02/05/1998 03:30 PM House HES
| Audio | Topic |
|---|
+ teleconferenced
= bill was previously heard/scheduled
HOUSE HEALTH, EDUCATION AND SOCIAL
SERVICES STANDING COMMITTEE
February 5, 1998
3:30 p.m.
MEMBERS PRESENT
Representative Con Bunde, Chairman
Representative Joe Green, Vice Chairman
Representative Al Vezey
Representative Brian Porter
Representative Fred Dyson
Representative J. Allen Kemplen
Representative Tom Brice
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
HOUSE BILL NO. 335
"An Act replacing the Uniform Child Custody Jurisdiction Act with
the Uniform Child Custody Jurisdiction and Enforcement Act; and
amending Rules 4 and 62, Alaska Rules of Civil Procedure, and Rule
205, Alaska Rules of Appellate Procedure."
- PASSED HB 335 OUT OF COMMITTEE
HOUSE BILL NO. 125
"An Act relating to contributions from permanent fund dividends to
the Alaska children's trust; and providing for an effective date."
- PASSED CSHB 125(HES) OUT OF COMMITTEE
SPONSOR SUBSTITUTE FOR HOUSE BILL NO. 148
"An Act relating to the public school funding program; relating to
the definition of a school district, to the transportation of
students, to school district layoff plans, to the special education
service agency, to the child care grant program, and to compulsory
attendance in public schools; and providing for an effective date."
- HEARD AND HELD
(* First public hearing)
PREVIOUS ACTION
BILL: HB 335
SHORT TITLE: UNIFORM INTERSTATE CHILD CUSTODY ACT
SPONSOR(S): HEALTH, EDUCATION & SOCIAL SERVICES
Jrn-Date Jrn-Page Action
01/20/98 2090 (H) READ THE FIRST TIME - REFERRAL(S)
01/20/98 2090 (H) HES, JUDICIARY
01/29/98 (H) HES AT 3:00 PM CAPITOL 106
01/29/98 (H) MINUTE(HES)
02/05/98 (H) HES AT 3:00 PM CAPITOL 106
BILL: HB 125
SHORT TITLE: PFD CONTRIBUTIONS TO CHILDREN'S TRUST
SPONSOR(S): REPRESENTATIVES(S) HUDSON, Dyson, Davies, Green,
Brice
Jrn-Date Jrn-Page Action
02/12/97 314 (H) READ THE FIRST TIME - REFERRAL(S)
02/12/97 315 (H) HES, FINANCE
03/06/97 570 (H) COSPONSOR(S): DAVIES
03/07/97 594 (H) COSPONSOR(S): GREEN
04/30/97 1427 (H) COSPONSOR(S): BRICE
01/29/98 (H) HES AT 3:00 PM CAPITOL 106
01/29/98 (H) MINUTE(HES)
02/05/98 (H) HES AT 3:00 PM CAPITOL 106
BILL: HB 148
SHORT TITLE: SCHOOL FUNDING ETC./ CHILD CARE GRANTS
SPONSOR(S): HEALTH, EDUCATION & SOCIAL SERVICES
Jrn-Date Jrn-Page Action
02/18/97 382 (H) READ THE FIRST TIME - REFERRAL(S)
02/18/97 382 (H) HES, FINANCE
04/04/97 988 (H) SPONSOR SUBSTITUTE
INTRODUCED-REFERRALS
04/04/97 988 (H) READ THE FIRST TIME - REFERRAL(S)
04/04/97 989 (H) HES, FINANCE
04/08/97 (H) HES AT 3:00 PM CAPITOL 106
04/08/97 (H) MINUTE(HES)
04/24/97 (H) HES AT 3:00 PM CAPITOL 106
04/24/97 (H) MINUTE(HES)
04/28/97 (H) HES AT 3:30 PM CAPITOL 106
04/28/97 (H) MINUTE(HES)
04/30/97 (H) HES AT 3:30 PM CAPITOL 106
04/30/97 (H) MINUTE(HES)
08/25/97 (H) HES AT 10:00 AM CAPITOL 205
08/25/97 (H) MINUTE(HES)
09/30/97 (H) HES AT 9:00 AM ANCHORAGE LIO
09/30/97 (H) MINUTE(HES)
01/27/98 (H) HES AT 3:00 PM CAPITOL 106
01/27/98 (H) MINUTE(HES)
01/29/98 (H) HES AT 3:00 PM CAPITOL 106
01/29/98 (H) MINUTE(HES)
02/05/98 (H) HES AT 3:00 PM CAPITOL 106
WITNESS REGISTER
DEBORAH BEHR, Assistant Attorney General
Legislation and Regulations Section
Civil Division
Department of Law;
Uniform Law Commissioner for the
state of Alaska
P.O. Box 100300
Juneau, Alaska 99811-0300
Telephone: (907) 465-3600
POSITION STATEMENT: Commented on HB 335.
EDDY JEANS, Manager
School Finance Section
Education Support Services
Department of Education
801 West 10th Street, Suite 200
Juneau, Alaska 99801-1894
Telephone: (907) 465-2891
POSITION STATEMENT: Presented side-by-side analysis of various
legislation relating to school funding.
ERIC MCDOWELL, Senior Partner
McDowell Group
416 Harris Street
Juneau, Alaska 99801
Telephone: (907) 586-6126
POSITION STATEMENT: Presented the area cost differential study.
BETH DEETER
P.O. Box 289
Seward, Alaska 99664
Telephone: (907) 224-3814
POSITION STATEMENT: Testified on proposed CSSSHB 148(HES).
CAROL STURGULEWSKI
P.O. Box 142
Seward, Alaska 99664
Telephone: (907) 224-2630
POSITION STATEMENT: Testified on proposed CSSSHB 148(HES).
RON W. ROHLMAN
827 Pherson Street
Sitka, Alaska 99835
Telephone: (907) 747-8698
POSITION STATEMENT: Testified on proposed CSSSHB 148(HES).
ACTION NARRATIVE
TAPE 98-4, SIDE A
Number 0005
CHAIRMAN CON BUNDE reconvened the House Health, Education and
Social Services Standing Committee at 3:30 p.m. Members present
were Representatives Bunde, Green, Vezey, Porter, Dyson, Kemplen
and Brice.
HB 335 - UNIFORM INTERSTATE CHILD CUSTODY ACT
Number 0007
CHAIRMAN BUNDE announced the first item on the calendar was HB 335
"An Act replacing the Uniform Child Custody Jurisdiction Act with
the Uniform Child Custody Jurisdiction and Enforcement Act; and
amending Rules 4 and 62, Alaska Rules of Civil Procedure, and Rule
205, Alaska Rules of Appellate Procedure." He noted this
legislation had been discussed quite extensively at the previous
committee meeting. He asked if there was additional testimony or
questions.
Number 0063
REPRESENTATIVE BRIAN PORTER made a motion to move HB 335 from
committee with individual recommendations and attached fiscal
notes.
Number 0078
REPRESENTATIVE AL VEZEY objected. He said he hadn't received any
input from his constituents that this area of statute needed
modification. He didn't understand why the legislature would
attempt to put into statute how the Alaska Court System will
interrelate with international court systems. He viewed this
legislation as basically conveying to our court system that in many
cases, Alaska is going to give jurisdiction to foreign powers over
child custody cases, and he can not support that.
Number 0150
CHAIRMAN BUNDE understood the jurisdiction would be determined by
the court in the area of residency at the time custody was
originally granted, so if someone from this country goes to another
country and wants a revision of the custody, which is not unusual
in a kidnaping, we are asking that not only other countries listen
to our courts, but more importantly that other states will adopt
the Uniform Child Custody Jurisdiction and Enforcement Act and will
not revise a custody order that was entered into in the state of
Alaska.
Number 0230
REPRESENTATIVE TOM BRICE said he did not see this as an abrogation
of our judiciary responsibilities, but rather a question of
building those responsibilities and giving the Alaska Court System
the authority to work outside its parameters. For example, a case
was brought up at the Domestic Violence Conference in December,
whereby a woman whose ex-husband and father of her children was
from Greece. The ex-husband had weekend custody and fled to Greece
with the children. There was no way for the Alaska courts or the
State Department to communicate with the appropriate Greek
officials to retrieve those children. He recognized this
legislation may not give absolute certainty in those types of
cases, but it could go a long way toward reaching appropriate
resolution.
Number 0333
CHAIRMAN BUNDE shared Representative Vezey's concern about
international courts, but hopefully, with all the states seeking
resolution, there will be a reduction in individuals fleeing to
another jurisdiction. He asked Deborah Behr from the Department of
Law if she had any comments.
Number 0361
DEBORAH BEHR, Assistant Attorney General, Legislation and
Regulations Section, Civil Division, Department of Law; and Uniform
Law Commissioner for the state of Alaska, commented this
legislation addresses those very concerns expressed by
Representative Brice where individuals have legitimate orders that
are entered by a state court and the absent parent either takes the
child or doesn't return the child in violation of the order. There
is no easy or inexpensive way to get the child back. She pointed
out the Uniform Child Custody Jurisdiction and Enforcement Act has
been reviewed and undergone hearings for two years at the national
level.
Number 0424
REPRESENTATIVE PORTER said his initial concern about this
legislation was that he doesn't necessarily subscribe to the "one
size fits all" theory, but what he likes is that other states who
adopt this will recognize our custody orders and the problem of
trying to deal with individuals who believe if they flee Alaska,
the cost will prohibit retrieval of a child will be greatly
diminished.
Number 0514
CHAIRMAN BUNDE asked for a roll call vote. Representatives Brice,
Dyson, Kemplen, Porter, Green and Bunde voted in favor of moving
the bill. Representative Vezey voted against it. Therefore,
HB 335 moved from the House Health, Education and Social Services
Standing Committee by a vote of 6-1.
HB 125 - PFD CONTRIBUTIONS TO CHILDREN'S TRUST
Number 0618
CHAIRMAN BUNDE announced the next order of business was HB 125
"An Act relating to contributions from permanent fund dividends to
the Alaska children's trust; and providing for an effective date."
This legislation was before the committee at the last meeting at
which time public testimony was taken. He noted that Melinda
Hofstad, Legislative Assistant to Representative Bill Hudson was
available to answer questions.
CHAIRMAN BUNDE asked if there were further questions. Hearing
none, he closed public testimony.
Number 0648
REPRESENTATIVE PORTER said at the last meeting, he had discussed
the possibility of the committee attaching a letter of intent to
HB 125, to basically serve notice to the rest of the legislature
that the committee recognizes this legislation could potentially
become a Christmas tree and hopefully, the letter of intent would
discourage that action.
Number 0734
REPRESENTATIVE PORTER made a motion that a letter of intent be
prepared indicating the committee's desire that HB 125 go through
the legislative process without additional organizations being
added to it; thus creating the Christmas tree effect. Hearing no
objection, Chairman Bunde announced that a letter of intent would
be prepared by Representative Porter for the committee's approval.
REPRESENTATIVE BRICE made a motion to pass CSHB 125(HES) from
committee with individual recommendations and attached fiscal
notes. Hearing no objection, CSHB 125(HES) moved from the House
Health, Education and Social Services Standing Committee.
SSHB 148 - SCHOOL FUNDING ETC./ CHILD CARE GRANTS
Number 0817
CHAIRMAN BUNDE announced the next bill to be heard was SSHB 148 "An
Act relating to the public school funding program; relating to the
definition of a school district, to the transportation of students,
to school district layoff plans, to the special education service
agency, to the child care grant program, and to compulsory
attendance in public schools; and providing for an effective date."
He noted that a representative from the McDowell Group who had
recently released the area cost differential study was available to
explain the results of the study. Additionally, Eddy Jeans, from
the Department of Education was on hand to discuss the side-by-side
analysis of the different legislative bills relating to this issue.
Number 0892
EDDY JEANS, Manager, School Finance Section, Education Support
Services, Department of Education, stated the side-by-side
comparison prepared by the Department of Education does not include
amendments to the various bills that would include the revisions
based on the McDowell Study. The Department of Education is
currently reviewing that study to determine the impacts. He
pointed out the study does not have differentials that can simply
be dropped in to replace the old area cost differentials, so it
will require additional analysis on the part of the department.
Number 0948
CHAIRMAN BUNDE noted that most, if not all, legislators had
received a communication from various communities which
recommended, in part, that an area cost differential study be
prepared biennially. In light of the costs involved, he asked Mr.
Jeans what his reaction was to that recommendation.
MR. JEANS stated it is the opinion of the Department of Education
that a database should be established in which the area cost
differentials could be modified on a biennial or 3- to 5-year-
basis. That was included in the Governor's bill before the
legislature last year that the Department of Education could update
those area cost differentials; in fact, recommended that it be
placed in regulation.
Number 1008
MR. JEANS pointed out the Governor has introduced new legislation
this year that does not include this type of update to the area
cost differential. In fact, it modifies the current information as
sort of a housekeeping measure.
Number 1032
CHAIRMAN BUNDE asked Mr. Jeans if he could speculate what the cost
might be for a revision in the area cost differential every two
years.
MR. JEANS responded he couldn't say what the dollar amount would
be, but hoped the department would get a database out of this so
they could start to collect the information, input it into the
database, and generate the results. He didn't anticipate it would
be all that expensive, although the initial cost for the database
probably would be.
Number 1068
CHAIRMAN BUNDE recalled that one of the premises of the McDowell
Study was that the "market basket" cost in a community really
shouldn't be used as the basis for cost of education in that
community. For example, the cost of a gallon of gasoline in
Kivalina doesn't relate to educating a student there because the
school district probably has very few, if any, vehicles.
MR. JEANS commented that in general terms, the department would
agree with that philosophy; it shouldn't be a market basket of
goods, but should have some other indicators on providing the
educational services.
Number 1114
REPRESENTATIVE JOE GREEN asked Mr. Jeans what kind of time and cost
would be associated with data gathering and/or computer people to
make the information meaningful, if the department was to establish
a database that would update information every couple of years.
MR. JEANS emphasized his response would be hypothetical because he
was not prepared to say the department could actually do this. He
said the department already collects a lot of information on
schools such as enrollments and financial information, so it would
be a matter of determining what the data set was that would be used
to determine the area cost differentials and the means to collect
that information. The majority of the costs would be incurred in
the initial set up; maintenance shouldn't be a big problem.
CHAIRMAN BUNDE asked Mr. Jeans to explain the side-by-side analysis
prepared by the department.
Number 1184
MR. JEANS stated the side-by-side is a school funding analysis.
The first column identifies the elements within each of the
proposals. The headings of the next six columns are as follows:
Current Foundation Formula; HB 294 introduced by Rep. Kubina; SB 36
introduced by Senator Phillips; SB 257/HB 351, Governor Knowles'
new proposal; SB 146 adopted by the Senate HESS; and HB 148 adopted
by the House HESS.
MR. JEANS explained the first element is units versus per pupil
allocation. The current foundation program uses an instructional
unit method for distributing state aid. That would also be true
for Representative Kubina's bill, Senator Phillips and Governor
Knowles' new proposals. Senate Bill 146 and House Bill 148 would
move the allocations to a student-based allocation.
MR. JEANS continued the next column down is the full funding
requirements. The current formula is fully funded in the
Governor's FY 99 budget based on the current criteria of the
foundation program. The unit value is currently set at $61,000 per
instructional unit. House Bill 294 would require an additional
$37.5 million over the FY 99 budget and would increase the
instructional unit value to $64,000 for a $3,000 increase. Senate
Bill 36 would require an additional $35.5 million to fully fund
over the current FY 99 budget. This bill has a recapture provision
which would require the North Slope Borough to send a payment to
the state of Alaska of approximately $33 million. The unit value
would remain at $61,000. Under SB 257/HB 351 an additional $24.1
million would be required over the FY 99 budget and the unit value
would be increased to $62,550.
CHAIRMAN BUNDE asked if that was an additional $24 million per year
or a one time cost.
MR. JEANS replied that each one of the increases referred to would
be an annual cost. He continued that under the updated fiscal note
for SB 146 an additional $4.1 million would be required over the
FY 99 budget. He pointed out it was a per pupil allocation.
Because of transition years, the per student allocation will vary
for the first four years before it becomes stable, so the
department did not address that on the side-by-side comparison.
The full funding requirement wasn't addressed for HB 148 because
the department wasn't sure what the committee substitutes would be.
CHAIRMAN BUNDE recalled that it was about $400,000 - $500,000.
MR. JEANS continued to explain the next column was the annual
increases. There is no annual adjustment under the current
foundation formula, HB 294, or SB 36. There's a 1 percent
increase under SB 257/HB 351, which is about a $600 per year
increase to the unit value for an annual cost of slightly over $8
million. Senate Bill 146 has a recommended inflationary adjustment
based on the Anchorage Consumer Price Index. The term recommended
is used because the legislation requires the department to report
to the legislature, a recommended student value. There is no
adjustment in HB 148.
MR. JEANS explained the next element was categorical funding.
Under the current foundation formula, categorical revenue is based
on identification and types of service. There are four different
levels in special education, three different levels in bilingual
and one level for vocational education. There would be no program
changes under HB 294. Under SB 36, categorical revenue would be
generated for gifted and talented students and is an allocation
based system whereby 4 1/2 percent of the student population is
multiplied by a factor to arrive at the allocation. This
legislation also consolidates the three different levels of
bilingual into one level, which basically levels the playing field.
Under SB 257/HB 351, a 4 percent allocation is recommended for
gifted and talented students and a 14 percent allocation for
resource/self contained.
Number 1461
REPRESENTATIVE PORTER asked Mr. Jeans to explain the difference
between resource/self contained and intensive service.
MR. JEANS explained there are currently four categories in special
education: gifted and talented, resource, self contained services,
and intensive. Resource services are students who require remedial
services outside the classroom. Self contained services are
slightly beyond the resource service level where children are in a
classroom with other children needing the same types of services.
Intensive services are the severely multi-handicapped students who
require a full time aide. He noted there are approximately 1200
students statewide who require the intensive level of service, at
a cost of about $20,000 per student under the current foundation
formula.
MR. JEANS explained that under SB 146, special needs would be an
allocation of 20 percent of the student population and would
include special education, gifted and talented, bilingual and
vocational education. It would abolish the categorical revenues as
it is currently known, and make a 20 percent allocation. That same
scenario is true for HB 148, also.
Number 1535
MR. JEANS continued the intensive service funding is based on
student count under the current foundation formula. The current
level of funding is slightly over $20,000 and would remain at that
level under all the proposed legislation, with the exception of
SB 146 and HB 148 which would be $22,500.
Number 1560
MR. JEANS explained the required local effort element in the
current formula is based on the equivalent of a 4 mill property tax
levy or 35 percent of the district's basic need from the previous
year.
CHAIRMAN BUNDE pointed out that Rural Education Attendance Areas
(REAAs) were excluded.
MR. JEANS continued that under HB 294, the local effort would
remain at 4 mill local effort, but the 35 percent would be
increased to 40 percent of basic need for those communities falling
into that provision: Valdez, North Slope, Unalaska and Skagway.
Number 1590
REPRESENTATIVE PORTER questioned why those four communities fall
under the basic need provision while other communities fall into
the minimum millage.
MR. JEANS explained that under the current foundation program, the
required local effort is the lesser of the equivalent of a 4 mill
property tax or 35 percent of basic need. Mr. Jeans continued the
required local effort under SB 36 would change to 4.5 mills; the
equivalent of a 4.5 mill tax levy for all municipal school
districts in the state. This legislation also contains a recapture
provision which requires the North Slope to send $33 million to the
state of Alaska.
Number 1631
REPRESENTATIVE FRED DYSON asked Mr. Jeans to explain the uniqueness
of the North Slope situation.
MR. JEANS explained the North Slope assessed value is approximately
the same as Anchorage and on a per student basis it is
approximately $6 million property value per student. Basically, it
indicates extreme wealth.
CHAIRMAN BUNDE understood that per capita, it is the wealthiest
local government in the United States.
CHAIRMAN BUNDE announced he would like to discontinue the
discussion of the side-by-side analysis at this time, and have
Eric McDowell address the area cost differential study. He
confirmed that Mr. Jeans would be available to continue his
discussion at a later date.
Number 1691
REPRESENTATIVE GREEN observed that according to the side-by-side
comparison, Senate Bill 146 was the only legislation that affected
the unorganized boroughs. He questioned how that could be ignored
in the other bills.
MR. JEANS replied that SB 146 places a 3 percent wage tax on the
unorganized boroughs. None of the other proposals would impose
some form of tax on the unorganized boroughs.
Number 1720
CHAIRMAN BUNDE interjected that for House Bill 148 to be
successful, it presupposes that other legislation in the process
requiring unorganized areas to make a contribution would be passed.
CHAIRMAN BUNDE asked Eric McDowell to come forward to discuss the
area cost differential study.
Number 1782
ERIC MCDOWELL, Senior Partner, McDowell Group, introduced David
Teal, Senior Analyst for the McDowell Group, and designer and
project manager. Mr. McDowell said he would be giving the
committee an overview and would be available to answer questions.
Mr. McDowell explained the nature of the assignment, which is quite
limited in one sense, but quite vast in another; that being basic
need or what is needed to provide equitable education across the
state. There are two items relating to the cost of education they
were asked to looked at: What is the effect of school size on cost
and geographic location. He explained that a school of 50 students
has less efficiencies than a school of 500 and climate and
distance, et cetera, are factors in location.
MR. MCDOWELL said he would address size first, and explained
factual data was used for both staffing and cost, followed by
statistical methods to manipulate that data. In one sense it was
a huge assignment because they were dealing with enormous databases
of all kinds; on another hand, it was good the scope was limited to
size, location and to the basic needs.
MR. MCDOWELL drew a graph for the committee which depicted students
and staffing. He stated, "When I draw this curve, it will go from
a school size of 0 students out here to about 1500 and what we did
is we looked at the staffing of all 484 - depending on who's
counting or how we're counting - individual schools and said how
big are they, what were the staffing that was done regardless of
whether your district might have been overcompensated or
undercompensated or big or small. And so, what we did was we took
the influence of your current allocation out of it to calculate the
most crucial piece which is the size factor in cost of education."
CHAIRMAN BUNDE clarified the largest school in the state has well
over 2,000 students.
Number 1971
MR. MCDOWELL said 1500 was a generalization. He continued his
overview stating a team of individuals, having about 100 years
cumulative school expertise, was assembled. The team included Andy
Warwick from Fairbanks; Tom Freeman, former business manager of the
Anchorage School District; Bob Weinstein, former rural Southeast
school superintendent; and Jim Paul, retired rural school
superintendent. This team of individuals was asked what they would
need to staff a school to provide good education in the basics,
regardless of budget. They mapped out a curve of what was needed
for schools of all sizes. The team didn't necessarily agree with
everything the McDowell Group was doing, and in fact, many changes
were made. It was interesting that the curve derived by the team
was very close to the statistical curve of the McDowell Group. He
drew a curve on the flip chart and said, "In other words, the
larger the school, the efficiency gets really good starting about
say 500 to 600, and then your increasing benefits of efficiency get
a lot less. You get out beyond 1500, and while you still get some
more efficiencies, it's pretty insignificant beyond that." But the
difference in efficiency between a school of 50 and a school of 150
is very significant.
Number 2026
CHAIRMAN BUNDE said one of the concerns about Alaska schools is
that of being top heavy in administration and asked if that was
addressed anywhere in the study. He was interested in knowing if
the curve illustrated "what is," "what ought to be," et cetera.
MR. MCDOWELL replied the information is essentially, according to
data from superintendents and data from McDowell Group, what ought
to be in terms of instruction, not administration or nonpersonal
costs.
Number 2046
REPRESENTATIVE GREEN asked, "In this -- this is a wish list type
thing, it's an artificial school, so as you get out 2 - 3,000 -- we
don't have many like that but we do have some over 2,000 -- that
you're not in a cramped, confined quarter or anything like that.
It's still on a hypothetical basis."
MR. MCDOWELL said, "Yeah, I would say hypothetical, but the basis
of it is the combination and the average curve of all schools as
they staff now - under the assumption that some are high, some are
low in their funding - but that they'll come down the middle and
that will be defined as adequate education. And that matches very
closely with what the superintendents say. Most of their work is
through the 500 and once you get out here because there's so few
schools, the changes can be -- like if one particular school was
overfunded or underfunded, then you could have some quirks out here
at the end. But the statistical method, the regression analysis
and so forth that we use, we think it's still pretty good way out
here at the end with the big schools."
Number 2084
REPRESENTATIVE GREEN said that he has heard from both educators and
administrators, that when a school reaches over 1,500 students, the
efficiency actually begins to drop.
MR. MCDOWELL said he didn't know if it dropped, but it doesn't get
much more efficient. He explained that when a school reaches 1,500
- 2,000 students, a constituency exists for everything; e.g., a
Latin class, gymnastics program for third graders, et cetera.
Essentially, the demands are much greater for a large constituency
and unfortunately, it's one of the burdens that big schools have to
bear.
Number 2114
MR. MCDOWELL explained that one of the first conclusions reached
was that under the old system there was one area cost differential.
The suggestion from the McDowell Group is to allocate in three
different areas - instructional, administration, and nonpersonal
(NPS). Based on a variety of data, they determined the three costs
behaved totally differently from one another, so one formula
doesn't do it. He said, "Administration costs behaved like we told
you - you got more efficient as you went up there and cost per
student seemed pretty reasonable in most cases and so what we
learned is, we suggested using size only for instruction because
one of the major findings of the study is no matter what your
differential was that you were funded by, the truth is that most
districts paid about the same to their instructional personnel."
Number 2158
CHAIRMAN BUNDE interjected that rural schools pay a premium for
teachers who teach a relatively short period of time. Urban
schools don't have to pay the initial premium, but have teachers
who stay to hit the top end of the salary scale, which nets about
the same.
Number 2175
MR. MCDOWELL said that most districts pay about the same, and
approximately 45 out of 53 districts pay within 5 percent of what
Anchorage pays. Urban districts have made conscious choices in
terms of how long they want teachers to stay, while rural districts
start at a higher wage in order to attract teachers. The real cost
differences are in the other two areas; administration and
nonpersonal. With regard to size, the area cost differential for
instruction is one for everyone. But districts with relatively
small sized schools will get 1.4.
MR. MCDOWELL next addressed the nonpersonal service areas. He said
that statewide, and it varies greatly by district, about 79 percent
of all operating costs are instructional; about 5 percent are
administration. Building administrators were included in the
instructional category. Administration was narrowly defined as
just personnel in the central office that don't relate to students.
CHAIRMAN BUNDE noted the committee may have a need to revisit
HB 148 to define administrator. He had recently learned that
administrators are being classified as teachers, because districts
can see what the impact is going to be.
MR. MCDOWELL agreed there was some shuffling from administration to
instructional. He continued that nonpersonal which includes books,
fuel, et cetera, is about 15 percent. The findings indicate that
cost differential per student is far higher than imagined in
nonpersonal service. He explained it as follows: "Let's say that
in Nome it cost $2 a gallon for fuel and in Anchorage it cost $1 a
gallon, so you think that your differential should be 2.0 for NPS.
That's not the case and we're the ones who did the research nine
years ago that told you what these things cost -- per pupil is what
costs. And here in Nome, you've got a severe climate and an
inefficient old building, you're burning four gallons of fuel to
heat a kid each day. Anchorage burns one gallon of fuel to heat a
kid each day. The cost difference per student is really $8 versus
$1, so your differential can be as high as 8, not 1.3, for example.
So, the shift is identifying where the costs really are." It's not
personnel, it's very severe in NPS, and administration hits all
over the map. The lowest administration costs were approximately
$115 per district and the highest was in the thousands of dollars
per student.
REPRESENTATIVE GREEN inquired if the administration costs were
determined by the size of the school, location or a combination.
MR. MCDOWELL responded that it was a combination and stated, "When
we give you a factor for administration NPS, we're talking about
the cumulative effect of size and location in these categories.
What we really have -- we didn't make judgments about whether you
manage your district inefficiently and you were doing a great job
in keeping it lean -- what we did observe is because of size, there
are inefficient school districts to start with. So if you've got
a district of 31 kids in Pelican and add a superintendent and a
principal, you're a little top heavy."
TAPE 98-4, SIDE B
Number 0034
MR. MCDOWELL continued that because of fluctuations and not having
real strong data in this area, they ended up recommending
essentially three different differentials: Use size for
instruction because that's where most of the money is spent; look
at setting some limits for administration costs; and for
nonpersonal services, the extreme at the top was lobed off and
filled in at the bottom so the districts that were very lean didn't
get penalized, but ended up with the average for Anchorage. Mr.
McDowell said the real result of their work was to telescope so the
districts with the highest differentials are probably a little
lower, and the districts with the lowest differentials are a little
higher. The order, however, is the same - the lowest paid
districts are still the lowest paid and the highest paid districts
are still the highest. Mr. McDowell believed that some equity had
been achieved in doing it this way.
Number 0049
CHAIRMAN BUNDE inquired what category would nonteaching staff, such
as janitors, fall under.
MR. MCDOWELL responded that if they are in a building and
associated with supporting the students, they are included in the
instructional category. Individuals performing a central function
would fall into the administration category.
MR. MCDOWELL said one of the key points is there are 53 districts,
there were 271 funding communities, and 484 or 488 schools. The
McDowell Group was asked to study the per school size factor. He
stated, "You can't do that and use funding communities." An
objective cost analysis of what it costs to operate a school of any
particular size can't be done if there is a combination of schools
in one funding community. The McDowell Group's analyses were done
by school and it is their recommendation to let go of the funding
community concept and go with the real cost center. He cited an
example of a town with 600 students and three schools of 200 each,
funding is needed for three schools of 200 each because that's
where the inefficiencies are; staffing and principals are required
for each one of those schools. However, if the next town has 600
students but only one school, the level of funding per student is
less than each of the three schools. He stated, "When we do it by
school, everyone is on an equitable basis when it comes to funding
for school size and that's a big departure."
Number 0108
CHAIRMAN BUNDE asked if that wasn't rewarding inefficiency because
the economically efficient big school gets less money than the
economically inefficient smaller school.
MR. MCDOWELL pointed out the inefficient smaller school costs more,
so it's self-defeating. He added, "I probably wouldn't want to
manipulate that way because it's all going out the door because
I've got higher costs in these little buildings. But it is
conceivable that someone might want to manipulate that." On the
other hand, if the cost center is by school and it's been measured,
then why not fund by school. He said the McDowell Group was not
giving the committee a new formula, cut and dried, but rather
giving the pieces to assemble a formula that has political
considerations.
MR. MCDOWELL said in closing that one of the reasons this method
was chosen is because there are existing databases that can
continue to be improved, so this formula can get more and more
accurate. Also, a transition period is being recommended so that
no one loses dollar funding. He said the results of taking $800
million and distributing it through this formula indicate there's
about $20 million that shifts from some districts to other
districts. The suggestion is to take the $16 million to $20
million and do essentially a hold harmless.
Number 0203
CHAIRMAN BUNDE asked if it would take an additional $20 million per
year to fund the hold harmless or was it a one-time expenditure.
MR. MCDOWELL said, "Per year, but as your pot grows a little, it
will probably go away pretty quick in a few years."
Number 0216
REPRESENTATIVE GREEN asked, "...is there some way that you would
not be penalizing an efficient large school because if you do it by
school and not consider the number of students in it, you are
penalizing efficiency and is there a way that you could make a
combination of student enrollment and number of schools as opposed
to just saying we're going to go to a building rather than a number
of kids inside?"
MR. MCDOWELL responded that it was all based on the number of
students. He explained, "How it works is I've got a school of 50
and a school of 100 and a school of 200, I get to start over with
my efficiency curve each time, so I get, per kid, a funding
allocation based on this school's efficiency. So, the large
efficient school is not penalized; they're still getting an
appropriate per kid allocation for however many kids there are."
Number 0254
MR. MCDOWELL said, "So, in summary on the area cost differential,
not the size part, is here was the personnel side or the
instruction side and here was the nonpersonal side. You used to
get a formula that was at this level - say 1.30 for one of the
remote districts - so you got 30 percent more for all your people;
30 percent more for all your NPS. What we found is that personnel
is actually 1.00 but when you got to the NPS, that could be as high
as 8.00. Same with administration because like I say, there's
inefficient districts that may or may not be efficiently
administered, but just the fact that you only have 50 or 100 in a
district, you gotta have somebody sitting in there being the boss.
That's inefficient by itself, although he might have a low salary
and cut his travel and all that. So when you look at the issue of
say perhaps, consolidation and those kinds of things, you're
probably looking at some significant administrative savings. So,
what we're doing is we're just saying here's where your real costs
are, how about allocating by real costs and I think you'll have a
fairer system as a result."
Number 0300
CHAIRMAN BUNDE asked if it was safe to assume there wouldn't be any
huge change in funding for various schools.
MR. MCDOWELL confirmed that. He considered that it would be
moderate. He reiterated their study looked at districts from 21
students to 47,000 students and there wasn't any formula that would
treat every district fairly. However, he thought by and large the
costs were being allocated where the costs really are.
CHAIRMAN BUNDE noted there were three people who wished to testify
via teleconference. He thanked Mr. McDowell for his presentation
and announced that Beth Deeter would be testifying via
teleconference from Seward.
Number 0371
BETH DEETER testified via teleconference from Seward stating the
foundation formula had not increased in several years. She
discussed the unfunded mandates being cut but were needed in the
schools and said she would like to see some provision to increase
funds for that. She found the area cost differential study
interesting and liked the idea of allocation by real cost. She
noted the original draft had Seward at the same cost as Anchorage,
which in her opinion was ludicrist considering the increased cost
of living in Seward.
CHAIRMAN BUNDE noted that Ms. Deeter had expressed a desire to see
more funding for the foundation formula and asked where the
additional funds should come from.
MS. DEETER suggested taxes and other things.
CHAIRMAN BUNDE noted the results of a statewide study indicated
that people would support a sales tax for education, if a tax was
necessary. He thanked Ms. Deeter for her testimony and asked Ms.
Sturgulewski to present her testimony.
Number 0488
CAROL STURGULEWSKI testified via teleconference from Seward. She
referred to Chairman Bunde's question and suggested either taking
funds from the reserve account or not putting as much money into
the reserve account this year. She encouraged the committee to
adopt the area cost differential, as described. People on the
Kenai Peninsula have known for years that the numbers were not
correct as the cost of living is certainly higher there than in
Anchorage. Considering these numbers have been used for
approximately the past 10 years, she said the Kenai Borough School
District should be funded about 1.156 instead of 1.0. Because the
district hasn't been funded at that level, they've been taking
money out of other areas to pay for actual costs. She urged the
committee to approve the area cost differential and to consider an
increase in funding.
CHAIRMAN BUNDE observed that part of the goal in rewriting the
foundation formula was to make it simpler and make it a more fair
distribution. He thanked Ms. Sturgulewski for her testimony and
asked Mr. Rohlman to present his testimony.
Number 0618
RON ROHLMAN testified via teleconference from Sitka and echoed the
comments of the previous speakers regarding a need for an increase
in educational funding. He indicated he has no problem with paying
taxes for education. He noted the area cost differential for Sitka
is the same as Anchorage, meaning they get the same amount of money
but Sitka pays phenomenal transport fees. With respect to cutting
funds for education, he cited an example of a kindergarten site
being cut which cost approximately $100,000 a year to maintain and
served 113 children. Those 113 children were crammed into another
building, which decreased the quality of education for the entire
building proportionately. He reiterated his willingness to pay
more taxes, but he suggested the legislature get more directed on
their view of oil prices.
Number 0752
CHAIRMAN BUNDE emphasized that education funding has not been
reduced. He thanked Mr. Rohlman for his comments. Chairman Bunde
announced that information from the cost differential study still
needed to be incorporated into CSSSHB 148(HES) and individuals
would have an opportunity to testify at a later meeting.
ADJOURNMENT
Number 0800
CHAIRMAN BUNDE adjourned the House Health, Education and Social
Services Committee at 4:40 p.m.
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