be used for correspondence                         
across the State.   The proposed amendment would change                        
that by providing a higher rate for the "in" district                          
versus the "out" of district.                                                  
                                                                               
A roll call vote was taken on the motion.                                      
                                                                               
IN FAVOR:  J. Davies, Foster, Kohring                                          
OPPOSED: Martin, Mulder, G. Davis, Grussendorf,                                
Kelly, Hanley, Therriault                                                      
                                                                               
The MOTION FAILED (3-7).                                                       
                                                                               
Representative Kohring MOVED to ADOPT Amendment #13.  [Copy                    
on File].  He stated that the amendment would provide                          
Intent Language to address the shortfalls in funding due to                    
miscalculations in the public school funding formula                           
through supplemental appropriations.                                           
                                                                               
Co-Chair Therriault OBJECTED.  He voiced concern with                          
meeting the unaddressed student enrollment with                                
supplemental appropriations.  He pointed out that the bill                     
does contain language to address the adjustment of student                     
count or incorrect reporting.                                                  
                                                                               
Representative J. Davies pointed out that the proposed                         
language would allow districts which experienced an                            
increased enrollment during the year, to be able to apply                      
for supplemental funding during the year.  He noted that                       
the proposed formula provides for a single count period so                     
as to avoid a teeter-totter effect.  This amendment would                      
lead to confusion.                                                             
                                                                               
Representative Kohring pointed out that the Department of                      
Education should establish criteria regarding when the                         
reports should be remitted by the school districts.  He                        
added that the amendment would help the rapidly growing                        
school districts.                                                              
                                                                               
A roll call vote was taken on the motion to adopt Amendment                    
                                                                               
IN FAVOR: Moses, Mulder, Foster, Kohring                                       
OPPOSED: J. Davies, G. Davis, Grussendorf, Kelly,                              
Martin, Therriault, Hanley                                                     
                                                                               
The MOTION FAILED (4-7).                                                       
                                                                               
(Tape Change HFC 98- 169, Side 1).                                             
                                                                               
Representative Kohring MOVED to ADOPT Amendment #14.  [Copy                    
on File].  He stated that the amendment would authorize                        
funding for temporary overcrowding and emergency                               
assessment.                                                                    
                                                                               
Representative J. Davies asked how costs would be mitigated                    
for overcrowding.  Representative Kohring replied that                         
costs would be associated with renting a portable facility                     
and would be reflective that the initial foundation formula                    
dollars will not be adequate to cover the needs of the Mat-                    
Su Borough.  Representative J. Davies asked if the                             
amendment would provide for supplemental funding over and                      
above the increment given on the per student basis.                            
Representative Kohring acknowledged it would and that it                       
would be used for operations.                                                  
                                                                               
Representative J. Davies explained that there are many                         
other districts loosing under the proposed formula and that                    
the amendment would address only the needs of one specific                     
school district.  Representative J. Davies OBJECTED to                         
Amendment #14.                                                                 
                                                                               
A roll call vote was taken on the motion.                                      
                                                                               
IN FAVOR: Kohring                                                              
OPPOSED: J. Davies, G. Davis, Foster, Grussendorf,                             
Kelly, Martin, Moses, Mulder, Hanley,                                          
Therriault                                                                     
                                                                               
The MOTION FAILED (1-10).                                                      
                                                                               
Representative J. Davies WITHDREW Amendment #15.  [Copy on                     
File].                                                                         
                                                                               
Co-Chair Therriault MOVED to ADOPT Amendment #16, a change                     
to Page 8, Line 10, raising the per student dollar amount                      
to $3940 dollars.  There being NO OBJECTION, it was                            
adopted.                                                                       
                                                                               
Representative Mulder MOVED to report HCS CS SB 36 (FIN)                       
out of Committee with individual recommendations and with                      
the accompanying fiscal notes.  Representative J. Davies                       
OBJECTED.                                                                      
                                                                               
A roll call vote was taken on the motion.                                      
                                                                               
IN FAVOR: G. Davis, Foster, Kelly, Martin, Mulder,                             
Therriault, Hanley                                                             
OPPOSED:  Grussendorf, Kohring, Moses, J. Davies                               
                                                                               
The MOTION PASSED (7-4).                                                       
                                                                               
HCS CS SB 36 (FIN) was reported out of Committee with a "do                    
pass" recommendation and with five fiscal notes by the                         
Department of Education and a zero fiscal note by the                          
Department of Labor dated 3/10/98.                                             
ADJOURNMENT                                                                    
                                                                               
The meeting adjourned at 4:20 P.M.                                             
                                                                               
H.F.C. 10 5/11/98 p.m.                                                         

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