Legislature(2003 - 2004)
02/13/2003 11:35 AM House HES
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE FINANCE COMMITTEE
HOUSE HEALTH, EDUCATION & SOCIAL SERVICES COMMITTEE
HOUSE SPECIAL COMMITTEE ON EDUCATION
February 13, 2003
11:35 A.M.
TAPE HFC 03 - 19, Side A
TAPE HFC 03 - 19, Side B
CALL TO ORDER
Co-Chair Harris called the House Finance Committee meeting
to order at 11:35 A.M.
MEMBERS PRESENT
HOUSE FINANCE COMMITTEE MEMBERS
Representative John Harris, Co-Chair
Representative Bill Williams, Co-Chair
Representative Kevin Meyer, Vice-Chair
Representative Eric Croft
Representative Richard Foster
Representative Mike Hawker
Representative Gary Stevens
Representative Bill Stoltze
Representative Jim Whitaker
HOUSE HEALTH, EDUCATION & SOCIAL SERVICES COMMITTEE
Representative Peggy Wilson
Representative Carl Gatto
Representative Sharon Cissna
Representative Cheryll Heinze
Representative Mary Kapsner
Representative Paul Seaton
Representative Kelly Wolf
HOUSE SPECIAL COMMITTEE ON EDUCATION
Representative Carl Gatto
Representative Paul Seaton
Representative Les Gara
Representative Mary Kapsner
Representative Peggy Wilson
Representative Kelly Wolf
MEMBERS ABSENT
Representative Reggie Joule
Representative Carl Moses
Representative John Coghill
ALSO PRESENT
Representative David Guttenberg; Eddy Jeans, Manger, School
Finance and Facilities Section, Department of Education and
Early Development;
PRESENT VIA TELECONFERENCE
No participation on teleconference.
GENERAL SUBJECT(S):
JOINT WITH THE SPECIAL COMMITTEE ON EDUCATION
HOUSE HEALTH, EDUCATION & SOCIAL SERVICES
OVERVIEW: FOUNDATION FORMULA
The following overview was taken in log note format. Tapes
and handouts will be on file with the House Finance
Committee through the 23rd Legislative Session, contact 465-
2156. After the 23rd Legislative Session they will be
available through the Legislative Library at 465-3808.
LOG SPEAKER DISCUSSION
TAPE HFC 03 - 19, SIDE A
000 Co-Chair Harris Convened the House Committee on Special
Committee on Education and the House
Health, Education & Social Services
Committee with the House Finance
Committee meeting to discuss the
Department of Education & Early
Development's Foundation Formula. He
introduced the Special Committee on
Education's Chair-Representative Carl
Gatto, and the House Health, Education &
Social Services Committee Chair-
Representative Peggy Wilson.
057 EDDY JEANS, MANGER, Provided Committee members with (2)
SCHOOL FINANCE AND handouts. (Copies on File). He
FACILITIES SECTION, referenced the schedule attached at the
DEPARTMENT OF end of document #1. He encouraged
EDUCATION AND EARLY Committee members to ask questions during
DEVELOPMENT the overview. He requested that the
presentation be kept to just the
foundation funding program as it is today
without discussing the changes over time.
239 Mr. Jeans Commented that current public school
funding formula was adopted under SB 36
in 1998. It was implemented in 1999 and
the public school funding formula was
defined in AS 14.17. He stated that the
overview would provide an overview of the
calculation of the Average Daily
Membership (ADM) and the calculation of
basic need and the components of basic
need regarding who pays, state, local or
federal.
352 Mr. Jeans The ADM is the number of students
enrolled during the 20-day count period
that ends on the fourth Friday in
October. The reports are due into the
Department within 2-weeks of the 20-day
count period.
422 Co-Chair Harris Asked for a definition of 'enrolled in'.
430 Mr. Jeans Explained that the enrollment was based
on students enrolled in the public
schools and not actually attending during
that 20-day period.
450 Representative Inquired how would the district 'project'
Kapsner the number of students for the following
year.
459 Mr. Jeans Advised that Department of Education &
Early Development does not do the student
projection. That is done at the local
level and then provides that information
to the Department.
513 Representative Questioned how would each school district
Kapsner make that determination.
532 Mr. Jeans Explained that the school districts do
not have a prescribed method from the
Department. Some use complex formulas
and some use the actual data from the
current year. There is a variety of
ways.
558 Representative Croft Asked if the projection matters. He
asked what the formula does with the
projected amount.
602 Mr. Jeans Replied that the Department prepares the
State budget for the next year using that
information.
621 Mr. Jeans Explained that the school districts
provide their estimated count based on
the information that they have available.
The Department takes that information and
runs it through the size adjustment
tables. That information is for the
purpose of developing the State budget.
If there are large swings in the
information provided, then the Department
goes back to the district for an
explanation. For the most part, the
districts have a minimal change in their
enrollment.
723 Representative Croft If there actual amount is different than
the projected, would it have an effect on
the formula.
736 Mr. Jeans Commented that addresses how the
districts are actually reimbursed. The
projection provides an appropriation that
is held. For the first nine months of
th
the current year, they receive 1/12 of
their entitlement from the previous year.
810 Representative Croft Asked about the correspondence numbers
and the student ADM count.
821 Mr. Jeans Replied that a correspondent student was
funded at 80%.
831 Co-Chair Williams Asked about home-schooled students.
840 Mr. Jeans Could not say that the State funds home
schooled students. The State does fund
correspondence students.
860 Representative Commented if the projected ADM was a
Wilson certain amount and the school did not
have close to that amount, would that
school receive less than what they had
planned on.
928 Mr. Jeans Replied that under the current foundation
formula, that is what would happen and
they would receive less based on their
actual student count.
942 Representative Asked if there was any type of protection
Wilson or safeguard to help them.
958 Mr. Jeans Stated that there was no "hold harmless"
provision to act as a safety guard.
1012 Representative Gara Asked if in Anchorage, Charter School
students were treated as correspondence
students.
1029 Mr. Jeans Replied that would depend in what program
that they were enrolled in. Not all the
charter schools are home school based
programs.
1042 Representative Gara Is it left up to the Department to 'make
a call' to determine if the program is
run like a correspondence or home school
program.
1053 Mr. Jeans Replied that was correct.
1100 Mr. Jeans Addressed who qualifies as a student.
The child must be six years old before
th
August 15 and/or is under the age of 20-
years old. The Special Education
Programs must serve students from the
ages of 3 through 22 years old.
1126 Mr. Jeans Noted that there are five steps in
adjusting the school districts average
daily membership.
· Look at the school and run it
through the school size adjustment
table
· Apply the district cost factor
· Increase that number by 20% for
special needs funding
· Intensive service counts for the
severely multi handicapped children
· District correspondence count for
the districts adjusted ADM
1215 Mr. Jeans School size adjustment. For each school
in the district subtract from the ADM all
correspondence counts. Adjust the
remaining ADM of each school using the
school size factor table.
· A community with an ADM under 10:
Added to the smallest school with an
ADM greater than 10;
· A community with an ADM from 10-100:
Grades K-12 ADM combined and
adjusted once, adjusted as one
school;
· A community with an ADM from 101-
425: ADM for grades K-6 and 7-12 are
adjusted separately; adjusted as two
schools;
· A community with an ADM greater than
425: Each facility administered as
one school, counted as one school,
ADM is adjusted as one school;
Alternative schools with an ADM of
less than 200 combined are adjusted
with the school with the greatest
ADM in the district; If an
alternative school ADM is greater
than 200, the ADM will be adjusted
once; A charter school with an ADM
of 150 or greater will be adjusted
once.
· Using the proper formula from the
school size factor table, calculate
the adjusted ADM for each school.
1325 Representative Asked how the special needs factor would
Kapsner apply to the 20% block factor.
1345 Mr. Jeans Advised that the special needs factor is
the 20% block funding.
1358 Representative Asked what would happen for a district
Kapsner that currently has a much higher need.
1404 Mr. Jeans Emphasized that they would only be funded
at 20% regardless of what the special
needs in that district are.
1414 Representative Gatto Asked about the ADM's slide. He asked
what would happen in a community that had
multiple schools with ADM's under 100 or
over 500. He asked if the referenced was
to the community or each school in the
community.
1445 Mr. Jeans Replied that the first thing that the
Department looks at is the overall
student population in that community.
That provides the information regarding
how many schools will be run through that
size adjustment table. A community could
actually have a number of schools, but if
they have less than 425 students in that
community, that will be run through the
size adjustment table.
1526 Representative Gatto Commented that it would be like a virtual
school for the purposes of allocating
funding.
1536 Representative If the district has 3 schools, they would
Wilson only get paid for 2, and if they have one
school, they get paid for 2.
1558 Mr. Jeans Replied that the foundation entitlement
is calculated as if they have 2.
1604 Representative Clarified that if there were less than
Wilson 425 students, and they had 3 schools,
they would only be paid for 2 schools.
1620 Representative Croft Asked if the formula was attempting to
encourage schools in that range.
1643 Mr. Jeans Responded that the breaking points exist,
because when the foundation program was
rewritten as SB 36, there were a number
of decisions that had been made in the
past regarding the structuring of
schools. To insure that the districts
were getting an appropriate level of
funding, the intent was not to penalize
districts for passing decisions of how
the students were being 'housed'.
Consequently, the range factor was put
into place to assist driving revenue.
1734 Representative Asked what would happen in a school
Wilson system in which there are 3 schools, and
that they are all small enough that you
could not get them into 2 schools.
1748 Mr. Jeans Replied that they would need to operate
within their means.
1801 Representative Commented that the school would be
Wilson basically 'stuck'.
1807 Mr. Jeans Responded that in some of the
communities, there were larger student
populations, which required a greater
number of schools. As community's
student population declines, the school
district needs to make decisions if they
need to operate that many schools. When
the community falls within the range of
101-425, the State has made it clear that
they will fund that district as if it
were operating 2 schools.
1901 Representative Asked what would happen if they cannot do
Wilson that.
1910 Mr. Jeans Acknowledged that was correct.
1921 Mr. Jeans Noted that they had taken the Nome City
school district to base the presented
calculations. He noted that they reported
that they have an elementary population
of 425 students; high school with 305;
charter school currently serving 42
students; and the Nome Youth facility
that has 12 students. The district has
over the 425 minimum number. Each school
will be funded through the size
adjustment table with the exception of
the charter school.
2011 Representative Croft Asked how the Department would deal with
the youth facility.
2020 Mr. Jeans The Department decided to fund youth
facilities around the State as separate
sites because those sites are operating
on a year-round basis.
2043 Representative Asked in that instance, would they get
Wilson paid for three buildings.
2056 Mr. Jeans Replied that was correct.
2101 Mr. Jeans He added that the alternative school
would be added to the school with the
largest ADM.
2124 Mr. Jeans He referenced the school size adjustment
statute. Using those numbers, the
adjusted ADM school size would be 514.
2215 Co-Chair Harris Asked why the extra students were only
worth 92% funding.
2231 Mr. Jeans Replied that was correct. The purpose is
that as you move through the scale, there
is a benefit of an economy of scales.
2236 Co-Chair Harris He noted that over 400 students, the
students would be taught 'cheaper'. Mr.
Jeans noted that once you get over the
400 that would be a correct assumption.
2300 Representative Gatto Asked why there was no allocation for any
school with exactly 750 students.
2336 Mr. Jeans State that to take the 750 through the
funding formula, there would be 793.6 for
that school with this formula.
2351 Mr. Jeans The next adjustment would be to the 305
students and with the computations for
adjustment to the ADM, providing for
379.45.
2420 Mr. Jeans Continued, the last adjustment for school
size would be the youth facility, with 12
students, which falls into the range of
10-20, providing for the base allocation
of $39.60. The adjusted ADM for school
size for Nome would be 933.
2455 Mr. Jeans Spoke to the district cost factor. The
Department of Education & Early
Development is required to monitor and
report on the district cost factors to
the legislature every other year. Those
numbers are laid out in statute and are
specific to each school district. Those
numbers range from 1.0 - 1.736.
2531 Co-Chair Harris Asked about the latest district cost
factor for a school less than 1.
2546 Mr. Jeans Replied that Mat-Su was at .99. That
study would indicate .99 not 1.
2607 Representative Asked if the Legislature would receive a
Wilson "district cost factor" this year.
2622 Mr. Jeans Explained that the Legislature had
contracted out for their own study. When
SB 36 was passed, the Department was
required to do a report that covered
three areas:
· District costs factors
· Comparison of the old formula to the
new
· Adequacy
The Department did that report two years
ago. The Department attempted to use the
McDowell methodology but it was not
successfully funded. The Legislature
then contracted for the study.
2736 Representative Hoped that the Department would have some
Wilson recommendations that could be compared to
the private study. Mr. Jeans understood
that study would take the place of the
one provided by the Department.
2802 Representative Asked when would there be a discussion in
Kapsner full regarding the cost study.
2816 Co-Chair Harris Replied in the future.
2822 Mr. Jeans Continued, the school size adjustment for
Nome was 933; the district cost factor is
1.319. The adjusted ADM after the cost
factor is 1,231.
2831 Mr. Jeans The next adjustment is for special needs,
20% block funding allocation for
categorical programs. To qualify for the
funding, the district must submit a plan
to the Department on how they intend to
utilize those funds. The districts all
did that in 1999.
2907 Co-Chair Harris Noted that in his district there are many
Russians who do not speak English well.
They would be considered bilingual. He
emphasized that they are a huge
percentage of the students. He asked if
20% was the maximum that any school could
receive.
2946 Mr. Jeans Replied that it is a flat 20% block
funding and that the Department cannot
give more.
3004 Representative Asked the projected need of each
Kapsner district. She pointed out that some
districts do not have a 20% need and some
districts have a much greater need.
3023 Mr. Jeans Replied that he could not do provide that
information. The way that the school
districts report their expenses is under
one category called instruction. Special
education is the only category that is
broken out separately.
3054 Representative Questioned where the Legislature could
Kapsner get that information.
3107 Mr. Jeans Responded that the Department would have
to collect it from each individual
district assuming that the district was
tracking the individual programs.
3118 Co-Chair Harris Stated that on February 19th at 1:30
p.m., there will be a meeting to discuss
cost differential concerns.
3139 Mr. Jeans Continued that the special needs
adjustment was a 20% block allocation.
He referenced the new adjusted ADM of
1,478.
3153 Mr. Jeans School districts receive funding for
intensive special education students
that:
· Are receiving intensive services
· Are enrolled on the last day of the
20 school day count period
· Have an established Individual
Education Plan (IEP)
The districts intensive student count is
multiples by five. Each student enrolled
in the district generates $20,050
dollars. Nome identified one student.
3232 Representative Asked for a breakdown of each step and
Wilson how it coordinates with each letter of
the formula.
3252 Mr. Jeans Advised that Step 1 would correspond with
column O, step #2-Q, step #3-R, step #4-
T, and step #5-B.
3433 Mr. Jeans Stated that correspondence funded
programs are calculated by multiplying
the ADM by 80%.
3457 Representative Gara Inquired about the adjustment for special
needs students versus intensive need
students.
3514 Mr. Jeans The intensive need student is multiplied
times 5, and the 20% block funding is
added on after the adjustment for the
cost factor and the school size. It is
the entire population after those
adjustments.
3545 Representative Gara Asked if it was assumed for special needs
students that every district would
receive the 20% adjustment.
3554 Mr. Jeans Stated that was true. He offered to
explain the previous funding formula at
another time.
3611 Mr. Jeans The next step is to calculate the
district's entitlement under the
foundation formula for basic need. For
Nome, that number would be $5,947,472
dollars.
3648 Mr. Jeans The next slide summarizes the steps taken
to achieve that amount.
3704 Mr. Jeans The adjusted district ADM multiplied by
the base student allocation, $4,010.
3736 Mr. Jeans For the purpose of calculating the normal
required effort, the State will consider
½ of the increase property value of those
communities. 1999 was established as the
base year. That number will help to
determine the 'education full value'.
3804 Representative Croft Asked in those municipalities that have a
tax base and are growing, what would be
the effect.
3823 Mr. Jeans They would contribute ½ the growth.
3830 Representative Gatto Asked if the accelerated growth was
different than linear growth in regard to
the calculations.
3846 Mr. Jeans Responded that the discussion was
regarding any growth. Many small, first
class municipalities have very little
property growth. They would continue to
pay based on the old value.
3912 Representative Asked which communities are growing more
Kapsner quickly.
3936 Mr. Jeans Outlined that the calculation is applied
to every school district.
3948 Representative If a town is growing quickly, they only
Wilson pay 1/2 as much as normal.
4016 Mr. Jeans Replied that was correct. He added, that
was for any growth.
4020 Representative Additionally, if a community is loosing
Wilson students, do they loose the full or ½
amount.
4034 Mr. Jeans Responded that the property wealth is not
based on the student population within
the community. It is based on the value
of taxable real and personal property in
your community. If the value is
declining in the community, the mechanism
does not benefit your community.
4112 Representative Croft Questioned who were the "big winners &
losers" in this process.
4139 Mr. Jeans Responded that he would provide that
information.
4150 Mr. Jeans Pointed out that the full value for Nome
in 2002 was $207 million dollars. It
changed $15 million dollars in three
years.
4225 Representative Gatto Interjected that Mat-Su is the fastest
growing community in the State. That
district has indicated because of the
accelerated growth, the required local
effort has increased disproportionately.
4302 Mr. Jeans Discussed that their required local
effort does increase as the value
increases. The taxable property in Mat-
Su has increased and therefore under this
formula, they are required greater
funding for education.
4346 Representative Croft Asked that in effect with this formula,
the growing communities have a lower tax
base than the others.
4412 Mr. Jeans That is correct.
4421 Representative Gara Asked about the perceived policy base for
the benefit to the communities that are
growing.
4455 Mr. Jeans Stated that he could not comment on that.
4509 Mr. Jeans Noted that the required local effort is
the lesser of the four mil equivalent on
the education full value. Not to exceed
45% of a districts basic need for an
entire year. For those communities that
have a high property wealth, the State
has established a maximum level of local
support for education. In the above
scenario, Nome would be required to
contribute 4 mils.
4622 Mr. Jeans Addressed the Title Impact Aid payments.
That aid is counted by the Federal
dollars received by the district, the
last day of February.
4653 Mr. Jeans Nome for the purpose of State funding,
would have $49 thousand dollars available
in federal receipts. The Impact Aid
Program has a provision in it that
requires a calculation.
TAPE HFC 03 - 19, Side B
4700 Mr. Jeans Continued, impact aid revenues are
considered local revenues. However,
local revenues are treated in the State
funding formula that is how impact aid
will be treated. For municipalities,
there is a required contribution or mil.
The municipalities are allowed to
contribute local revenue over and above
that 4 mils up to 23% of their basic
need.
4609 Mr. Jeans Reviewed the impact aid calculations for
Nome: $27,473.
4435 Representative Croft Asked if the local schools paid more
minimum would they then be able to keep
more of the impact aid. He clarified
that overpayments are retained.
4357 Representative Gatto Noted that if the impact aid was
equivalent to the local effort would that
eliminate the local effort.
4327 Mr. Jeans Responded that it would be in addition to
the required local effort. He noted that
the adjustments are calculated and then
the adjusted ADM is multiplied by $4010
dollars to determine the entitled amount.
He stressed that the he basic need is the
entitlement.
4257 Representative Gatto Asked if all communities have some
required local effort.
4240 Mr. Jeans Replied that every community has some
kind of required local effort and that
impact aid is considered local effort.
He acknowledged that there are members of
the Legislature that disagree with that
analogy. The money is coming from the
federal government. He continued
discussion regarding the districts that
do not have a required local effort. Mr.
Jeans referenced Page 9.
4114 Representative Observed that if school districts are
Wilson forced into a borough that the funding
would remain the same. The required local
contribution would only replace the
federal impact aid.
4007 Mr. Jeans Noted that the last three boroughs that
incorporated, those costs were more with
incorporation then through the foundation
formula [prior to incorporation]. He
noted that the fourth borough that
recently incorporated received more State
aid since its incorporation as they did
not have high property value.
3800 Representative Confirmed that it is illegal to assess
Kapsner property taxes on federal land such as
Native allotments, pointing out that
there is no way to assess property value
on 60 percent of the State of Alaska's
land. Mr. Jean understood that certain
lands were non-taxable and that is why
those people qualify for impact aid.
3715 Co-Chair Harris Pointed out that taxes are not paid on
land where there are military bases.
3646 Mr. Jeans Reviewed the additional local
contribution of a school district, which
can be the greater of 2-mil tax levy or
23 % of the district's current year basic
need. In response to Representative
Croft, Mr. Jeans stated that local
contribution could be capped. Federal
aid is taken into consideration in the
federal impact formula and to do that,
the State has to meet an equalization
test under the federal law. The
disparity test clarifies that the State
cannot have more than 25% variance in
revenue between the wealthiest and
poorest district.
3499 Mr. Jeans The formula assumes that everyone is
equal at basic need.
3440 Representative Gatto Clarified that the federal government is
attempting to guarantee that the very
wealthy districts do not have an undue
advantage over poor districts. Thus, the
parameters are established at no more
than 25%.
3403 Mr. Jeans Reviewed Nome's local effort. The maximum
contribution that Nome will be able to
receive according to calculations is
$2,166,060 dollars.
3326 Mr. Jeans Discussed Quality School Grants. School
districts must submit a plan to the
Department regarding how to spend the
funds. These are targeted funds for
student intervention. The statute
clarifies that $16 dollars per adjusted
ADM would be added. Nome would qualify
for $23, 131 under this program.
3252 Mr. Jeans Addressed the supplemental funding
"floor" bridges the transition between
the old funding formula implemented in
1998 to the new funding formula
implemented in 1999.
3156 Mr. Jeans In response to a question by
Representative Gatto, explained that SB
36 targeted funding for student
intervention programs. He explained that
the number of students had multiplied $16
dollars.
3043 Representative Questioned what would have occurred if it
Wilson had been added to the ADM.
3023 Mr. Jeans Observed that the funding level would
have remained about the same. The
Legislature directed how the money was to
be spent for to student intervention.
2957 Mr. Jeans He provided members an example of the
supplemental funding floor. Under 1999
if a district generated $1,100,000 under
the old and $1,000,000 under the new,
they would receive $100,000.
2854 Mr. Jeans Observed that the intent was to be an
adjustment tool. He reviewed Nome's
calculations.
2742 Mr. Jeans Observed that if there is a decrease
below 95 percent, the floor is decreased
by the same amount.
2709 Mr. Jeans Reviewed the establishment of Nome City's
school funding floor. He noted that Nome
would have another increase in FY04,
which would place them on the new funding
floor.
2610 Representative Referred to the overall loss of school
Kapsner funds for Nome with the changes in the
formula.
2515 Mr. Jeans In response to a question by
Representative Wilson, Mr. Jeans
explained that either more students or an
increase in the base student allocation
causes the changes in basic need. Once
the floor is reached, the funding is
based on what you make through the
formula.
2359 Co-Chair Harris Pointed out that the premise was that the
Legislature felt that some schools were
receiving less than some of the rural
schools.
2346 Mr. Jeans Responded that this is only a 'hold
harmless provision' from a rewrite of the
foundation funding formula. It is a
transition provision. It only erodes
when there is an increase in the yearly
entitlement.
2308 Mr. Jeans Continued, the supplemental funding floor
is a reduction of 40% of the increase
over the prior year.
2251 Mr. Jeans Components of State aid as it relates to
Nome with a total State aid entitlement
of $5,145,000 dollars. If insufficient
funds are provided by the Legislature to
meet the total entitlement of all
districts, then the amount is prorated
the programs equally.
2233 Mr. Jeans Concluded his presentation on the
foundation-funding program.
2220 Representative Gatto Question regarding the funding floor and
asked why some children are only worth
60% of other children. He asked if the
funding floor had changed in the last 4
years that had changed that.
2137 Mr. Jeans That is a 'misperception' that some
students are only worth 60%. The funding
floor is transition provision from the
old to the new funding floor. In
reality, districts have changed the
amount they receive from the funding
floor.
2050 Representative Gatto Asked if the State had followed through.
2039 Mr. Jeans Emphasized that the State is still
following through; however, Nome has hit
the end of their transition.
2024 Co-Chair Harris Applauded the presentation presented by
Mr. Jeans.
1959 Representative Gatto Echoed his gratitude and noted how
astounding it was, the amount of work it
took to agree on a foundation formula.
1935 Co-Chair Harris ADJOURNMENT:
The meeting was adjourned at 12:52 P.M.
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