03/21/1998 01:07 PM House HES
| Audio | Topic |
|---|
+ teleconferenced
= bill was previously heard/scheduled
HOUSE HEALTH, EDUCATION AND SOCIAL
SERVICES STANDING COMMITTEE
March 21, 1998
1:07 p.m.
MEMBERS PRESENT
Representative Con Bunde, Chairman
Representative Joe Green, Vice Chairman
Representative Brian Porter
Representative Fred Dyson
Representative Tom Brice
MEMBERS ABSENT
Representative J. Allen Kemplen
Representative Al Vezey
OTHER HOUSE MEMBERS PRESENT
Representative Pete Kelly
Representative Jeannette James
Representative Irene Nicholia, via teleconference
COMMITTEE CALENDAR
CS FOR SENATE BILL NO. 36(FIN) am
"An Act relating to public schools; relating to the definition of
a school district, to the transportation of students, to employment
of chief school administrators, to school district layoff plans, to
the special education service agency, and to the child care grant
program; and providing for an effective date."
- HEARD AND HELD
(* First public hearing)
PREVIOUS ACTION
BILL: SB 36
SHORT TITLE: PUBLIC SCHOOL FUNDING
SPONSOR(S): SENATOR(S) PHILLIPS, Taylor, Halford, Wilken,
Torgerson
Jrn-Date Jrn-Page Action
01/13/97 24 (S) PREFILE RELEASED 1/10/97
01/13/97 24 (S) READ THE FIRST TIME - REFERRAL(S)
01/13/97 24 (S) HES, FIN
02/12/97 (S) HES AT 9:00 AM BUTROVICH ROOM 205
02/12/97 (S) MINUTE(HES)
02/27/97 542 (S) COSPONSOR(S): HALFORD
03/14/97 (S) HES AT 9:00 AM BUTROVICH ROOM 205
03/14/97 (S) MINUTE(HES)
03/17/97 (S) HES AT 9:00 AM BUTROVICH ROOM 205
03/17/97 (S) MINUTE(HES)
03/19/97 (S) HES AT 9:00 AM BUTROVICH ROOM 205
03/19/97 (S) MINUTE(HES)
03/21/97 (S) HES AT 9:00 AM BUTROVICH ROOM 205
03/21/97 (S) MINUTE(HES)
05/05/97 (S) HES AT 3:15 PM BUTROVICH ROOM 205
05/05/97 (S) MINUTE(HES)
05/06/97 1712 (S) HES RPT 1AM 3NR
05/06/97 1712 (S) AM: WILKEN; NR: GREEN, LEMAN, ELLIS
05/06/97 1712 (S) FISCAL NOTES (DOE-2)
11/12/97 (S) MINUTE(HES)
01/23/98 (S) FIN AT 8:45 AM SENATE FINANCE 532
02/03/98 (S) FIN AT 9:00 AM SENATE FINANCE 532
02/03/98 (S) FIN AT 6:30 PM SENATE FINANCE 532
02/24/98 (S) FIN AT 8:30 AM SENATE FINANCE 532
02/26/98 (S) FIN AT 8:30 AM SENATE FINANCE 532
02/26/98 (S) FIN AT 6:00 PM SENATE FINANCE 532
02/27/98 (S) FIN AT 4:30 PM SENATE FINANCE 532
02/28/98 (S) FIN AT 10:00 AM SENATE FINANCE 532
03/02/98 2705 (S) COSPONSOR: WILKEN
03/03/98 (S) FIN AT 8:30 AM SENATE FINANCE 532
03/03/98 (S) FIN AT 4:30 PM SENATE FINANCE 532
03/04/98 (S) FIN AT 10:00 AM SENATE FINANCE 532
03/04/98 (S) FIN AT 4:30 PM SENATE FINANCE 532
03/06/98 (S) FIN AT 9:00 AM SENATE FINANCE 532
03/09/98 (S) FIN AT 9:00 AM SENATE FINANCE 532
03/09/98 (S) RLS AT 11:45 AM FAHRENKAMP RM 203
03/09/98 (S) FIN AT 4:30 PM SENATE FINANCE 532
03/09/98 (S) MINUTE(RLS)
03/10/98 (S) RLS AT 1:15 PM FAHRENKAMP RM 203
03/10/98 (S) MINUTE(RLS)
03/10/98 2805 (S) FIN RPT CS 5DP 1NR 1DNP NEW TITLE
03/10/98 2806 (S) DP: SHARP, PHILLIPS, PARNELL,
TORGERSON
03/10/98 2806 (S) DONLEY NR: PEARCE DNP: ADAMS
03/10/98 2806 (S) FISCAL NOTE TO CS (DOE)
03/10/98 2806 (S) ZERO FISCAL NOTE TO CS (LABOR, REV)
03/10/98 2808 (S) RULES TO CALENDAR & 1 OTHER REC 3/10
03/10/98 2809 (S) READ THE SECOND TIME
03/10/98 2809 (S) MOTION TO ADOPT FIN CS
03/10/98 2810 (S) FIN CS Y14 N5 E1
03/10/98 2810 (S) AM NO 1 ADOPTED UNAN CONSENT
03/10/98 2811 (S) AM NO 2 ADOPTED UNAN CONSENT
03/10/98 2811 (S) AM NO 3 ADOPTED UNAN CONSENT
03/10/98 2811 (S) AM NO 4 WITHDRAWN
03/10/98 2812 (S) AM NO 5 FAILED Y5 N14 E1
03/10/98 2814 (S) AM NO 6 FAILED Y4 N15 E1
03/10/98 2814 (S) AM NO 7 FAILED Y5 N14 E1
03/10/98 2815 (S) AM NO 8 NOT OFFERED
03/10/98 2815 (S) AM NO 9 FAILED Y5 N14 E1
03/10/98 2816 (S) AM NO 10 FAILED Y5 N14 E1
03/10/98 2817 (S) ADVANCED TO THIRD READING UNAN
CONSENT
03/10/98 2817 (S) READ THE THIRD TIME CSSB 36(FIN) AM
03/10/98 2817 (S) COSPONSOR: TORGERSON
03/10/98 2817 (S) PASSED Y12 N7 E1
03/10/98 2818 (S) EFFECTIVE DATE ADPTD Y18 N1 E1
03/10/98 2818 (S) ADAMS NOTICE OF RECONSIDERATION
03/11/98 2829 (S) RECON TAKEN UP - IN THIRD READING
03/11/98 2830 (S) PASSED ON RECONSIDERATION Y12 N8
03/11/98 2830 (S) EFFECTIVE DATE ADPTD Y18 N2
03/11/98 2831 (S) TRANSMITTED TO (H)
03/13/98 2613 (H) READ THE FIRST TIME - REFERRAL(S)
03/13/98 2613 (H) HES, FINANCE
03/21/98 (H) HES AT 1:00 PM CAPITOL 106
WITNESS REGISTER
SENATOR RANDY PHILLIPS
Alaska State Legislature
Capitol Building, Room 103
Juneau, Alaska 99801-1182
Telephone: (907) 465-4949
POSITION STATEMENT: Testified as prime sponsor of CSSB 36(FIN)am.
SENATOR GARY WILKEN
Alaska State Legislature
Capitol Building, Room 510
Juneau, Alaska 99801-1182
Telephone: (907) 465-3709
POSITION STATEMENT: Testified as co-sponsor of CSSB 36(FIN)am
via teleconference.
SENATOR JOHN TORGERSON
Alaska State Legislature
Capitol Building, Room 514
Juneau, Alaska 99801-1182
Telephone: (907) 465-2828
POSITION STATEMENT: Testified as co-sponsor of CSSB 36(FIN)am.
ACTION NARRATIVE
TAPE 98-30, SIDE A
Number 0007
CHAIRMAN CON BUNDE called the House Health, Education and Social
Services Standing Committee meeting to order at 1:07 p.m. Members
present at the call to order were Representatives Bunde, Porter,
Dyson and Brice. Representative Green arrived at 1:09 p.m.
Representatives Kemplen and Vezey were absent.
CSSB 36(FIN)am - PUBLIC SCHOOL FUNDING
Number 0137
CHAIRMAN BUNDE announced the committee would be addressing
CSSB 36(FIN)am, "An Act relating to public schools; relating to the
definition of a school district, to the transportation of students,
to employment of chief school administrators, to school district
layoff plans, to the special education service agency, and to the
child care grant program; and providing for an effective date."
He announced that Senators Phillips and Torgerson were present and
Senator Wilken would participate via teleconference in giving the
committee an overview of this legislation.
REPRESENTATIVE IRENE NICHOLIA speaking via teleconference advised
Chairman Bunde there were hundreds of people at the Tok Legislative
Information Office in protest of this bill.
CHAIRMAN BUNDE noted that Representative Jeannette James was in
attendance.
Number 0242
SENATOR RANDY PHILLIPS, Prime sponsor, verified that committee
members had received the sponsor statement, sectional analysis, a
comparison schedule of funding of the existing system plus $50
million as well as SB 36 plus $50 million and a short history of
the McDowell Report.
CHAIRMAN BUNDE drew attention to a stack several inches high of
public correspondence that accompanied the legislation from the
Senate. He advised the correspondence would be available in the
committee room for members' perusal.
Number 0359
SENATOR PHILLIPS said he believes that Alaska's public school
foundation formula is broken and is not working for today's
conditions. Therefore, this legislation is an attempt to rewrite
the school foundation formula. He noted the Anchorage School
District has approximately 40 percent of the enrollment and 30
percent of the funding, and many of his constituents have indicated
there is something wrong with that picture. He pointed out that
SB 36 was based on the McDowell Report which shows the actual costs
of operating a school district and its schools versus a market
basket approach. The funding is allocated based on a per student
formula rather than the current instructional unit and it is his
opinion, the public would be better served and would better
understand a per student ratio versus the instructional unit.
Number 0464
CHAIRMAN BUNDE inquired how many other states are using the per
student formula and how many use the instructional unit.
SENATOR PHILLIPS replied that only 7 states are using the
instructional unit formula, which Alaska's current foundation
formula is based on, and the other 43 states use the per student
formula.
CHAIRMAN BUNDE questioned if any of the states have changed from
the per student count to the per unit formula.
SENATOR PHILLIPS wasn't aware of any, but a number of states have
changed from the per unit to the per student.
Number 0515
REPRESENTATIVE TOM BRICE asked for a breakdown of the per student
funding for the other 43 states.
Number 0540
SENATOR GARY WILKEN, co-sponsor of CSSB 36(FIN) am, informed
Representative Brice that formula fundings as well as other
information from other states was available in his office.
Number 0585
SENATOR PHILLIPS stated his second point is the size adjustment in
the formula is based on the individual school instead of the
funding communities. Funding communities under the current formula
are not well defined and a fair comparison of instructional costs
can be made at the school level. The third point is that
adjustments for geographical cost differences are based on the
McDowell Report of the actual costs of operating school districts
instead of household cost of living. He added this is the first
time it's been done in this manner since statehood. His fourth
point is the required local contribution for municipal districts is
set at 4 mills of assessed value or 100 percent of district state
support; currently that limit is at 35 percent. He said, "We
believe that by having that, we have taxpayer equity within the tax
paying jurisdictions for their local contribution towards
education." Fifth, categorical funding is set at 20 percent of
state support plus funding for intensive needs students. This will
remove any incentive in the current formula to identify students as
special ed in order to qualify for additional funding.
SENATOR PHILLIPS continued to explain his sixth point is that
funding for statewide correspondence study programs offered by a
district is set at .65 times average daily membership (ADM) the
same as the state operated program. At least one school district
has several times as many students enrolled in their statewide
correspondence program than live in the actual district. This
provision is intended to prevent districts from being in the
business of providing programs to finance their operations. His
seventh point is that CSSB 36(FIN)am provides reimbursement for
district operated pupil transportation at 90 percent of actual
cost. Currently, the Anchorage School District is the only
district not fully funded at 100 percent; it's funded at 66
percent. He said the Senate Finance Committee had brought that up
to 90 percent. His last point is that districts are required to
spend at least 70 percent of student funding on instructional
costs. The Education Week "report card" earlier this year
criticized Alaska for spending too much money on school
administration and not enough on instruction. Overall in Alaska,
approximately 70 percent of public school funding is spent on
instruction, with some districts spending about 75 percent on
instruction and some spending closer to 39 percent.
Number 0800
CHAIRMAN BUNDE confirmed that some districts were spending only 39
percent in the classroom and 61 percent was spent on
administration.
SENATOR PHILLIPS said that was accurate. He directed the
committee's attention to a list of 18 school districts which breaks
down the local contribution, cost per student, and the existing
formula plus $50 million versus SB 36 plus $50 million. He stated
this is not a perfect bill, but there are inequities within the tax
paying jurisdictions, as well as inequities between the tax paying
jurisdictions and the unorganized areas of the state. This bill
attempts to rewrite a broken foundation formula which most everyone
agrees or has at least expressed concern that the current system is
broken.
Number 0896
CHAIRMAN BUNDE verified that a copy of the McDowell Report was
available in each of the legislative information offices.
SENATOR PHILLIPS confirmed that and added that each school
superintendent statewide had received a copy, also.
CHAIRMAN BUNDE said that Senator Phillips had mentioned that
special needs funding was set at 20 percent plus funding for
intensive needs students. For the committee's edification, he
explained the 20 percent includes gifted, special ed and bilingual.
Intensive needs students are seriously disabled students who need
personal care attendants, et cetera.
Number 0949
REPRESENTATIVE FRED DYSON referred to the chart of state funding
per ADM for selected school districts and said he didn't understand
why there was no funding figures for the North Slope under SB 36.
Number 0978
SENATOR JOHN TORGERSON, Co-sponsor, said, "The part of the bill
that Senator Phillips referred to with the local effort, he said
that in order to receive state funding, you'd have to come up with
4 mills or 100 percent of your prior basic need of the state
funding in order to qualify for that - so it's whatever is less.
The current formula says 4 mills or 35 percent of your prior basic
need and that's currently what North Slope pays into. What that's
(indisc. - paper shuffling) to the 100 percent in this bill, the
North Slope, 4 mills would be roughly $50 million and the 100
percent is the lesser amount, I believe that's somewhere around $38
million or something which indicates that we do not put any state
money in there. They pay 100 percent of their own education costs
because of that formula. So that's why we show zero."
REPRESENTATIVE DYSON questioned if that was true for Tanana,
Unalaska and Valdez.
SENATOR TORGERSON wasn't certain about Tanana.
CHAIRMAN BUNDE noted the Department of Education would be
furnishing the committee with an updated run of numbers next
Wednesday.
SENATOR WILKEN said in response to Representative Dyson's question,
the easy way to think about it is the North Slope Borough has the
capacity to fund their education about 30 times what the rest of
Alaska has due to their wealth per student; about $6 million per
student versus $225,000 per student for Anchorage and Fairbanks.
He added, "But at the same time, because of a quirk in the formula
in 1987, they're only required to do it at 35 percent, so they
essentially are doing it at about one-eighth of what you and I are
funding our education at. Even when they pay 100 percent of their
educational requirement, which is an additional $11.6 million,
they're still funding at a rate that is about one-third of what the
rest of organized Alaska is, so there's a lot of (indisc.) about
lawsuits and things because we treat them differently, and in deed
we do treat them differently; we ask them to pay less and I don't
think that's unfair at all."
Number 1145
REPRESENTATIVE BRICE asked, "It goes back to the capitation - the
20 percent above and beyond for special needs - do we know how
much, basically on a statewide average maybe, is spent on special
education, how much is spent on gifted and talent, and then on
vocational education?"
SENATOR TORGERSON said the statewide average for all is 19.
something percent.
SENATOR WILKEN interjected said the average was 19 and that figure
came from the Department of Education in SB 85, the Governor's
education bill last year.
SENATOR PHILLIPS pointed out that each school district has a
different standard for the gifted and talented category. For
example, Anchorage is about 4-5 percent whereas Juneau is about 9-10 percent.
up to the local district so while the categorical funding is set at
20 percent, the school district decides how to split that up. He
pointed out a problem with bilingual in that both the Lower
Kuskokwim and Yukon School Districts go above 20 percent on the
bilingual aspect of the categorical funding. In his opinion, it's
an imperfection in the legislation and he will wait and see what
happens as the bill continues to go through the legislative
process.
Number 1283
REPRESENTATIVE JEANNETTE JAMES said it appeared to her the assessed
valuation of a community is always used as the measure of the
wealth of the community. In the case of the school districts
listed that get no money based on 4 percent of their assessed
valuation, there's a falsification factor as to the wealth of the
community because of the activity of the oil industry which is part
of the calculation. She asked the sponsors if a comparison had
been done which separated out the assessed valuation of the oil
industry located in these areas from the other assessed valuation
relating to the community; e.g., homes, personal property, et
cetera.
SENATOR WILKEN said the North Slope has a $217 million budget for
9,000 people. They have a cap on the budget that was put in place
in the 1980s but it's an artificial cap that recognizes the fact
there is extreme wealth per capita. The North Slope Borough is the
only community that qualifies for a cap, referred to as the "30
mill cap" because 96 percent of the wealth in the community is
generated by oil and gas. He added, "So, in order to be able to
put a cap on what they can tax, there's the 20 mill tax cap, which
we're all familiar with, and they're at about 18.5 mills out of the
20 that's assessable off the oil and gas properties in the state of
Alaska."
CHAIRMAN BUNDE noted the presence of Representative Pete Kelly and
former Representative Bettye Davis.
Number 1430
SENATOR PHILLIPS concluded that CSSB 36(FIN)am is a complex bill
and he, Senator Torgerson and Senator Wilken have shared duties in
the drafting. For individuals who don't like the legislation, he
has asked them to come up with an alternative. In his opinion,
putting more money into the current system isn't going to solve the
problem in the long term. He is hopeful that CSSB 36(FIN)am will
pass through the legislative process and once the formula is fixed,
it's a policy decision of the legislature and the Governor as to
whether or not more money should be put into the new rewrite of the
foundation formula.
Number 1502
CHAIRMAN BUNDE commented that passing this legislation perhaps will
not guarantee additional money, but if his correspondence is any
indication of the attitude of the majority of the people in the
state, if the current formula is not changed, it guarantees there
will not be additional money because it simply perpetuates
inequity.
Number 1516
REPRESENTATIVE GREEN asked if most of the negative responses from
the public are primarily from districts who would receive less
funding under a new formula.
SENATOR PHILLIPS responded affirmatively.
Number 1541
CHAIRMAN BUNDE asked Senator Torgerson to address the comparison
done based on the assumption that $50 million was added to the
current foundation formula in terms of the amount of money students
in the Mat-Su School District or the Anchorage School District, for
example, would receive versus students in other districts in the
state.
SENATOR TORGERSON explained that Senator Sharp had wanted to take
a hypothetical $50 million and compare what the distribution would
be under the current system to the distribution under SB 36. The
determination was made on a per student basis and some districts
went up from $4,000 per student to $4,500 per student. He said the
handout prepared by Senator Phillips showed the actual dollar
growth or loss in some of the districts. He said it's a good
comparison and shows that the current formula plus $50 million
would give his district, the Kenai Peninsula, about $3.6 million
more in state aid support; the adoption of CSSB 36(FIN)am would
give the district an additional $4 million; and the adoption of
CSSB 36(FIN)am plus $50 million would be an additional $7 million.
He pointed out the Kenai Peninsula might be somewhat different than
other districts because of the number and size of rural schools in
the district. There has been debate for years that the area cost
differential wasn't anywhere near fair to the Kenai Peninsula
because there are schools that children either walk to or get there
by 4-wheeler and others where either a ferry or airplane are used.
Those schools have always been on the same area cost differential
as the rest of the district, which is the same as Anchorage.
SENATOR TORGERSON referred to various charts; specifically the
chart depicting the growth in categorical funding requirements
which shows an overall increase of about 22 percent in new students
and an increase of approximately 92 percent in the bilingual
category. It has been a growing and out of control determination
on how the state reimburses and qualifies for the bilingual
category.
Number 1715
CHAIRMAN BUNDE commented that CSSB 36(FIN)am has been portrayed as
urban versus rural. He asked how many urban schools versus rural
schools would lose funding.
SENATOR TORGERSON said he didn't have the actual numbers, but added
that 82 percent of the students would benefit from this
legislation.
SENATOR WILKEN noted it was about 27 urban and 26 rural, but a
problem arises with defining rural and urban. He's heard comments
that the Rural Education Attendance Areas (REAAs) obviously come
out with less money, but the question arises as to what they are
contributing for education. He added, "If you take and ask for, as
we did at one time -- it's not in the bill now -- but you ask for
a simple payroll tax of 3 percent, those folks that are what I'll
say losers today, become winners. And probably the best example of
that is the new Alaska Gateway that was put together - if they did
a 3 percent payroll tax, they would go from a $1.3 million loss in
this effort over the next two or three years to a gain of about
$90,000. That gives an indication of what if folks will just help
themselves a little bit in this effort, it helps the formula
tremendously. So we must remember that there's still areas of the
state under SB 36 that are contributing zero of their own money
towards education, and frankly I don't like that but that's where
we are today."
Number 1820
CHAIRMAN BUNDE asked Senator Wilken to discuss the results of his
study of 1996 earned wages in REAAs. Frequently, comments are made
that people cannot contribute in REAAs because they simply don't
have a cash economy.
SENATOR WILKEN said based on comments he heard during his travels,
he requested a report about a year ago from the Department of Labor
of the earned wages reported on the quarterly employment security
reports. The chart lists the REAAs (indisc.) equivalent census
areas and shows that $460,991,899 by 18,341 people in 1996. He
added, "When the Department of Education looked at that, they did
a little definition differently than I and theirs was a bit more
conservative - they said about $390 million, and that was when
there was a 3 percent payroll tax in the equation." Overall, it's
somewhere between $400 million and $500 million earned by about
18,000 people in the rural areas. The state support in 1996 to
these REAAs listed was $135 million with zero personal return,
which is about 22 percent of the $630 million budget. He simply
asks these areas to find a way to help pay for education, just as
the organized areas do.
SENATOR TORGERSON said for a matter of clarification, the chart
shows that $195,748,233 were government wages earned by 7,338
individuals, $265,243,666 earned by 11,003 individuals in the
private sector, for a total of $460,991,899 wages earned.
SENATOR WILKEN noted that's an average income of about $25,000 or
$26,000 for these areas and the average income for the state is
about $27,000. These figures do not include any income other than
earned wages.
Number 1968
SENATOR TORGERSON referred back to the bill and said that
approximately $26 million is shifted by following the
recommendations of the McDowell Report. One of the key components
determined in that report was that 70 percent of the education
budget is spent in the instructional unit - the classroom and pupil
services - and there is no cost differential eligible for that 70
percent, which is one of the major reasons for the shift. He said
it was important to keep that in mind because some districts had
been receiving as much as 1.46 for an area cost differential and
now we're saying that 70 percent of that isn't eligible for a cost
differential.
Number 2014
REPRESENTATIVE GREEN noted Senator Torgerson had earlier remarked
that some districts were spending only 39 percent in the
instructional unit and asked if adjustments were made for those
districts or do they further get penalized.
SENATOR TORGERSON responded that another portion of the bill
mandates that 70 percent of the funds appropriated be spent in the
instructional unit. He explained that previously the statute
mandated 55 percent be spent in instructional unit, but that was
amended out of statute in 1982. He continued, "Some of you might
remember earlier that I had a piece of legislation that required an
administrative cap and it was basically $950 per student that was
adjusted by the area cost differential to bring that gap of
administrative costs a little closer. Currently, we have a low of
$695 - this is both district and school - in Ketchikan to a high of
$6,501 in the Aleutians, so the administrative cap was just all
over the board. But in lieu of that and since we had a report from
an independent consultant that said 70 percent, we went ahead and
took all the administrative caps out of there and said we want 70
percent of this money in the classroom. Because this is a large
impact on some of those districts - you mentioned, Representative
Green, 39 percent - we put a phase in of 60 percent to 65 percent
to 70 percent so that they can work their way into this and we also
provided in the bill for a waiver provision that if the district
says there's just no way we can get to that, it goes to the State
Board of Education and the commissioner, to grant the waiver so
there could be an additional review of this." He noted there will
be an impact on districts having a lower percentage in the
instructional unit if they are unable to substantiate it through
the waiver process. He pointed out that staying with the 70
percent will reinvest $42 million into the system.
Number 2118
CHAIRMAN BUNDE verified that if the formula in this legislation is
adopted, there would be an additional $42 million in the classroom.
SENATOR TORGERSON replied, "If you take the 70 percent." He added
that some school districts may be able to prove that fuel expenses
or travel costs, et cetera, are high and 70 percent may not be
appropriate for those districts.
SENATOR TORGERSON noted each school district has been mandated in
the past to have a school administrator. The bill changes the
language from "shall" to "may" to encourage some of the smaller
districts to join under one superintendent.
CHAIRMAN BUNDE asked the sponsors to give a sectional analysis for
the committee.
Number 2307
SENATOR TORGERSON said Section 1 is the purpose section. Section
2 enacts new sections providing state funding for public schools.
Sec. 14.17.300 establishes the public school account and provides
that money in the account can only be used for public schools,
community school programs or centralized correspondence study.
Sec. 14.17.400 provides that state funding for school districts is
the amount calculated under AS 14.17.410. It provides for a pro
rata reduction in state funding if the amount appropriated is
insufficient to meet the authorized amounts. He said, "In the
Governor's FY 99 ...
TAPE 98-30, SIDE B
Number 0001
SENATOR TORGERSON ....budget of $660 million and change to come up
with a student dollar and backed that number into the student
dollar -- the department did -- and what this section is, if the
legislature was to come in with a lesser number than that, then all
the numbers would be prorated accordingly."
SENATOR TORGERSON continued that Sec. 14.17.410 establishes a
formula for funding public schools. Under subsection (b) public
school funding consists of a state share and a local contribution
from city or borough school districts. Subsection (b)(1) is the
state share and subsection (b)(2) is the city or borough local
contribution. Subsection (c) establishes an optional local
contribution for city or borough school districts. Subsection (d)
prohibits state funding for a city or borough school district that
does not make the local contribution required under subsection
(b)(2). Sec. 14.17.420 provides state funding for special needs
children and for intensive services. He explained the number of
students is multiplied by a special needs factor of 1.20 for the
bilingual education, special education, gifted and talented
education and vocational education. Sec. 14.17.430 provides state
funding for the state centralized correspondence study program, for
district statewide correspondence programs and for district-only
correspondence study programs.
CHAIRMAN BUNDE asked if the bilingual program grew more rapidly
than the general student population.
SENATOR TORGERSON responded that overall there was about a 22
percent increase in student growth and a 92 percent increase in the
bilingual program.
Number 0123
CHAIRMAN BUNDE noted that encouraging students into the bilingual
program is a mechanism which increases funding.
SENATOR TORGERSON responded that either the statutes or regulations
allow school districts to set up their own rules on who qualifies
for categorical funding and the state provides funding based on the
determination and the count. Theoretically, audits are done on the
districts to verify the counts, but very few audits have been done.
CHAIRMAN BUNDE reflected that one summer he and his family went
commercial fishing on a beach site and for the next four or five
years, the Anchorage School District encouraged them to place the
kids into a migrant worker program because the district got more
money for that program.
Number 0158
SENATOR WILKEN referred to the chart entitled "Bilingual/bicultural
instructional units 1988 to 1998" for five actual school districts
from the same area of the state and said from 1998 to 1994
instructional units went from about 53 units down to about 48;
however, in 1995 one school district increased from 48 units up to
about 82 units and a year later up to 94 units. Each unit is
funded at about $61,500, resulting in an additional $2.5 million
for that school district. He pointed out the other four districts
in the same area of the state remained relatively flat from 1988 to
1998. As Senator Torgerson mentioned earlier, while a district
defines and the state funds, the district has no obligation to
spend that money for the purpose from which it was derived as a
revenue.
Number 0222
REPRESENTATIVE JAMES asked Senator Wilken if his research into the
categorical funding had included any of the more populated areas of
the state to determine if there had been an increase for any
language other than the Alaska Native language.
SENATOR WILKEN responded it was not broken down by district or
language. He directed her attention to the graph, "Growth in
Categorical Funding Requirements" and reiterated the overall
increase in students was about 23 percent for the period 1988 to
1997, while the bilingual/bicultural grew at a rate of about 90
percent. He said this is an interesting graph and shows one of the
reasons why the current formula is broken; the district defines and
counts and the state just funds it.
REPRESENTATIVE JAMES said it appeared to her the flaw would have
been in the identifying of students being served as opposed to
students who had a need.
SENATOR WILKEN responded, "No, but I think you've hit the problem
right on the head. And that is the state doesn't need to be nor
should it be unless we want to fund some sort of an audit and for
that matter, categorical funding police, we shouldn't be in this
business. This is a foundation formula; this is to give everybody
an equal amount upon which they can build a special ed program.
That, I think, was the intent a year ago at 20 percent, based on
the 19 percent so that if one district has a different requirement
than the other, then they simply fund that out of their own school
district. It's a local choice issue and you can use your 20
percent - which in this particular formula is almost $197 million
is set aside and earmarked for special ed - and it's up to the
school districts, as it should be locally, to decide how they want
to spend it ...."
Number 0412
REPRESENTATIVE BRICE asked if the state were to capitate
categorical funding, would we be running askance of federal
requirements?
REPRESENTATIVE WILKEN wasn't aware of any federal requirements for
categorical funding. He noted there were some hard lines on the
$22,500 for the developmentally disabled but that's not part of
this program.
Number 0459
SENATOR PHILLIPS pointed out there are three different categories
under the bilingual program and the funding varies with each of the
three different categories.
Number 0491
REPRESENTATIVE GREEN observed there are several bills in process
dealing with part-time students and wondered how part-time students
were dealt with in this legislation.
SENATOR TORGERSON indicated there were provisions in CSSB 36(FIN)am
dealing with how part-time students are counted, but he didn't
recall exactly what they were offhand.
REPRESENTATIVE JAMES observed that fetal alcohol syndrome (FAS) and
fetal alcohol effect (FAE) were more prevalent in some districts
and asked if that had been taken into consideration in terms of the
special education category.
SENATOR WILKEN responded no, but the severely disabled wouldn't
fall under this category; they would fall under the developmentally
disabled category.
Number 0603
SENATOR TORGERSON, continuing with the sectional analysis, said
that Sec. 14.17.430 provides state funding for the state
centralized correspondence program and also district program. He
noted this had been somewhat controversial as it relates to Galena,
as well as a couple of other districts, where the state was paying
the statewide correspondence programs at the same area cost
differential that they qualified for their district. Galena
started a program which grew at such a rapid pace, the commissioner
of the Department of Education limited their cost differential to
1.0. This legislation further limits the cost differential to .65
which is the rate paid to the Alyeska Correspondence School. He
said, "In the debate that surrounded this, the Galena School
District was attempting to get additional money because they used
some of this money to free up some other money that pays for their
charter boarding school. I never saw any debate from them that
indicated that they could not operate the statewide correspondence
school for this, but they did use the additional money to do a
boarding school. We did try to work on several fixes for that and
we couldn't come up with any that were satisfactory, anyway at that
time. I think it was our intent to promote, as much as we can,
leaving the boarding schools and not try to take away funding for
those but it's one of the areas that needs some work on in this
bill."
Number 0669
SENATOR TORGERSON stated Sec. 14.17.440 provides state funding for
state boarding schools, which is basically Mt. Edgecumbe. Sec.
14.17.450 establishes the school size factor for purposes of
determining a school's public school funding.
CHAIRMAN BUNDE said at one time there was specific legislation
which specified that Mt. Edgecumbe could be the only state funded
boarding school and he wondered if that changed in CSSB 36(FIN)am.
SENATOR TORGERSON noted that legislation had passed approximately
a year ago changing boarding school to boarding schools. He
pointed out that Galena is a charter boarding school and based on
legislation that passed last year, charter boarding schools cannot
use state funds to house and pay for housing of students. Clearly,
that's what Galena is doing, but they're freeing up other money;
it's not illegal, but the intent is so they can operate the regular
charter school.
Number 0747
SENATOR TORGERSON said that Sec. 14.17.450 establishes the school
size factor for purposes of determining a school's public school
funding and is the heart of the McDowell Report. He stated,
"Basically, you would take your school ADM and use this chart like
you would a tax table, to borrow McDowell's words, and you would
find where your number of students are in relation to your school
and then you would go across the chart and you'd see -- if you take
75, for example on line 14 -- if you have a school of 75 students,
you'd be paid for 122.85 students and anything above the 75 up to
the 150, you would receive 1.27. Mr. Chairman, what this whole
chart does is it shows that there's a certain amount of
administration and a certain amount of cost associated with
operating a small school and remember the McDowell Report says the
costs are the same no matter where you're located for doing that.
So if you had a school in Anchorage or a school in Nome that was
this size, it would cost you about the same percent. And then back
to the instructional - 70 percent of that did not deserve an area
cost differential. This also shows, Mr. Chairman, that if you get
up to the 400, that's where you reach your efficiencies, so a
school the size of 400, you'd see that the multiplier drops down to
.97 so the students don't actually earn the total amount on a per
student basis. This is really the heart of how we, by adopting
this out of the McDowell Report, on how we identify the costs per
school."
SENATOR TORGERSON explained that Sec. 14.17.460 is also out of the
McDowell Report and relates to the remaining 30 percent paid to the
districts. The district cost factors are a combination of the
nonpersonnel costs as well as the district administrative costs.
The McDowell Report did not make any determination as to whether
this money was being spent in an effective, efficient manner as far
as nonpersonnel, superintendent costs or central office costs.
This reflects actual dollars spent off the financial statements of
the districts.
Number 0866
SENATOR TORGERSON said that Sec. 14.17.470 establishes the base
student allocation for purposes of determining a district's public
school funding. Sec. 14.17.500 requires certain student count data
be reported to the department. Sec. 14.17.505 establishes
requirements concerning year-end fund balances for a school
district and establishes a penalty for violating this section.
Sec. 14.17.510 requires the Department of Community and Regional
Affairs to determine the value of taxable real and personal
property for purposes of calculating a city or borough school
district's local contribution. Sec. 14.17.520 imposes a minimum
expenditure for instruction requirement on school districts. Sec.
14.17.600 establishes student count reporting deadlines for school
districts. Sec. 14.17.610 establishes a payment schedule for state
funding for school districts, requires excess funding be returned
to the state and provides for advance payments at the discretion of
the commissioner. Sec. 14.17.900 provides that AS 14.17 does not
create a debt of the state and requires each district to operate
under a balanced budget. Sec. 14.17.920 requires the department to
adopt regulations to implement this legislation and Sec. 14.17.990
is the definitions section.
Number 0955
SENATOR TORGERSON continued that Section 3 repeals a provision
requiring a report be provided to the chief school administrator.
Sections 4, 5, 6, 7 and 8 are technical amendments. Section 9
provides that REAAs may employ a chief school administrator.
Section 10 repeals the requirement that an REAA school board employ
a chief school administrator. Section 11 requires that school
districts be reimbursed for student transportation system costs at
certain percentages. Sections 12 and 13 are technical amendments.
Section 14 provides that a city or borough school district may
employ a chief school administrator. Section 15 requires the chief
school administrator to follow school board policy. Section 16
requires that employees hired by a chief school administrator are
subject to school board approval. Section 17 repeals a requirement
that state boarding schools hire a chief school administrator.
Sections 18 and 19 are technical amendments and Section 20 repeals
a requirement that limited teacher certificates be requested
through the chief school administrator. Section 21 amends the
provision relating to chief school administrator approval of
transfers of teachers. Section 22 amends a provision relating to
intradistrict teacher reassignments. Section 23 allows a district
to implement a tenured teacher layoff plan if state funding
decreases by 3 percent or more between fiscal years. Section 24 is
a technical amendment. Section 25 provides that an exceptional
child shall be transported with other children if the district
provides transportation to other children in the district. Section
26 provides that if certain special education appropriations are
insufficient, the allocation described in this section shall be
reduced on a pro rata basis. Sections 27 through 31 are technical
amendments and Section 32 provides that child care facility grants
shall be adjusted by the same factor as school district funding
under AS 14.17.460. Section 33 is repealers, Section 34
establishes a two year transition period for public school funding
and Section 35 provides that regulations adopted before the
effective date of this Act remain in effect if consistent with the
provisions of this Act and requires the department to define by
regulation the term "school". Section 36 requires the initial
proposed district cost factors be submitted to the department by
January 15, 2001. Section 37 imposes a two year transition period
for the base student allocation. Section 38 requires that certain
small schools be included in the largest school in the district for
purposes of calculating the school size factor under AS 14.17.450,
which is basically for schools of 10 students or less. Section 39
establishes a two year transition period for the minimum
expenditure for instruction requirement imposed under AS 14.17.520
and Section 40 is the effective date.
Number 1169
SENATOR TORGERSON said that concludes the sectional analysis. He
said the Senate struggled with the provision that all Alaskans pay
something for the cost of education. Senate Bill 36, at one time
was the combination of four other bills which had different
mechanisms for requiring the local effort. He stated, "We did have
the 3 percent payroll tax idea that Senator Wilken spoke about
earlier to make that local requirement. We had in the bill that
anybody that wanted to opt out of that certainly could and become
a borough or become whatever they wanted to be, could have their
own tax base or their own method of raising that tax, they
certainly could do that, or they could bring a proposal to us
through the petition process and we would do that as an assembly
for the unorganized borough. Basically, the Senate decided not to
go forward with that issue and they decided that we'd rather do a
mandatory third class borough. So, we currently have the mandatory
third class borough issue up before us in Senate Finance. We had
hearings on it last week and I'm not sure when it's rescheduled
again for the next hearing."
SENATOR TORGERSON further stated, "Basically, a third class
borough, just to refresh your memory, has only two powers; the
power of taxation and the power of education. We currently have
only one third class borough and that's Haines. When that was
created, there was some talk about some other boroughs dropping
down to that level, my understanding is, and so the legislature put
a prohibition on any more third class boroughs so they would only
have the Haines borough. But this recognizes that we're not really
trying to force local government on unorganized Alaska but for one,
we should consolidate school districts, this would -- if we
mandated the third class boroughs, we would have one school
district or one REAA per borough boundary. This is currently the
case in the other organized boroughs and it would also give them
the power to come up with whatever taxation measure that they'd
like to do to make their local effort."
Number 1291
SENATOR TORGERSON reminded committee members there are four
boroughs in the state that currently do not have a property tax and
use some other form. The Northwest Arctic Borough has a severance
tax or resource tax on Cominco; the Denali Borough has a
combination of a severance tax on Healy coal and a bed tax; one has
a fish tax complemented with a sales tax issue. There are ways
other than a payroll tax to come up with the required local effort,
and it allows an existing organized entity to determine how to pay
their taxes. He wasn't sure where that legislation would go, but
it is a big issue.
Number 1365
CHAIRMAN BUNDE recalled that last year the Governor introduced
legislation to rewrite the foundation formula and set a minimum of
10 students for a school. He asked what the minimum was under CSSB
36(FIN)am.
SENATOR TORGERSON referred to Section 38 and said that a school of
10 would be added to another school and combined; it doesn't run
through the formula as a separate school.
CHAIRMAN BUNDE confirmed that nothing in CSSB 36(FIN)am would
require a school of three or four students to close.
SENATOR TORGERSON said not that he was aware of.
CHAIRMAN BUNDE observed there was some migration among schools
between spring and fall and that CSSB 36(FIN)am did not mandate a
spring count. He wondered if that had been discussed.
SENATOR TORGERSON said it had not been discussed in his presence.
He assumed the fall count was included in all the legislative bills
and it wasn't brought out as a separate issue to be debated. As
far as he knew, it was in existing language.
CHAIRMAN BUNDE asked how much money would have been generated for
local contribution ....
SENATOR TORGERSON interjected 3 percent; it was roughly
$18,300,000.
SENATOR WILKEN commented that it's about $3.5 million to $4 million
for every 1 percent.
Number 1488
CHAIRMAN BUNDE asked the sponsors to address two concerns he's
heard from people: 1) expanding the hold harmless; and 2)
addressing the notion that the state is mandated constitutionally
to provide an education and should be funding it at 100 percent.
SENATOR PHILLIPS noted that under the constitution, the state is
required to provide a system for public education for children. He
asked Senator Torgerson to address the second issue.
SENATOR TORGERSON said, "People have brought that up and wouldn't
it be a great world if we could surpass the $240 million that local
governments are putting in education now. But we're only doing
two-thirds of the thing. Local governments that are now paying,
pay in a tremendous amount. I don't know -- I think even under the
mandatory borough act, that was one of the reasons back in '63 when
they formed all the boroughs that we're in currently. Those powers
were pretty general in nature but the largest ones that we're
trying for is the local contribution, the taxation and education
issues. As far as a longer transition period, Mr. Chairman, we
picked two years, it could have been three that we picked. The
Lower Kuskokwim district does lose a substantial amount of money
under this; they go down from $10,618 a student they're currently
being paid today to $8,615. So, they lose about $2,000 a student.
Our transition period says you do one year half of that and the
other year the next. Just to say we're going to hold harmless
forever doesn't fix the problems that we have in the formula. So,
in our debate when we were pushing this bill through the Senate, it
was just decided that we'd do the two year period. And it is a
policy call and it is a tough issue for that district and some of
the others and it could be that we might entertain a longer
transition period. I think the overall goal here is we're going to
change the system to get this more equitable and it's tied in with
no only holding the district harmless for a few years, but a
district that might pay some for their educational costs. Keep in
mind the Lower Kuskokwim has a town of 6,000 and they don't pay a
dime towards education."
Number 1658
CHAIRMAN BUNDE asked if Senator Torgerson was implying the $2,000
student decrease in the Lower Kuskokwim could be made up in part by
some local contribution.
SENATOR TORGERSON commented if they were to do a 2 percent sales
tax, a tremendous part of the $11 million would be covered.
SENATOR WILKEN interjected the city of Bethel did a study which
indicated that a 2 percent sales tax would cover their entire
educational requirement. He added based on his numbers, a 3
percent payroll tax would generate about $3.2 million that could be
contributed to education. He said the chart previously discussed
indicates that area of the state had about 4,900 people who earned
about $120 million in 1996, so obviously there's some wealth.
Number 1727
SENATOR TORGERSON explained the reason for deciding on the payroll
tax idea was the collection; the fiscal note from the Department of
Labor was about $200,000 which is relatively small compared to some
of the other ideas looked at. Currently, all employers are
required to file a report of employment security contributions with
the department and it was the intent to generate a new form that
would identify the school contribution.
Number 1787
CHAIRMAN BUNDE said people have suggested an increase and a
reinstatement of the old school tax. He inquired if that idea had
been discussed.
SENATOR TORGERSON said it was to some degree; however, a $10 tax
for 300,000 working people would generate $3 million or a $100 tax
would generate $30 million, which really doesn't go very far in
meeting the problem of funding education. It's certainly something
that could be looked at but in the scope of things, it just doesn't
generate enough money to solve the problem.
Number 1856
CHAIRMAN BUNDE commented that numbers differ depending on the
issue; for example, when the subsistence issue is being discussed,
he hears that 60 percent of rural Alaska is non-Native, but with
the educational funding issue, he hears that 70-80 percent of rural
Alaska is Native. He asked if Senator Torgerson knew which factor
is correct.
SENATOR TORGERSON said it really hasn't been looked at because it
is really a non-issue.
Number 1923
REPRESENTATIVE BRICE asked the sponsors to explain the property
valuation in general.
SENATOR TORGERSON said as the local assessed value rises, state aid
goes down. He explained that his borough can't put any more money
in because it is up against the caps. He said, "What has happened
with this bill as not a direct measure but we picked it up in the
runs that we got from DOE, is that we actually are -- because we're
increasing the state aid to some districts because of the
redistribution of funding and because of asking North Slope to pay
100 percent, -- we're actually shifting some money back in there
and increasing the amount of state aid both to Fairbanks and my
district which then makes the amount of money you can put in for
local effort higher - or more is available. It really wasn't an
intent, but that's how it came out. The cap that is placed upon us
statutorily is the 4 mills for the state aid or the 35 percent and
then it's 2 mills or 23 percent of state aid, whichever is greater
and that's where the cap comes from." He is of the opinion that
assessed valuation is used as the trigger to indicate the worth of
an area.
Number 2123
REPRESENTATIVE JAMES said she understands this legislation deals
with funding, not the best way to deliver education. It is her
opinion that ten students is too few for a school, which she
recognized had been addressed by joining them with another school.
However, she wondered if the sponsors had looked at other issues,
in addition to the number of children in a school, that would
relate to the performance of the schools in terms of addressing the
best way to deliver education.
SENATOR TORGERSON said, "The best thing I can say or the closest
thing we have done to that, when we adopted the McDowell Report and
their tax table way of reimbursing districts for their school by
school, it's recognizing that the smaller schools need maybe a
principal and a counselor and you may have 15 or 20 students or 50
students in there or a school of 100, you might have the same
amount of students in there. So, that's why when they put that per
student adjustment to the ADM in their calculations, it reimburses
the smaller schools substantially more than a larger school. They
made that formula and that curve based upon the audited financial
statements or the costs that are coming in now."
REPRESENTATIVE JAMES said she understands that, but it doesn't get
to the problem of having smaller schools where the performance is
poor. Her concern is that giving a school extra money will
encourage them to stay small as opposed to figuring out a better
way to educate their children.
TAPE 98-31, SIDE A
Number 0001
SENATOR TORGERSON said there are a couple of bills which include
those standards, and in fact, amendments to this legislation had
been drafted but many of the school districts indicated they did
not want any more unfunded mandates. It doesn't mean professional
standards aren't important in this legislation, but the sponsors
hadn't included them.
Number 0038
REPRESENTATIVE JAMES commented that it would probably require
different legislation; it wouldn't be appropriate for CSSB
36(FIN)am.
SENATOR TORGERSON thought the title was broad enough to incorporate
the standards if an agreement could be reached as to what
performance standards should be included. He noted the
Administration wants more accountability and this legislation
doesn't bring accountability into it. He added that school
districts view accountability as unfunded mandates.
CHAIRMAN BUNDE noted he frequently hears the comment about a number
of programs, including education, that "you don't pour good money
after bad" and it's not very logical to reward a school for poor
performance by giving them more money.
REPRESENTATIVE PORTER recognized this legislation has caps in terms
of the 4 mills, up to 100 percent or whatever is less, but he
questioned if there was still concern with the federal disparity
issue.
SENATOR TORGERSON responded there is always concern with the
federal disparity. The Department of Education did a computer run
in relation to the federal disparity and it dropped down to about
19 percent as opposed to the current 23 percent. If a local effort
was required, it would probably go back up to the 22 or 23 percent
level.
Number 0278
CHAIRMAN BUNDE asked Senator Wilken to comment on the other
iteration of how the PL-874 money was to be used.
SENATOR WILKEN said, "It's really difficult but we kept in -- we
tried to take it out originally, but the numbers just didn't work,
so we recognized it and stayed within the disparity. The real
issue is that there were five districts in the state that were up
against the cap - it's really an artificial number that was really
hurting five districts - and with the increase in funding to the
formula itself, those caps are increased so the disparity issue
falls away as long as we (indisc.) it. And as Senator Torgerson
said, according to DOE we are within it and I take confidence in
their numbers. The folks over there really know that issue inside
and out and it's difficult at best, but it seems like we're safe in
what we've got so far."
CHAIRMAN BUNDE said as he understood disparity and the PL-874
money, disparity is continuing to decrease and it will be more and
more difficult to fall under the cap in the future.
REPRESENTATIVE BRICE commented, "I think when we're talking about
accountability, because it is a discussion that I've had and
actually had a piece of legislation drawn up that would basically
break down some of the barriers that DOE had to address the Adak
issue - I mean, let's call it what it was - and frankly, I think
much to her credit, Commissioner Holloway has finally pretty well
gotten that thing put to rest. It would be nothing to throw a
couple of lines in here that wouldn't cost a penny to break down
some of those issues and I'll approach you guys about that a little
bit later." He asked if a school district with multiple sites
would receive a check for each site or a lump sum for all the
schools in that district, with the district allocating the money
for each school.
SENATOR TORGERSON said it is not the intent to change the current
distribution. He added, "It's just that each school now, because
of the McDowell Report - we wanted to know the cost of operating a
school, not the cost of the entire district, so you go to each
school for the ADM and then you run it through that table - but you
qualify it in one way and then when it comes to the district to
maintain -- as a matter of fact, we even have that in the intent
language -- to maintain the maximum local economy, we want them to
be able to distribute those funds."
Number 0539
SENATOR PHILLIPS commented the intent is that the money goes to the
school district and it's up to the constituency, school board and
the assembly in the organized areas to determine how those funds
are allocated. In the unorganized areas, it's up to the
constituency and school board to allocate the funds.
REPRESENTATIVE BRICE inquired if charter schools would be counted
as a regular school within the district and they would receive the
same level of funding as a regular school.
REPRESENTATIVE TORGERSON remarked a charter school would be counted
as a regular school.
CHAIRMAN BUNDE asked if there were further questions for the
sponsors. He announced that CSSB 36(FIN)am would be held in
committee and heard again on Wednesday, March 25.
ADJOURNMENT
Number 0729
CHAIRMAN BUNDE adjourned the House Health, Education and Social
Services Committee at 2:48 p.m.
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