Legislature(2019 - 2020)ADAMS ROOM 519
03/05/2019 01:30 PM House FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| Presentation - Education Funding: Local Entity Perspective | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE FINANCE COMMITTEE
March 5, 2019
1:37 p.m.
1:37:53 PM
CALL TO ORDER
Co-Chair Foster called the House Finance Committee meeting
to order at 1:37 p.m.
MEMBERS PRESENT
Representative Neal Foster, Co-Chair
Representative Tammie Wilson, Co-Chair
Representative Jennifer Johnston, Vice-Chair
Representative Dan Ortiz, Vice-Chair
Representative Ben Carpenter
Representative Andy Josephson
Representative Gary Knopp
Representative Bart LeBon
Representative Kelly Merrick
Representative Colleen Sullivan-Leonard
Representative Cathy Tilton
MEMBERS ABSENT
None
ALSO PRESENT
Rorie Watt, Manager, City of Juneau; Dr. Dena Bishop,
Superintendent, Anchorage School District; Dr. Monica
Goyette, Superintendent, Matanuska-Susitna Borough School
District; Dr. Annmarie O'Brien, Superintendent, North West
Arctic Borough School District.
PRESENT VIA TELECONFERENCE
Brandi Harbough, Finance Director, Kenai Peninsula Borough;
Dave Jones, Assistant Superintendent, Kenai Peninsula
Borough School District; Fadil Limani, Deputy Finance
Director, North Slope Borough; Stewart McDonald,
Superintendent, North Slope Borough School District.
SUMMARY
^PRESENTATION - EDUCATION FUNDING: LOCAL ENTITY PERSPECTIVE
Co-Chair Foster reminded the audience to silence cell
phones. He noted that invited testifiers from local
entities would speak on perspectives on education funding.
He added that the meeting was a snapshot of what each
borough, municipality, and school district would be
considering when putting together a budget.
1:39:18 PM
BRANDI HARBOUGH, FINANCE DIRECTOR, KENAI PENINSULA BOROUGH
(via teleconference), stated that the borough had a working
relationship with the Kenai Peninsula School District
(KPBSD).
Ms. Harbough discussed the presentation "The Relationship
Between State Foundation Funding and Borough Local
Contributions," (copy on file).
1:39:54 PM
Ms. Harbough turned to slide 2:
? Minimum Contribution calculation AS 14.17.410 (b)
(2)
Maximum "Funding to the Cap" calculation AS
14.17.410 (c)
? 3 scenarios:
No change to calculations
AS 14.17.400 Basic Need reduced pro rata
HB 59 - Removing oil and gas property levy for
municipalities
1:40:23 PM
DAVE JONES, ASSISTANT SUPERINTENDENT, KENAI PENINSULA
BOROUGH SCHOOL DISTRICT (via teleconference), introduced
himself.
Mr. Jones discussed slide 3:
Required Local Contribution
AS 14.17.410 (b) (2) the required local contribution
of a city or borough school district is the equivalent
of a 2.65 mill tax levy on the full and true value of
the taxable real and personal property in the district
as of January 1 of the second preceding fiscal year,
as determined by the Department of Commerce,
Community, and Economic Development under AS 14.17.510
and AS 29.45.110, not to exceed 45 percent of a
district's basic need for the preceding fiscal year as
determined under (1) of this subsection.
Mr. Jones elaborated that local contributions were
comprised of required and allowable contribution formulas.
He thought that in most cases that KPBSD would receive the
2.6 mils times the full tax value.
1:42:01 PM
Mr. Jones reviewed slide 4:
Allowable Contribution
AS 14.17.410 (c) In addition to the local contribution
required under (b)(2) of this section, a city or
borough school district in a fiscal year may make a
local contribution of not more than the greater of
(1) the equivalent of a two mill tax levy on the
full and true value of the taxable real and
personal property in the district as of January 1
of the second preceding fiscal year, as
determined by the Department of Commerce,
Community, and Economic Development under AS
14.17.510 and AS 29.45.110; or
(2) 23 percent of the total of the district's
basic need for the fiscal year under (b)(1) of
this section and any additional funding
distributed to the district in a fiscal year
according to (b) of this section.
Mr. Jones summarized that the maximum local contribution
was the sum of the required contribution and the additional
allowable contribution.
1:43:10 PM
Ms. Harbough showed slide 5:
Required Local Contribution - no change
2017 Full Tax Value of Real, Personal & Oil
Property x 2.65 mills =10,374,523,920 x 0.00265 =
$27,492,488
Not to exceed 45% of the School District's
previous years basic need
1:43:49 PM
Ms. Harbough reviewed slide 6:
Maximum Allowable Contribution ("the Cap") no change
23% of School District's Current year Basic need
+ quality schools + one time funding =
23% x $108,889,577 = $25,044,603
Basic Need 106,502,207
One-time funding 2,100,012
Quality Schools 287,358
= 108,889,577
1:44:25 PM
Ms. Harbough discussed slide 7, "Total Allowable Required
and Maximum Contribution with no Changes to funding
formula":
Required Local contribution
$27,492,488
Additional Allowable amount
$25,044,603
Total KPB can contribute to KPBSD in FY2020
$52,537,091
Mr. Jones remarked that the example was assuming no
legislative changes. He noted that there were additional
reference materials showing three funding examples entitled
"KPBSD Available Revenue Examples FY20 - 3/4/19" (copy on
file). The first example outlined the outcome after the
governor's proposed reductions. He thought the proposed
cuts had caused controversy.
1:45:55 PM
Mr. Jones displayed slide 8, "State Aid for Districts":
AS 14.17.400
(a) The state aid for which a school district is
eligible in a fiscal year is equal to the amount for
which a district qualifies under AS 14.17.410.
(b) If the amount appropriated to the public education
fund for purposes of this chapter is insufficient to
meet the amounts authorized under (a) of this section
for a fiscal year, the department shall reduce pro
rata each district's basic need by the necessary
percentage as determined by the department. If the
basic need of each district is reduced under this
subsection, the department shall also reduce state
funding for centralized correspondence study and the
state boarding school by the same percentage.
Mr. Jones discussed foundation formula funding and opined
that statute dictated that if foundation funding was under-
funded, the basic need would be reduced on a pro rata
basis. He stated that the Department of Education and Early
Development (DEED) had communicated that basic need would
decrease and the effective Base Student Allocation (BSA)
value would be $4,880.
1:46:50 PM
Mr. Jones referenced slide 9:
Required Local Contribution
With Basic Need reduced pro rata per AS 14.17.400
2017 Full Tax Value of Real, Personal and Oil Property
x 2.65 mills =
10,374,523,920 x 0.00265 = $27,492,488
Not to exceed 45% of the School District's previous
years basic need
1:47:15 PM
Mr. Jones spoke to slide 10:
Maximum Allowable Contribution ("the Cap")
With Basic Need reduced pro rata per AS 14.17.400
23% of School District's Current year Basic need + QS
or
full value x 2 mills which ever is greater =
10,374,523,920 x 2 mills = $20,749,048
1:47:42 PM
Mr. Jones spoke to slide 11:
Total Allowable Required and Maximum Contribution
With Basic Need reduced pro rata per AS 14.17.400
Required Local contribution
$27,492,488
Additional Allowable amount
$20,749,048
Total KPB can contribute to KPBSD in FY2020
$48,241,536
Mr. Jones noted that the school district was concerned that
there would be cuts from the borough on top of the proposed
cuts.
1:48:40 PM
Ms. Harbough referenced slide 12:
Required Local Contribution with HB 59 - Removing
Oil and Gas Property levy for municipalities
2017 Full Tax Value of Real and Personal Property x
2.65 mills =
8,855,917,600 x 0.00265 = $23,468,182
Not to exceed 45% of the School District's previous
years basic need
1:49:25 PM
Ms. Harbough addressed slide 13:
Maximum Allowable Contribution ("the Cap") with HB
59 - Removing Oil and Gas Property levy for
municipalities
23% of School District's Current year Basic need +
quality schools =
23% x $87,931,670 = $20,224,284
Reduced Basic Need pro-rated + QS = $87,931,670
Full value of 8,855,917,600 x 2 mills = 17,711,835,
less than 23% of basic need
1:49:54 PM
Ms. Harbough summarized slide 14:
Total Allowable Required and Maximum Contribution with
HB 59 - Removing Oil and Gas Property levy for
municipalities
Required Local contribution
$23,468,182
Additional Allowable amount
$20,224,284
Total KPB can contribute to KPBSD in FY2020
$43,692,466
1:50:17 PM
Ms. Harbough spoke to slide 15, which showed a table that
addressed a summary of the three scenarios being discussed.
No change to statute would allow for the borough to
contribute up to $52 million. The reduction based on AS
14.17.400 reduced the allowable contribution to $48
million, and the removal of oil and gas property taxes
would take the maximum contribution to $43 million.
1:50:56 PM
Mr. Jones discussed slide 16, which showed a table
depicting the maximum allowable funding the district could
receive from the state and borough in various scenarios.
1:52:25 PM
Vice-Chair Ortiz asked if the Kenai borough had been
funding to the cap up until the current year.
Mr. Jones stated that historically the borough had funded
at or near the cap. The previous year the funding had been
just under the cap, and the current year funding was under
about $2.1 million for FY 19. If there were no changes; the
difference between current borough funding and the funding
cap for FY 20 would be an additional funding allowance of
$2,798,000.
1:53:26 PM
Vice-Chair Ortiz asked how much local contribution would be
reduced if the governor's proposals of reduction of 23
percent of BSA and change in property tax was passed.
Mr. Jones specified that the funding cap would go down to
$43,692,466 if the governors proposed budget went into
effect. He referenced the revenue documents he had
described earlier, which provided examples of the funding
scenarios.
1:54:43 PM
RORIE WATT, MANAGER, CITY OF JUNEAU, discussed the
presentation, "Juneau School Funding" (copy on file). He
relayed that the city provided funding for the Juneau
School District. He qualified that the City of Juneau (CBJ)
faced the same issues faced by Kenai. He directed attention
to a memo dated November 3, 2018 that discussed the
timeline of school funding decisions (copy on file). He
thought the memo could illustrate the challenges faced by
districts in making timed decisions. He contended that it
was difficult to hire and retain teachers and provide
education programming given that districts were not in
control of the budget. He discussed the challenges of the
funding timeline, and thought it was difficult for school
districts to provide stable and predictable education.
Mr. Watt continued his remarks, and noted that CBJ had
historically funded to or very near the cap, and wanted to
fund to the cap. If the governor's proposed reduction in
funding was adopted by the legislature, the CBJ local
contribution would be reduced by about 16 percent. He noted
that even though the city funded to the cap, the district
had not been able to offer the educational programs it
would like to.
Mr. Watt asserted that the state and the city had a
partnership, and that it was important to remember the
reason for funding education. He referenced the State
Constitution. He emphasized that the cities and school
districts were waiting on the legislature's action. He
thought the partnership had been in place for 40 or more
years.
1:57:57 PM
Mr. Watt turned to slide 2, "Impact of Proposed Budget
Cuts":
Operational Impact:
?Loss of $10.2M to CBJ/JSD based on Formula
?Additional Loss of $3M to JSD from CBJ
Total 16% Funding Loss
School Debt Impact:
?Loss of $7.1M to CBJ for School Debt
CBJ Property Owner Impact:
?Assume School Funding is held to FY19 Equivalent of
33% Property Tax Increase
Mr. Watt highlighted tax information and noted that the
city gave 60 percent of property taxes to the school
district. He estimated that for a person with a median home
(with an assessed value of $325,000) there could be a
property tax increase of about $1,100 or $1,200. He
mentioned federal equity standards.
Mr. Watt briefly discussed school debt. He asserted that if
the legislature did not fund school debt, it would affect
the city's ability to fund all programs.
1:59:39 PM
Mr. Watt looked at slide 3, "Past Project Funding," which
showed a bar graph entitled 'School Funding: Construction,
Renovation, Technology.' The graph showed long term funding
of education projects. He emphasized that CBJ was trying to
build for the future. He noted the CBJ had school debt that
was decreasing. He thought other boroughs had higher debt.
1:59:57 PM
Mr. Watt displayed slide 4, "CBJ School Project Debt,"
which showed a bar graph entitled 'School Bond Payments for
Facilities.' He commented that Juneau was lucky compared to
other boroughs, which had greater debt that would last
longer. He referenced Governor Walker's one-time veto of 25
percent of the state funding portion from FY 17, which had
been unanticipated.
2:00:56 PM
Mr. Watt reviewed slide 5, "Summary of Deferred
Maintenance":
?JSD has ~980,000 SF of facilities
?JSD will have ~$67 million in deferred maintenance by
FY2020
?Funding of 2-3% of replacement value per year is an
industry standard used to budget for facility renewal
& replacement projects. 2% = $6 million; 3% = $9
million
?Excluding new construction CBJ has provided ~$1.3
million per year(~$4.4 million including state share)
to upgrade school facilities since 1990
Mr. Watt commented that facility costs were significant in
Juneau, and the district had nearly 1 million square feet
of facilities and a deferred maintenance backlog. He
thought any facility manager should be looking at 2 percent
to 3 percent of the replacement value of the facilities
just to stay even. He advised the assembly that it should
keep the city's facilities in good working order to avoid
passing on deferred maintenance to the next generation.
2:01:40 PM
Representative Josephson envied those that had served in
local government before the legislature. He asked about
increasing the cap for CBJ.
Mr. Watt explained that CBJ had a locally imposed property
tax cap of about 12 mils. With regard to school funding,
the city was bound by Alaska Statute, and was limited in
the amount it could provide as a maximum local
contribution. If the foundation formula was reduced, the
city would also be reduced in its ability to fund
education.
2:03:25 PM
Vice-Chair Ortiz referred to Mr. Watts comment on timing
issues in education funding. He asked when the school board
in Juneau presented the budget to the city.
Mr. Watt relayed that the school board must submit a budget
to the assembly by April 5 each spring. He continued that
through the charter, he must submit the municipal budget to
the assembly by April 1 and the budget must be complete by
June 15. He continued that the budget had a compressed
timeline which was also made difficult by the legislative
calendar.
2:04:34 PM
FADIL LIMANI, DEPUTY FINANCE DIRECTOR, NORTH SLOPE BOROUGH
(via teleconference), discussed the presentation "North
Slope Borough and North Slope Borough School District,"
(copy on file).
2:05:21 PM
Mr. Limani addressed slide 2, "NSBSD Mission":
Learning in our schools is rooted in the values,
history and language of the I?upiat. Students develop
the academic and cultural skills and knowledge to be:
?Critical and creative thinkers able to adapt in a
changing environment and world;
?Active, responsible, contributing members of their
communities; and
?Confident, healthy young adults, able to envision,
plan and take control of their destiny.
Mr. Limani wanted to explain the baseline education funding
formula in addition to impacts of the proposed reductions.
He thought the City of Kenai had done a good job explaining
the statutory provisions of the education funding formula.
He wanted to discuss the basic need calculation.
2:06:15 PM
Mr. Limani turned to slide 3, "NSBSD Foundation Formula,"
which showed data tables that showed all the schools in the
borough and the factors that provided for the BSA. He
referenced the document "NSBSD Foundation Formula
Spreadsheet" (copy on file). He pointed out that the basic
need for FY 20 was $36,482,540.28. The left side of the
document showed a calculation for the borough's minimum
required local contribution, which was 45 percent of the
prior year's basic need, which equated to $15,590,658. He
discussed amounts for the state's maximum allowed local
contribution; as well as the borough's appropriation, in-
kind, and supplemental funding amounts.
2:07:54 PM
Mr. Limani showed slide 4, "North Slope Borough Funding,"
which showed a table illustrating the district's baseline
budget support from the borough. He pointed out that FY 15
although FY 19 had relatively stable funding of around 9
percent. In 2019, as a result of a population reduction of
the oil patch (which impacted the operating tax cap
formula) there had been a reduction in the baseline
contribution. He pointed out the mill rates and percent of
overall budget for education. He qualified that the graph
did not include mill rate associated with debt service for
school bonds. The borough had the flexibility to move up to
20 mills if need be.
2:09:28 PM
Mr. Limani spoke to slide 5, "FY20 Legislative Impacts":
?House Bill 59-Repealing the levy of tax by
municipality on oil and gas exploration, production,
and pipeline transportation property.
?95-97% of NSB Tax Base is Oil and Gas Infrastructure
?NSB Pledges Ad valorem taxes on property within the
Borough to pay for principal and interest on bonds
Current outstanding debt (P+I) $251,431,154
Services Provided by the Borough on the State's
behalf
? Education, Public Safety, Fire, Search and
Rescue, Health, Permitting. Roads and etc.
Approx. $175 million annually in operating
funds.
**Does not include capital infrastructure
Mr. Limani commented that eliminating the ability to tax
the oil and gas infrastructure would have a drastic
material impact to the financial being of the borough. He
discussed outstanding debt in bonds.
2:11:12 PM
Mr. Limani displayed slide 6, "FY20 Legislative Impacts":
?If House Bill 59 went into effect, the Borough's
budget will be significantly impacted as projected
below:
Projected Revenues Property Tax Local $14,392,000
Federal Grants $1,275,787
State Grants $2,243,989
Charges for Services $9,359,008
Investment Income $2,500,000
Other Revenue $8,490,000
Total $38,260,784
he minimum required Borough Contribution $15,375,626
2:12:14 PM
Mr. Limani referenced slide 7, "FY20 Legislative Impacts
Continued":
?Governor's proposal surrounding the reduction in
Baseline Student Allocation
Reduction of $4,511,923 or 6.2%
?North Slope Borough reduction in local contribution
? Reduction of $3,537,563 or 10%
? Decrease is mainly due to operating budget
reduction as a result of population decline in
the oil patch.
Mr. Limani reiterated that the borough had reduced its
overall budget in all departments.
2:13:04 PM
Mr. Limani looked at slide 8, "FY20 Legislative Impacts
Continued":
? Senate Bill 64/HB 66-Repealing state aid for costs
of school construction debt
Currently DEED reimburses the Borough on one
project.
? Project Cost $1 million for Design work
Meade River School. 2014B Bonds
Eligible School Projects Subject to
reimbursement prior to 5yr suspension
? Project Cost $65,979,000
? No reimbursement by DEED
School Project and related Bonds since
suspension of DEED reimbursement
? $65,530,000
? Total cost to the NSB $131,509,000
Co-Chair Foster asked about school bond debt reimbursement.
He understood that the borough used payment in lieu of
taxes (PILT) funds for the local share. He asked Mr. Limani
to discuss the PILT funds and the dictates of PILT
agreements.
Mr. Limani referenced slide 6 and stated that the borough
had initially conducted a sales tax use study, and found
what the impacts would be if a sales use tax was imposed.
Initially it was found that the amount would be around $17
million. The borough entered into a five-year agreement
with operators that specified that the initial installment
would be $17.5 million with an annual escalation of 3.1
percent. The PILT agreement was in its last year of effect
and the borough would revisit the subject and meet with
industry to get the agreement revised.
2:16:39 PM
Co-Chair Wilson had asked her school district to send all
its unfunded mandates, and she had been surprised at the
list. She asked about the impact of unfunded mandates on
the budget.
Co-Chair Wilson noted that the Fairbanks North Star School
District, which had sent her a list of unfunded mandates.
She asked about unfunded mandate costs to the North Slope
Borough School District.
STEWART MCDONALD, SUPERINTENDENT, NORTH SLOPE BOROUGH
SCHOOL DISTRICT (via teleconference), addressed Co-Chair
Wilson's question. He stated that the list of items
Representative Wilson had received also applied to the rest
of the state. He relayed that the total budget for NSBSD
was $72 million, but there were higher costs because of the
large area over which his school district was spread. In
order to provide for the unfunded mandates, the district
had a "stripped-down" program. He stated that the proposed
cuts would result in a 40 percent reduction in the overall
operating program. He estimated that the cut was the same
amount as the entire teaching staff. He restated that there
was an additional cost because of his district being spread
out, as well as additional logistical challenges.
Co-Chair Wilson knew there was a cost to all school
districts. She thought it would be possible for larger ones
to combine during in-services. She noted that mandates
might have a more excessive effect on smaller schools.
2:20:48 PM
DR. DENA BISHOP, SUPERINTENDENT, ANCHORAGE SCHOOL DISTRICT,
discussed the presentation "Budget Conversation - March 5,
2019," (copy on file). She thanked the committee for
forward-funding education for the school year and into FY
20. She stated that she had a budget treatise to share with
members (copy not on file). She relayed that the first day
of March was the deadline for providing a budget to the
borough.
Dr. Bishop reviewed slide 2, "Budget Development Timeline,"
which showed a timeline. She recalled that in November DEED
required enrollment information to predict for the
subsequent fiscal year. There was a pro forma budget policy
was presented to the school board, which was an
understanding of what was known of funding assumptions and
costs. She highlighted months on the timeline that
included budget development and budget approval. She
thought the timelines were important in considering bond
debt and assessment of property taxes.
Dr. Bishop continued to speak to slide 2. She stated that
2.65 went into basic need. On the capital side, the
Anchorage School District (ASD) had continued to articulate
bond needs for major maintenance. Bonds had been passed in
the amount equal to bonds that were being retired. She
continued that the previous governor had reduced bond debt
reimbursement by 25 percent, and the $8 million shortfall
had come from the Anchorage School District (ASD), as the
city had already sent out its tax assessment. The city
operated on a calendar year and ASD was on a fiscal year
beginning July 1.
2:25:14 PM
Dr. Bishop looked at slide 3, " FY20 Budget Assumptions":
? Revenue is based on:
? Current law (BSA at $5,930 and HB287)
? Enrollment projections for FY20 (ASD enrollment
is declining)
? Expenditures are based on inflationary cost drivers:
? Salaries & benefits (including medical
insurance)
? Utility costs
? Contract services
? Lease/rent, etc.
Dr. Bishop detailed that over the previous ten years the
ASD share of medical insurance rose from 9 percent to 17
percent of the entire budget.
Dr. Bishop showed slide 4, "FY 20 General Fund Revenue,"
which showed a data table. She summarized that ASD's
general revenue was comprised of 39 percent city fund, 58
percent state funds, and 3 percent federal funds.
Dr. Bishop referenced slide 5, "What are the revenue
reductions for ASD from the State's initial proposed
budget?":
? 25.81% ($86,084,716) in total state funding
? Formula 24.02% ($77,684,716)
? HB287 ($8.4 million in state funds)
? 9.26% ($19,799,484) associated local reduction
? Base Student Allocation formula drives the revenue
to school districts
Dr. Bishop qualified that the slide considered the revenue
reductions for the Anchorage School District (ASD) from the
governor's proposed budget.
Dr. Bishop turned to slide 6, "State Foundation Formula FY
20," which showed a diagram outlining the steps for
calculation of the funding. She noted that the diagram had
been constructed by the Chief Financial Officer in the Mat-
Su Borough. She discussed the BSA algorithm and the
different multipliers involved in the formula.
Dr. Bishop moved to slide 7, "How will the ASD operating
funds be impacted by State/local reductions?":
? 18.74% ($105,884,200) overall reduction
? Includes reductions from
? State ($86,084,716 reduction not including
possible
bond debt reduction)
? Local ($19,799,484 reduction)
? HB287
• $20 million in FY19 and an additional $10
million statewide in FY20
• ASD portion is approximately $5.77 million
in FY19 and roughly $8 million to $10
million in FY20
Dr. Bishop stated that ASD had not received the local
appropriation of the additional funds the previous year,
because the funds had come out after the city had already
calculated the taxes.
2:28:46 PM
Dr. Bishop addressed slide 8, "Will ASD be impacted by
other State funding reductions?":
? Yes, elimination of State Bond Debt
Reimbursement
? $41.1 million
? This amount is not in General Fund but may
impact General Fund
? Yes, elimination of $3.2 million grant for Pre-K
statewide program
? ASD has approximately $1.6 million in two
different Pre-K grants
Dr. Bishop stated that ASD had a fund balance, but by
ordinance $25 million of the balance had to kept for the
bond rating and was not spendable.
Dr. Bishop showed slide 9, "What is the total overall
state/local reduction for ASD?":
? $148,484,200
? State reduction ($86,084,716 reduction)
? Local reduction ($19,799,484 reduction)
? Bond debt reduction ($41,000,000 reduction)
? Pre-K reduction ($1,600,000 reduction)
Dr. Bishop turned to slide 10, "Is there more?":
? Yes, transportation funding remains flat
? Yes, more to follow?
? The process is just beginning at the
legislative level
? ASD will work with its legislators to
communicate impacts, efficiencies, and outcomes
throughout the budget process
? ASD School Board passed its budget with a
request from the State for legislative grants
totaling $81 million ($68 million for class size
reduction and $13 million for preschool)
Dr. Bishop explained that the school board added a request
for $81 million in grants to the balanced proposed budget
to lower class sizes.
Dr. Bishop addressed slide 11, "Cost Comparisons of
Programs in ASD," which showed a graph purposed to
illustrate the magnitude of what $150 million look like for
a district such as ASD. She highlighted funding for the
school board, superintendent, and chiefs; as well as $124
million for elementary teachers in the district to educate
about 24,000 students. She highlighted the significance of
the programs and the magnitude of the proposed reduction.
2:31:41 PM
Dr. Bishop spoke to slide 12, "ASD Revenue Scenarios &
Impacts," which showed a table. She pointed out that the
right-hand side of the table showed the governor's proposed
budget. The middle section depicted a 1 percent reduction,
and the left-hand showed a 5 percent reduction scenario.
The table also showed elimination of the $30 million of
statewide funding, local reductions, and total reduction.
Dr. Bishop discussed slide 13, "ASD Bargaining Unit Layoff
Timelines," which showed a table that depicted potential
layoffs. She discussed employment timelines. She emphasized
that forward funding was important. She pointed out the
layoff timelines for various employment groups. Each of the
unions also had collective bargaining agreements which
defined notification. She emphasized the difficulty of
communicating with employees when faced with such a
substantial cut.
2:34:27 PM
Representative Josephson asked if she would have cause to
be more alarmed if it were March 5, 2020; as the governor
had asked for the repeal of forward funding. He was curious
how she was imparting the information to teachers as well
as parents and students. He thought there was a threat that
the proposed funding repeal would be passed. He wondered
how teaching staff were staying calm at the prospect of
kindergarten classes with 45 students.
Dr. Bishop reminded that the process occurred every year
for school districts. She considered that the idea of a 25
percent was absurd, and the threat of a yearly 5 percent
cut was very significant to the district's program. She
thought the House and Senate would come to understand the
impacts of the proposed cut. She thought the bond was
losing trust. She emphasized that the school district was
actively sharing information on the potential impact.
Dr. Bishop continued addressing Representative Josephson's
question. She had not seen many instances of the governor's
proposed budget being the final state budget. She had
spoken with several legislators that wanted improvements in
public education, and she had been working towards the
goal. She was willing to be held accountable, but thought
state investment was important. She could not imagine the
legislature not supporting public education in the state.
Co-Chair Wilson understood that ASD was reaching out to
other school districts and doing some special things. She
asked about different things ASD might be doing.
Dr. Bishop relayed that ASD had started a partnership with
the Lower Yukon School District (LYSD) in the career and
technical school. The Lower Yukon had purchased a building
in Anchorage and would house students. She discussed dual
credit and compacting certifications. The LYSD had been
interested in teaching skills that students could learn in
Anchorage and bring back to the LYSD community. She
mentioned small engine repair, veterinary technician,
construction and other areas of study. Anchorage students
would also attend and some ASD teachers would be paid
through the partnership. She added that ASD also had some
partnerships with the University of Alaska (UA).
Vice-Chair Ortiz asked about the partnership and asked if
it cost LYSD funding.
Dr. Bishop relayed that LYSD had the funding but not the
human resources. The funding was part of LYSD's original
budget through the BSA.
2:39:41 PM
DR. MONICA GOYETTE, SUPERINTENDENT, MATANUSKA-SUSITNA
BOROUGH SCHOOL DISTRICT, discussed the presentation "Impact
of the Governor's Proposed Budget to the MSBSD" (copy on
file).
Dr. Goyette turned to slide 2, "Alaska State Student
Performance Data - SAT and ACT College Entrance Exams,"
which showed two data tables. She informed that the
Matanuska-Susitna Borough School District (MSBSD) was an
open school district in which a student could choose any
school or even multiple schools. She thought there was a
lot of rhetoric about educational failures in the state.
She agreed that there were many things that needed to be
done better. She thought there was also many successes. She
referenced the ACT and SAT test. The slide showed that
Alaska was above the national average for test scores in
every area. She thought it was significant that in the
Lower 48 it was very common for students to be in private
preparatory courses, and thought many Alaskan students took
the tests without preparation.
Dr. Goyette continued to speak to slide 2. She noted that
the slide showed that Alaska was below average in English
for the ACT but was above or matched in other areas. She
challenged the rhetoric that the state was the lowest
performing in the nation.
Dr. Goyette reviewed slide 3, "10 Year History of State
Funding," which showed a bar graph. She wanted to keep
perspective on the fact that the state's revenue had not
kept up with inflation. She noted that over the previous
ten years, MSBSD had made incremental budget reductions.
She thought it was difficult to make huge reductions in a
short time frame and adequately meet education needs.
Dr. Goyette spoke to slide 4, "Governor's Proposed Budget":
FY20 Preliminary Budget $239,843,230
Salaries and Benefits -$30,406,858
Non-Personnel Spending -$6,007,505
Charter Schools -$3,242,078
Total Reduction $39,656,441
Dr. Goyette noted that the preliminary budget listed on the
slide reflected the full BSA but not the one-time funding.
2:43:30 PM
Dr. Goyette discussed slide 5, which showed a bar graph
depicting staffing reduction by job type. She noted that
the proposed cut would impact 390 total jobs.
Dr. Goyette displayed slide 6, "Reduction To Charter School
Budgets," which showed a pictorial graph depicting
reduction in positions to various charter schools in the
district. She noted that many charter schools required
parents to donate a certain number of hours per year and
could often help with maintenance and other jobs. She
explained that there were not many positions outside
teaching positions in charter schools. She pointed out that
Academy Charter School would lose one-third of its teaching
staff as a result of the proposed cut.
Dr. Goyette moved to slide 7, "Increased Pupil-to-Teacher
Ratios," which showed a graphic depicting student/teacher
ratios. She noted that there would be a potential increase
of six students per classroom as a result of the proposed
cut. She stated that the current local contribution was 78
percent. She stated that she lived in a very fiscally
conservative area without diversity in the tax base,
therefore the contribution fell largely on predominately
residential property owners. She asserted that if there was
an average of pupil-to-teacher ratios in high school of 38,
there would be some classes of 50 students.
2:46:01 PM
Dr. Goyette turned to slide 8, "Employee Contracts":
?District Executive Leadership
?Certified -No rights to position
?Right to teacher position
?Classified -No rights to position
?Principals
?Notified by March 15 for retention
?MOA to extend to May 15
?Right to teacher position
?District Mid-Level Management
?30 Day Lay-Off Notice
?Teachers
?Tenured Notified by May 15
?Non-Tenured Notified by May 22
?265 Individuals are Non-Tenured
lassified Employees
?14 Day Lay-Off Notice
Dr. Goyette stated that the school board could not commit
revenue through contracts until it knew for sure what the
revenue would be. She was doubtful that the legislative
session and veto period would be complete by May 15. She
mentioned the tiered retirement system, and noted that 53
percent of MSBSD teachers were in Tier 3. She was not
worried that teachers would go to other districts, but knew
the teachers would be able to take retirement to the Lower
48.
Dr. Goyette looked at slide 9, "Impact to Alaska Middle
College and ANSEP Accelerated High School," which showed a
bar graph showing other effects of the proposed budget cut.
She detailed that the district had 200 students in the
Alaska Middle College Program. In 2017 MSBSD had done a
cost comparison, and it was found that it was as typical to
send a student to the middle college as it was to send them
to the largest comprehensive high schools. If the UA budget
was radically reduced and tuition was raised, the ability
to offer the middle college and ANSEP programs would be
compromised.
2:48:04 PM
Dr. Goyette spoke to slide 10, "Impact to Home School
Allotments and Local Purchasing Power":
Mat-Su Central School (Home School Program)
?1,765 Students
?Home School Allotment
?$2,200 per student
?$2,500 for Junior Year
?$2,700 for Senior Year
?300 Local Vendors
?Approved to accept allotment money for
educational services
$17.5 Million Spent Locally
?Supplies and Materials
?Purchased Services
?Lease Payments
?Utilities
?Insurance
Dr. Goyette noted that home schools were very popular in
her district. She thought if the budget was significantly
reduced it would have a huge impact on local revenue,
especially for small vendors that had grown through home
school business.
Dr. Goyette reviewed slide 11, "School Bond Debt
Reimbursement - $19 Million":
Mat-Su Grows 65% in 20 Years
FY 2020* - 19,074 Students
FY 2016 - 18,465 Students
FY 2012 - 17,338 Students
FY 2008 - 16,115 Students
FY 2004 - 14,304 Students
FY 2000 - 12.513 Students
$214 Million Bond Package - Voter Approved in 2011
?Mat-Su Day School
?Valley Pathways
?Career and Tech HS Addition
?Redington Jr./Sr. HS
?Dena'ina Elementary
?Iditarod Elementary
?Additional Projects: District-Wide ADA
Upgrades, Restroom Renovations, Energy Upgrades,
Generator Replacements, Athletic Facilities, Fire
Alarm System Upgrades, Flooring and HVAC
Dr. Goyette recounted that the district qualified for the
bond package because it had unhoused students. There was
$19 million in bond debt, and the district was paying 17
years out.
Dr. Goyette Referenced slide 12, "Cost of Health
Insurance," which showed a bar graph. She thought it was
important not to stop scrutinizing expenses. She pointed
out that health insurance was the district's second largest
cost driver, and the district spent $36 million, not
including the $5 million contributed by employees. She
emphasized that the district paid more for health insurance
than it paid for 950 employees. She shared that the
district had recently filed an unfair labor practice
against its union, the Mat-Su Education Association and the
Certified Education Association.
Dr. Goyette continued addressing slide 12. She stated that
the district was a member of the Public Employees Health
Trust, which had refused to provide actuarial data on
health insurance. The district had spent $41 million of
taxpayer money and had no transparency. The ruling had been
in favor of the district, and found that the union was not
bargaining in good faith. She hoped the state could help
solve the problem.
2:51:53 PM
Vice-Chair Johnston recalled that the two previous weekends
she had attended a caucus and was impressed that there had
been educators shining a light on health costs and looking
to the state for help.
Dr. Goyette informed that there was a hard cap with the
teachers. She stated that few years previously the district
was in negotiations received a zero percent increase
followed by a 25 percent increase.
Vice-Chair Johnston thought in Anchorage the school
district had enjoyed transparency with health insurance.
Dr. Goyette informed that ASD was partially self-insured,
and some were union. She relayed that when a district was
with a public employee health trust there was no
transparency.
Representative Josephson recalled that former Senator
Michael Dunleavy had been interested in consolidation of 54
school district health plans. He recalled that the NEA
trust had 16 schools that it served, and had been able to
keep rates down more than those not within the pool.
Dr. Goyette thought there had been a study done of high-
value high-cost insurance plans; after which the NEA Trust
was shown to be a higher-cost, lower-value plan. There were
districts that were self-insured that were lower than the
public health trust.
2:54:59 PM
Dr. Goyette discussed slide 13, "Mat-Su Graduation Rate
Data," which showed a bar graph. She noted that despite
making incremental budget reductions, the district had
increased its graduation rate by 13 percent since 2010. She
noted that the district required 24.5 credits to graduate,
including geometry; while the state required 21 credits.
She stated that the district was systems focused. She knew
that the district could meet the challenges and spend money
better.
Vice-Chair Ortiz recalled that Dr. Goyette had stated that
53 percent of MSBSD certified staff was Tier 3. He asked
how long she had worked in the district. He asked if there
was data that showed relationships between teacher
retention compared to when there was a defined benefit.
Dr. Goyette had worked in the district 20 years. She
offered to send the information at a later date. She noted
that the district's retention rate had been very stable and
was between 80 and 90 percent. She noted that it was a
challenge to fill specialized positions each year.
Vice-Chair Johnston was curious about the rise in
graduation rates, and the geometry requirement.
Dr. Goyette specified that to graduate students must
complete on year of algebra and one year of geometry.
2:57:50 PM
Representative Josephson asked for a brief description of
capital needs and insurance coverage following the recent
earthquake in the area.
Dr. Goyette stated that damage from all schools added up to
$2 million, most of which was tile and grid repair. The
borough had freed up funds leftover from the bond package.
The district had earthquake insurance up to $25 million.
She expected to hear about Houston Middle School by March;
whether the school would be repaired or a new build. She
suspected that a new school would be required. If a new
build was required, the district would need braided
funding. The district would apply for FEMA money and apply
to the state. The current value of Houston Middle School
was $35 million. The most recent school built in like size
was $65 million. She qualified that the school would not
need the exact same facilities. She imagined a new building
would be at least $45 million, and she did not expect more
than $15 million for the insurance company.
2:59:45 PM
DR. ANNMARIE O'BRIEN, SUPERINTENDENT, NORTH WEST ARCTIC
BOROUGH SCHOOL DISTRICT (NWABSD), discussed the
presentation "Leading the Way" (copy on file). She noted
that there was also an impact statement of the overall
results if the district had to instigate the proposed cuts
(copy on file).
Dr. O'Brien directed attention to the first page of the
presentation, "Leading the way":
39,000 Sq. Mi.
13 Schools
11 Villages
398 Employees
219 Certified
179 Classified
Dr. O'Brien pointed out the school district on the map on
the slide, and detailed that there were no roads within the
region. There were two jets a day that flew out of
Kotzebue, and smaller airlines that flew in and out of the
villages.
Dr. O'Brien turned to slide 2:
2085 Students
93% Alaska Native
100% Free & Reduced Lunch
758 Migrant
292 Special Needs
CTE Graduation Rate
94% for Student that have earned 2 or more
credits in CTE Career Strand
73% Alaska Native Graduation Rate
Dr. O'Brien looked at slide 3, "NWABSD Standardization":
?The student in-district transfer rate is consistently
over 25%
?Title 1 district teacher turnover nationwide is 25%
?The standardization of curriculum, discipline
processes, schedules, policies and procedures all
serve to mitigate the disruption caused to student
learning as a result to these statistics.
Dr. O'Brien had been with the school district for 20 years,
in which time it had done a great deal of standardization.
She thought the in-district transfer rate was common for
rural areas.
3:03:21 PM
Vice-Chair Johnston asked about the in-district transfer
rate and asked if data was collected to include the month
of transfer.
Dr. O'Brien stated that the data by month was not
collected, and the transfer information was sent to the
Department of Education and Early Development.
Vice-Chair Johnston thought it would be interesting to see
if there were peak months for in-district transfers.
Dr. O'Brien stated that in the Northwest Arctic Region, the
hub hospital was in Kotzebue, and very often families
travelled there for medical care.
3:04:15 PM
Dr. O'Brien continued to address slide 3. She stated that
NWABSD was a Title 1 school district and had a similar
district teacher turnover as the nationwide rate of 25
percent. The school district had worked to mitigate the
changes in teachers and students through standardization
between schools.
3:05:03 PM
Dr. O'Brien spoke to slide 4, "4-year Graduation Rates by
District," which showed a bar graph showing graduation
rates for Alaska Native students. She observed that while
the district always sought to improve the rates, it felt it
was doing better than some areas of the state. She
commented that there was more success with career and
technical education students. She noted that graduation
rate, along with attendance, was one of the outcome
measures for an academic standard.
3:06:06 PM
Dr. O'Brien addressed slide 5, "Career Technology Education
(CTE) Completer Graduation Rate," which showed a bar graph.
She noted that for the 2015-16 academic year and 2016-17
there had been 100 percent graduation rate. The district
had found that there was success when students were
introduced to viable well-paid careers that could keep
students in the home region.
3:06:52 PM
Dr. O'Brien discussed slide 6, "Alaska Native Science and
Engineering Program (ANSEP)," which showed two bar graphs.
The district had been very involved in the ANSEP program
and had been able to fund ANSEP through a combination of
grants and general funds. She thought the program
encouraged students to engage with academics. She thought
the graphs showed a desire by students to engage with
career-oriented academics.
3:07:58 PM
Dr. O'Brien referenced slide 7, "Star of the Northwest
Magnet School":
Statewide residential boarding school:
?Meeting the needs of Alaskan students from
across the state
?Bridging the gap between school and work
?Utilizing career & technical education to
provide unique experiences for students to be
work ready
?Focus on high demand high paying jobs
?40-Bed Dormitory
Dr. O'Brien noted that the Star of the Northwest Magnet
School had opened in February of 2014. She noted that the
school was designed for 11th and 12th grade students.
Culinary arts were put into the concept of the magnate
school because there were food services contractors that
were significant employers in the region.
3:09:09 PM
Dr. O'Brien discussed slide 8, "ReadiStar," which had a bar
graph. She explained that the magnate school had resident
students for long- and short-term stays. She noted that
students came from villages during the school year for a
two-week session in which they were introduced to various
career opportunities. Additionally, students could become
certified in CPR, or obtain a driver's license.
3:10:15 PM
Dr. O'Brien reviewed slide 9, "Proposed FY20 Budget Cuts":
1. 85 of the current 143 Classroom Teachers (59.4%)
OR
2. A mix of teachers and support staff (aides,
counselors, secretaries, itinerant specialists -music,
art, curriculum, technology)
OR
3. Staff and Programs such as:
?Pre-K Instruction
?Music and Art
Counselling
?Career and Technical Education (CTE)
?Bilingual
?Academic & Athletic Extracurricular Activities
Dr. O'Brien wanted the committee to keep students in the
forefront of their minds when contemplating the proposed
cuts to education. She thought it was important to
understand, given the range and scope of the distances
travelled in the district, that there was no way to compare
the pupil to teacher ratio of a rural school to an urban
school. She relayed that the district had worked hard to
get and retain itinerant specialists. She noted that grants
that paid for Pre-K Instruction and other areas were ending
in 2020.
Dr. O'Brien continued to address slide 9. She discussed
potential cuts to the counseling program and reminded that
the region had the highest suicide rate in the state. The
district had already experienced two student suicides in
the current year.
Dr. O'Brien continued to discuss proposed budget cuts to
areas of staff and programs at the district. She discussed
career and technical education and bilingual education. She
reminded that the region was an area of endangered
language. The district had been working with a federal
grant to revitalize language efforts. She noted the
importance and expense of academic and athletic
extracurricular activities. She hoped that members
understood the increased costs incurred in travel in rural
parts of the state.
3:14:50 PM
Vice-Chair Johnston referenced the Moore settlement, and
had been disappointed that not much data had been required.
She thought new grants started the previous year had more
requests for data.
Dr. O'Brien did not have the information at hand but had
been privy to funds that were not expended in other school
districts. She offered to provide the information at a
later time.
Vice-Chair Johnston noted that there were snow machine
roads in the region.
Dr. O'Brien agreed that snow machine roads were usable in
certain conditions.
3:15:53 PM
Vice-Chair Ortiz asked about a picture on slide 9 and
wondered if it showed a Battle of the Books competition.
Dr. O'Brien answered in the affirmative. She noted that the
district had a strategic plan goal of increasing academic-
oriented after school activities; and had been consciously
working to increase the opportunities.
3:16:33 PM
Dr. O'Brien spoke to slide 10, which showed two pie charts
that showed spending and the proposed cuts. She expressed
that the potential loss of funding would be significant to
the district. She emphasized that the district was unable
to raise funds through initiating taxes but did work with
the borough.
3:17:36 PM
Dr. O'Brien referenced slide 11, "FY19 Budget," which
showed a pie chart depicting where budget dollars went. She
emphasized that the majority of funds spent were for salary
and benefits.
3:18:06 PM
Dr. O'Brien discussed slide 12, "Kobuk School":
44 Students
91% Alaska Native
100% Free & Reduced Lunch
0% Drop-Out Rate
1 Migrant Ed Instructional Aide
1 Title 1 Instructional Aide
Dr. O'Brien explained that at the Kobuk School if one
teacher was cut, every teacher would be giving instruction
to four grades. She noted that the migrant education aide
and the Title 1 aide were federally funded.
3:19:28 PM
Dr. O'Brien moved to slide 13, "School Counselors":
1.Academics: Scheduling and Advisement
2.Social/Emotional:
?How to deal with someone you don't like /social
skills
?Identifying feeling and skills that lead to greater
function at school
?Behavioral Health needed at the point a student start
to process feelings
*Harm to Self (Threat) Protocol Facilitation -Year to
date we have had over 26 confirmed suicide threats at
school where harm to self protocol has been enacted.
3.Career: Post Graduation Pathway
Dr. O'Brien reiterated the importance of the counseling
program. She commented that counsellors were the first line
of support for students. She thought the role counsellors
played was critical. She continued that counselors also
designed career pathways for graduates prior to graduation.
3:20:55 PM
Dr. O'Brien showed slide 14, "Youth Leaders":
"The mission of Youth Leaders is to create a community of
young leaders that promote healthy choices and foster
social responsibility, as well as provide the best possible
support to our peers and communities."
Dr. O'Brien noted that the youth leaders assisted in
identifying students that were in trouble or in danger. She
relayed that the youth leaders were recently visiting the
legislature in Juneau.
3:21:48 PM
Representative Sullivan-Leonard asked about slide 14, and
asked about support for the youth leaders.
Dr. O'Brien noted that there was a zinc mine in the
Northwest Arctic, run by Teck Resources, that supported the
youth leaders.
3:22:15 PM
Dr. O'Brien asked to address the impact statement. She
relayed that for rural Alaska, housing came with the job.
If housing was not provided, there would be no teachers.
She recalled that three or four years previously, the
district refurbished housing for ten teachers, which had
been very helpful in retaining teachers. There was
tremendous anxiety with staff after the district was unable
to issue contracts. When contracts were not offered,
teachers were lost and the majority of teachers were from
out of state. Without offering the contracts, there were
not resignations and positions could not be posted for
hire. She noted that rural Alaska suffered more than urban
Alaska because of not being able to offer contracts,
largely because of the tie to housing. She hoped that
members would consider the disproportionate impact of not
being able to offer timely contracts. She discussed hiring
timelines.
3:26:01 PM
Dr. O'Brien discussed the effects of funding cuts to
Village Public Safety Officers (VPSO). She stated that the
issue affected staff, students, and families. She thought
that many of the proposed cut were interrelated in impact
to the communicates.
3:26:34 PM
Representative Josephson recalled that he attended a job
fair in 1991 and had taught in Kalstag for three years in
the Kuspuk School District. At the time there had been a
defined benefit program. He thought it was typical to see a
married couple at the time and thought recruitment in the
state had been easier. He asked for a description of how
recruitment had changed.
Dr. O'Brien had anecdotal evidence of a change in teacher
recruitment. She had seen teaching couples coming to work
for eight years to obtain retirement benefits, which was no
longer the case. Presently more teachers knew they could
stay for a short time and get benefits.
Co-Chair Foster discussed the agenda for the next meeting.
ADJOURNMENT
3:28:58 PM
The meeting was adjourned at 3:28 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| School Funding Notes for House Finance Committee 3 5 19.pdf |
HFIN 3/5/2019 1:30:00 PM |
HFIN Presentation JSD |
| School Funding Calendar.pdf |
HFIN 3/5/2019 1:30:00 PM |
HFIN Ed Funding - JSD |
| Juneau School Funding House Finance Committee 3 5 19.pdf |
HFIN 3/5/2019 1:30:00 PM |
HFIN Ed Funding -JSD |
| NW Arctic Borough SD Reduction Impacts.pdf |
HFIN 3/5/2019 1:30:00 PM |
HFIN Ed Funding |
| Juneau House Finance March 2019 NWArcticB SchDist.pdf |
HFIN 3/5/2019 1:30:00 PM |
HFIN Ed Funding |
| Additional Documentation_FoundationCalc_borough Contribution.pdf |
HFIN 3/5/2019 1:30:00 PM |
HFIN Ed Funding Kenai Pen Borough |
| House Finance Committee 3.5.pdf |
HFIN 3/5/2019 1:30:00 PM |
HFIN Ed Funding MatSu SD |
| Required and Maximum Allowable Contribution Calculations.pdf |
HFIN 3/5/2019 1:30:00 PM |
HFIN Ed Funding Kenai Pen SD |
| NORTH SLOPE BOROUGH and SCHOOL DISTRICT PRESENTATION.pdf |
HFIN 3/5/2019 1:30:00 PM |
HFIN - NSB SD Presentation Funding Impacts |
| FY20 Projected State Foundation Payment.pdf |
HFIN 3/5/2019 1:30:00 PM |
HFIN - NSB SD Ed Funding Impacts |
| Final 3_5_19 ASD Budget Conversation.pdf |
HFIN 3/5/2019 1:30:00 PM |
HFIN - ASD Ed Funding Presentation |