Legislature(1997 - 1998)

02/24/1998 03:08 PM House HES

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
         HOUSE HEALTH, EDUCATION AND SOCIAL                                    
            SERVICES STANDING COMMITTEE                                        
                 February 24, 1998                                             
                     3:08 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. 300                                                             
"An Act relating to health insurance; and providing for an                     
effective date."                                                               
     - PASSED CSHB 300(HES) OUT OF COMMITTEE                                   
* HOUSE BILL NO. 351                                                           
"An Act relating to academic performance and accreditation of                  
public schools; relating to state aid to school districts and                  
regional educational attendance areas; and providing for an                    
effective date."                                                               
    - HEARD AND HELD                                                           
* HOUSE BILL NO. 294                                                           
"An Act relating to the formula funding public education; and                  
providing for an effective date."                                              
     - HEARD AND HELD                                                          
HOUSE BILL NO. 169                                                             
"An Act relating to welfare to work tax credits under the Alaska               
Net Income Tax Act; and providing for an effective date."                      
     - SCHEDULED BUT NOT HEARD                                                 
(* First public hearing)                                                       
PREVIOUS ACTION                                                                
BILL: HB 300                                                                   
SHORT TITLE: HEALTH CARE INSURANCE                                             
SPONSOR(S): REPRESENTATIVES(S) BUNDE, James                                    
Jrn-Date    Jrn-Page           Action                                          
01/12/98      2023     (H)  PREFILE RELEASED  1/2/98                           




01/26/98 2133 (H) HES, FINANCE

01/26/98 2133 (H) 2 FISCAL NOTES (DOE)

01/26/98 2133 (H) GOVERNOR'S TRANSMITTAL LETTER 02/24/98 (H) HES AT 3:00 PM CAPITOL 106 BILL: HB 294 SHORT TITLE: LOCAL & STATE EDUC. FUNDING SPONSOR(S): REPRESENTATIVES(S) KUBINA, Joule, Davies, Brice, Croft, Elton, Kookesh, Davis Jrn-Date Jrn-Page Action

01/12/98 2021 (H) PREFILE RELEASED 1/2/98


01/12/98 2021 (H) HES, FINANCE 02/04/98 2222 (H) COSPONSOR(S): DAVIS 02/24/98 (H) HES AT 3:00 PM CAPITOL 106 WITNESS REGISTER SHIRLEY J. HOLLOWAY, Ph.D., Commissioner Department of Education 801 West 10th Street, Suite 200 Juneau, Alaska 99801-1894 Telephone: (907) 465-2802 POSITION STATEMENT: Provided department's position and answered questions regarding HB 351 and commented on HB 294. RICHARD CROSS, Deputy Commissioner Department of Education 801 West 10th Street, Suite 200 Juneau, Alaska 99801-1894 Telephone: (907) 465-2815 POSITION STATEMENT: Testified on HB 351. JOE CLADOUHOS, Member Juneau School Board 10750 Horizon Drive Juneau, Alaska 99801 Telephone: (907) 463-4010 POSITION STATEMENT: Testified on HB 351. CARL ROSE, Executive Director Association of Alaska School Boards 316 West 11th Street Juneau, Alaska 99801 Telephone: (907) 586-1083 POSITION STATEMENT: Testified on HB 351 and HB 294. STEPHEN McPHETRES, Executive Director Alaska Council of School Administrators 326 Fourth Street, Suite 404 Juneau, Alaska 99801 Telephone: (907) 586-9702 POSITION STATEMENT: Testified on HB 351. JOHN CYR, President NEA-Alaska 114 Second Street Juneau, Alaska 99801 Telephone: (907) 586-3090 POSITION STATEMENT: Testified on HB 351 and HB 294. BILL BURROWS, President Fairbanks Board of Education 413 Haines Avenue Fairbanks, Alaska 99701 Telephone: (907) 451-0985 POSITION STATEMENT: Testified on HB 351. REPRESENTATIVE GENE KUBINA Alaska State Legislature Capitol Building, Suite 404 Juneau, Alaska 99801-1182 Telephone: (907) 465-4859 POSITION STATEMENT: Testified as sponsor of HB 294. MARILYN LEAHY, Member Valdez School Board P.O. Box 307 Valdez, Alaska 9968 Telephone: (907) 835-2801 POSITION STATEMENT: Testified in support of HB 294. DARROLL HARGRAVES, Representative Alaska Gateway School District Box 226 Tok, Alaska 99780 Telephone: (907) 883-5151 POSITION STATEMENT: Testified on HB 294. ACTION NARRATIVE TAPE 98-12, SIDE A Number 0001 CHAIRMAN CON BUNDE called the House Health, Education and Social Services Standing Committee meeting to order at 3:08 p.m. Members present at the call to order were Representatives Bunde, Green, Vezey, Porter and Dyson. Representatives Brice and Kemplen arrived at 3:20 p.m. and 3:42 p.m., respectively. HB 300 - HEALTH CARE INSURANCE Number 0031 CHAIRMAN BUNDE announced the first item on the agenda was HB 300, "An Act relating to health insurance; and providing for an effective date." He noted that HB 300 had a further committee referral to the House Labor and Commerce Committee where the insurance issues would be addressed. Number 0077 REPRESENTATIVE JOE GREEN made a motion to move HB 300 from the committee with individual recommendations and attached fiscal notes. Number 0089 REPRESENTATIVE BRIAN PORTER objected. He said it was a close call for him, but looking at it from a position of endeavoring to get a handle on health care costs, he didn't think that anyone would be inspired to make an aggressive bid on a health care contract unless the company could be reasonably assured that the amount of clientele the program considered would be the amount of clientele delivered to them for service. A company cannot reduce the price for volume if the volume isn't delivered and in his opinion, Section (c)(1) would preclude that from happening. For that reason, he was not going to support HB 300. Number 0206 REPRESENTATIVE GREEN amended his motion to reflect he was moving CSHB 300(HES) from committee with individual recommendations and attached fiscal notes. CHAIRMAN BUNDE asked for a roll call vote. Representatives Dyson, Green and Bunde voted in favor of moving the bill. Representatives Porter and Vezey voted against it. Representatives Brice and Kemplen were absent. Therefore, CSHB 300(HES) moved from the House Health, Education and Social Services Standing Committee on a vote of 3-2. CHAIRMAN BUNDE called an at-ease for an update on the Traumatic Brain Injury Act of 1996. HB 351 - ACADEMIC PERFORM/ACCREDITATION/STATE AID Number 0261 CHAIRMAN BUNDE reconvened the House Health, Education and Social Services Standing Committee at 3:39 p.m. He announced the committee would next consider HB 351, "An Act relating to academic performance and accreditation of public schools; relating to state aid to school districts and regional educational attendance areas; and providing for an effective date." He noted there were a number of sites on teleconference for listen-only. He asked Commissioner Holloway to present HB 351. Number 0302 SHIRLEY J. HOLLOWAY, Ph.D., Commissioner, Department of Education, read the following excerpt from the transmittal letter for HB 351: "We have the responsibility to ensure every child in the state receives the educational opportunities to succeed. When our children can read, write and compute they not only are better able to enter the work force, but they can become full participants in tomorrow's society. On the other hand, children not meeting success in our schools are far more likely to fail in other ways, contributing to future costs to the public. "Meeting this responsibility requires providing schools appropriate funding and support while holding them accountable for student performance." Number 0372 COMMISSIONER HOLLOWAY referred to page 1 of the booklet entitled, "Quality Schools & Foundation Formula" and said the purpose of this legislation is three-fold: First, to raise the bar for each Alaskan student in reading, writing, and mathematics; second is to provide the school the financial and technical assistance to ensure each student can meet these higher expectations; and third, to hold schools and communities accountable. Number 0417 COMMISSIONER HOLLOWAY said she would be discussing the elements of HB 351 and Richard Cross, Deputy Commissioner, would discuss the funding. She stated this legislation would mandate performance standards in reading, writing and math which the Department of Education (DOE) views as important because of legislation passed last year relating to qualifying examinations for high school students based on reading, writing and math standards. As it currently stands, those standards are voluntary so ensuring that every child throughout K-12 has the opportunity to gain those skills is important. Number 0461 COMMISSIONER HOLLOWAY stated the second component is to implement the comprehensive assessment system. There's a qualifying exam at the high school level, but a comprehensive assessment system is really needed that starts early on in a child's educational life to ensure students meet the standards. The third part of the legislation would change the department's report card from school district to individual schools. The focus of the change in all the literature on school improvement is the school. Generally, districts don't change but schools change with a lot of community support and involvement. It is the department's belief that by focusing on individual schools, the community and family involvement will help promote the needed changes in public education in Alaska. It is important for the department to report back to the community on how well the students are meeting the standards. The department proposes to keep the California Achievement Test in place, and in addition have a comprehensive assessment that's based on the standards. Number 0579 COMMISSIONER HOLLOWAY further stated the next element of the legislation is the department will designate schools beginning in August 2002. She said, "We are proposing that in order to hold schools accountable for student learning, that in the year 2002, which is by the way the graduating class that will have to meet the qualifying exam here, that with a formula looking at multiple student measures, which include student achievement data, absenteeism, dropout and transient rates, that we would give each school in this state a designation and that designation would be either distinguished, successful, deficient or in crisis." Schools that receive the two higher designations of distinguished or successful, would be granted state accreditation. She noted the department is working with Northwest Accrediting Body, so it would be a joint accreditation. Schools receiving a designation of deficient or in crisis would have two years to begin turning that around. This legislation recommends that the quality school standards would be the core of that school improvement and that accreditation process. The department is also proposing to put together school improvement teams of practitioners - distinguished educators, school board members, parents, business people - to help turn schools around. She directed the committee's attention to the "Maintains Local Control" portion at the bottom of the page and said, "In working this bill through with many constituent groups, a lot of our folks felt it was very important that although they may be designated in those lower categories and be given two years that they ought to have the opportunity to invite the state in for help, but that it was still -- it was their choice where they got that help and during those first two years it would be only by invitation, and so we would maintain that local control." Number 0757 REPRESENTATIVE GREEN asked what happens if, after two years, a school is still deficient or in crisis. COMMISSIONER HOLLOWAY responded through this legislation, the State Board of Education, would be charged with the responsibility of developing a series of measures that could be used for schools still deficient after two years. The bottom line is the commissioner, in consultation with parents and the community, would manage a school's fiscal and/or academic affairs, or implement other emergency measures. The department envisions a lot of progressive measures prior to that action. It is the department's position that if schools and communities started today to identify the level at which students should be in reading, writing and math, in addition to ensuring that time, energy and funds were focused on that effort, there should be very few schools in the year 2002 in the lower two categories. This legislation holds schools and communities responsible. For example, a high dropout rate or absenteeism rate isn't necessarily in the control of the school, but it's a community problem. Number 0896 COMMISSIONER HOLLOWAY referred to the standards and said she has heard comments like, "Gee, the department only cares about reading, writing and math." The department cares about all of the standards, but it is important for children to have the basic skills early on in school years, in order to take advantage of the opportunities for the other learning. She has also heard criticism about restricting the ability to teach the local language, culture and tradition. She contends that many of the basic skills can be taught through that rich cultural context, and in fact, can be taught through another language other than English and then transitioned into English. Number 0947 COMMISSIONER HOLLOWAY concluded that the quality pieces of this legislation are absolutely essential in order to continue on the trail of improving public education in Alaska. She introduced Richard Cross, Deputy Commissioner, to discuss the foundation formula portion of the legislation. Number 0961 RICHARD CROSS, Deputy Commissioner, Department of Education, said the foundation mechanism in HB 351 is a modification of the existing foundation formula. It is not a radical rewrite or extreme departure from the current formula. House Bill 351 uses a 1994 special education task force funding study to allocate special education funds on a percentage of students enrolled at 14 percent and 4 percent for gifted/talented students on a percentage of total students. It continues to identify students who require extensive services. The reason for that is because students requiring these services are not evenly distributed across the state and the cost associated with the programs are extremely high. This reduces labeling of students for funding as well as simplifying the formula. Bilingual and bicultural students would continue to be counted based on the theory that their distribution across the districts is not necessarily uniform and it will continue to count vocational students in vocational programs. MR. CROSS continued that HB 351 incorporates the single site table, referred to as additional district support in the budget, into the foundation formula. This is a level of funding that's been (indisc.) for quite a few years now and the department believes it is appropriate to incorporate it in the formula, not only for the purposes of simplicity, but to get it into the amount of dollars that are considered in the federal disparity test. MR. CROSS said that HB 351 equalizes district correspondence funding. There has been a significant increase in the number of district-operated correspondence programs that serve students outside the district. Number 1101 CHAIRMAN BUNDE asked Mr. Cross to explain the situation in Galena relating to correspondence programs. MR. CROSS responded the department has seen an exponential increase in the number of students enrolled in correspondence programs who are not residents of the district in which the correspondence program is being offered. The most significant is in the Galena district where over 1,000 students are enrolled, but there are significant numbers in Copper River, Nenana, and the Chugiak district in Anchorage, as well. CHAIRMAN BUNDE asked Mr. Cross how students in Kenai were encouraged to enroll for the Galena correspondence program and what the payoff is for Galena. MR. CROSS said that Galena advertised their correspondence program and convinced parents the program would be of high quality and a number of parents enrolled their children. There were a lot of rumors about the marketing ploys; the department took those rumors seriously enough to conduct telephone interviews with about 300 families in the Galena program. The department found that parents were extremely serious about their child's education, were well aware of the program, had received materials concerning the program and had their children actively engaged in education. He said the department's issue is not with the legitimacy of these programs or whether the programs should be offered, but the concern is that under the current formula districts are overly compensated for those students. Number 1201 CHAIRMAN BUNDE explained that districts enroll children as correspondence students who can be educated at a fairly economical rate and then the district charges the state for the full allotment. MR. CROSS stated, "The current formula treats a correspondence student - counts them as any other student in the largest funding community in that district and so even though the cost associated with those programs are generally smaller than the costs of in- school programs, they get the same amount." CHAIRMAN BUNDE asked if the Glennallen district hadn't offered computers as a bonus to students signing up for the correspondence program in their district. MR. CROSS said that a number of districts had made a similar offering. Number 1259 REPRESENTATIVE FRED DYSON observed that it was a distance education program in which computers certainly played a part. He has been informed that most of the parents in the Galena program are happy and has given parents an alternative for supplying the educational needs of their children. Admittedly, the Galena School District does make out financially, but he understood the district had volunteered to give up the cost differential and had asked to be reimbursed at 1.0, not the premium rate of reimbursement for resident students. MR. CROSS remarked the Galena district was advised the department didn't want to use an area cost differential of 1.3 and a differential of 1.0 had been applied to that district's program. CHAIRMAN BUNDE said he was not implying the Galena district was doing anything illegal; they're using the current system creatively. MR. CROSS pointed out that HB 351 addresses the Galena issue by amending the school size table so a school would not continue to operate with less than eight students. Currently, a funding community with eight students can petition the commissioner and get a school. There is no provision in the law that addresses when that number reaches seven, six or less. House Bill 351 allows districts one year of funding when a school falls below eight students. The community would still be able to operate the school, but the community wouldn't get the "front end load that a funding community gives you for it." MR. CROSS said HB 351 provides new money to districts and provides a means for annually increasing the foundation formula to meet the increasing needs of districts. He directed the committee's attention to the spreadsheet developed for HB 351. He said, "We've been a little unkind to you here in that people usually like to see the bottom line in the far right-hand column and actually the bottom line is the second to right-hand column which -- and what that teaches you is how much additional state aid a district would get from this bill as they would get from the current foundation formula. And you can see that it ranges from 0 in the cases of a few districts, which I will explain, to $6,166,419 for the Anchorage School District. The districts that receive 0 are those districts who are impacted by the controls that we've put in this bill; in other words, the changes to gifted/talented funding, the changes to resources self-contained funding or the changes to correspondence funding. And the reason they need hold harmless is they deviated so far from the norm in the current scenario that they didn't get any additional funding from the way the formula worked, so that we had to provide them with hold harmless. And you'll see in each case in the second to last column, when a district has a 0, you'll see there's some hold harmless amount that's required to keep them from falling below 0. I think with the hold harmless, the number I'd like to point out is the bottom line number - the amount of money it takes to hold all districts harmless in this bill is a quarter of a million dollars." Number 1475 CHAIRMAN BUNDE asked if the hold harmless cost was a one year cost or ongoing. MR. CROSS said the hold harmless is applied in the first year. With the increase that's built into it, it wouldn't be necessary by the second year. CHAIRMAN BUNDE inquired how much money would have to be placed into the foundation formula to make HB 351 work. MR. CROSS replied the fiscal note for the foundation portion of HB 351 is $24.1 million. CHAIRMAN BUNDE asked if that would be $24 million each year? MR. CROSS responded that once the $24 million is paid, it would continue and then there are increased costs each year with the increase for the instruction unit. CHAIRMAN BUNDE verified that it would be $24 million this year and $24 million plus next year. MR. CROSS interjected, "Plus 1 percent of the value of the unit." Number 1587 REPRESENTATIVE DYSON referred to page 5, section (h) of HB 351, and asked if Commissioner Holloway was convinced she had the legal authority to take control of a school. COMMISSIONER HOLLOWAY indicated the department had been working with the Office of the Attorney General on this particular section. Based on the wording, the Office of the Attorney General believes the department has the ability to go in and work with a community and the staff, manage the school's fiscal and academic affairs in cooperation with the community. REPRESENTATIVE DYSON inquired who owns the title to the real estate. COMMISSIONER HOLLOWAY understood that in terms of real estate, it would depend on whether it's a Rural Education Attendance Area (REAA), a borough, or a city; it would differ based on the kind of school district. REPRESENTATIVE DYSON asked under which of those classifications does the state hold title to the real estate. COMMISSIONER HOLLOWAY understood it would be the REAAs. Number 1665 REPRESENTATIVE DYSON asked if he was correct in assuming that under the Alaska State Constitution, the state component of the foundation formula funding could not be withheld based solely on what is perceived to be unacceptable performance. COMMISSIONER HOLLOWAY deferred that question to Mr. Cross but noted it has been the department's position that withholding funding will not necessarily bring about the desired results. REPRESENTATIVE DYSON commented that he was not convinced the commissioner had the right to hold back funds or go in and seize control. COMMISSIONER HOLLOWAY pointed out there are 24 states that have academic bankruptcy laws, which are different in each state, but in some states that has been challenged. REPRESENTATIVE DYSON said in states that he's familiar with, it has been a court action whereby the court has seized control. It was his understanding that would be a more legal way to proceed, rather than the department seizing control. Number 1749 CHAIRMAN BUNDE asked, speaking from a practical aspect, does the department really have the funds to take over a school that has failed all the criteria and continues to fail? COMMISSIONER HOLLOWAY pointed out there is a $3.6 million fiscal note, beyond the foundation formula fiscal note, for the assessment portion. The department has asked for $900,000 in the FY 99 budget to begin a process of building school improvement teams. She emphasized the importance of being responsive today to schools that really do want to turn around and currently, there are limited funds to do that. She pointed out the Teaching/Learning Support Division, which is the only division that supports K-12 education, is down to $5 million of general fund monies and $2.5 million of that is pass-through grants. Over $12 million in that division has been lost in the last 10 years. When Alaska is compared to other states trying to support school reform, Alaska has a pittance. Without additional funding, the department will not be able to provide the quality support and technical assistance to the schools to turn around. Number 1825 CHAIRMAN BUNDE understood that it costs money to do business. He asked if the department had research that indicates a direct relationship between the amount of money spent and success in the classroom. COMMISSIONER HOLLOWAY said she didn't have research that would show a direct correlation; however, there is a basic level that's needed. She noted that Education Week had indicated Alaska had a 25 percent gap due to inflation and as a result schools are struggling. There was no doubt in her mind that school districts are not being sufficiently reimbursed to do the job. Number 1882 REPRESENTATIVE PORTER asked if the $3.6 million for accountability and accreditation section was an annual cost. COMMISSIONER HOLLOWAY said it was. In the first year, the majority of it would be to build the K-12 assessments based on the standards, and thereafter, that level of funding would be needed for the actual implementation, scoring, et cetera. She said, "Also, we would hope that we would not expect school districts to add another level of assessment without funding it, so it either needs to be funded through the foundation formula or it needs to be funded through the department so that we are paying for the expense of administering the tests." REPRESENTATIVE PORTER was under the impression it was the eventual goal to incorporate this into the normal curriculum and assessment that's currently being paid for, so there wouldn't be two or three levels. COMMISSIONER HOLLOWAY said that is the goal, but it's going to take awhile to get there. It will require additional monies for professional development, because it's a different education system from the current one. CHAIRMAN BUNDE said, "Last year or two years ago, while we had looked at a school improvement program from the Governor and it chose to go to a per unit [student] foundation formula, as many other states have chosen, and I think it limited funding to ten students or less. Now, this proposal goes back to the per unit and back to the current eight student minimum. It seems as a step backwards. Am I incorrect in that?" MR. CROSS responded, "We don't believe it's a step backwards. We don't argue that a per student allocation is a method of distributing money that's easily understood by the public and if it could be accomplished, you know, in a way that met the other ingredients that are people who are trying to do it -- and that is simplicity -- we'd probably recommend it as a way to go. The facts are, as we worked through our previous bill, we found that we were trying to do so many things in that bill that we were unable to predict the outcome or the result of what would happen when we did runs on that bill. And we frankly, because we are asking for a good deal in the front part of this bill - in the quality part of this bill - elected to go with a much simpler approach. I believe we will see that formulas that use a per student allocation and what we're talking about there, is an adjusted per student allocation, will certainly not be simple and they wouldn't be any easier for the public to understand than an instructional unit." Number 2015 REPRESENTATIVE KEMPLEN pointed out that last year the permanent fund deposited over $800 million of undistributed earnings into the corpus of the permanent fund at the direction of the legislature. This year, the projection is at least $982 million of undistributed earnings. Currently, there is legislation in the Senate proposing to again deposit the undistributed earnings into the corpus of the fund. Inasmuch as the permanent fund was to be used for public services when it was originally created, he wondered if Commissioner Holloway in her travels around the state, had heard many suggestions that it may be time to consider using the undistributed earnings for education instead of depositing it into the corpus. COMMISSIONER HOLLOWAY said as she travels around the state, everyone has an opinion of how education should be funded. The education coalition had a lot of dialogue with the public while collecting signatures to place the endowment issue on the ballot, and found there was a lot of support to look at alternative methods of funding education. She maintained there are probably more people today interested in pursuing alternative funding for education than ten years ago. Number 2119 REPRESENTATIVE DYSON referred to Section 12 and said he understood there was a public school "double dipping" situation where a part time student attends a school for four hours and that school gets the full time equivalent in the foundation formula. The same student is enrolled in the correspondence program, and the school gets 65 percent of the formula. That student is being counted for 165 percent of the equivalent of a student and the state is paying that amount. He asked if Section 12 was intended to eliminate that "double dipping" problem. MR. CROSS responded that Section 12 is an attempt to look at it. He explained it is extremely difficult to tell if the situation referred to was occurring with the current system of counting and reporting students. There are no individual student identifiers for each student that's counted and until the department has those identifiers, the possibility of duplicative counting will not be eliminated. While the expanding options for charter schools, correspondence schools, home schooling, and part time enrollment in schools, is a good thing, it does create some technical problems in terms of making sure the counts are accurate. CHAIRMAN BUNDE thanked Commissioner Holloway and Mr. Cross for their testimony. He called Joe Cladouhos forward to present his comments. Number 2265 JOE CLADOUHOS, Member, Juneau School Board, was testifying on behalf of the Juneau School District, Juneau School Board, and the school administration. He expressed support for many elements of HB 351 because it provides more funding, would help implement standards and assessments, provides remediation for students who won't initially meet the standards, and would reduce class size. The recent McDowell Study indicated the Juneau School District is the most efficient school in the state. The district's administrative costs are low and K-12 education is provided for the lowest average of dollars per student. The district is proud of that and proud of the fact the assembly supports the district to the maximum allowed by the cap each year. This year it will cost another additional million dollars for the City and Borough of Juneau taxpayers and another million dollars less for the state of Alaska. The district is not proud of having to cut dozens of teachers over the past ten years, reduce many specialists from full time to part time, reduce the annual text book purchasing from $350,000 per year to $50,000 this year and reduce library book building allowances. Two years ago in teacher contract negotiations, the incoming teacher salary schedule was reduced by 5 percent, froze step and column increases, capped health care costs and capped in-coming teacher experience credits into the teacher's retirement system. The bottom line is the Juneau School District needs more money and will be accountable for every dollar. TAPE 98-12, SIDE B Number 0001 MR. CLADOUHOS continued ... school board implemented a math test for sophomore students to prove they knew algebra and geometry by the tenth grade. The board was looking forward to implementing the high school exit exam, implementing standards and assessments of core concepts for every grade and reducing class sizes in every grade. But now the district is stymied; costs are increasing, expectations are increasing and money is not. Number 0020 CHAIRMAN BUNDE extended his congratulation on the Juneau School District being the most efficient district in the state. He called on Carl Rose to present his testimony. Number 0029 CARL ROSE, Executive Director, Association of Alaska School Boards, offered qualified support for HB 351. He uses "qualified" because it asks for things that he in part agrees with - the quality initiatives; however, in the absence of the dollars appropriated to implement these initiatives, he believes it will result in disaster if school districts are requested to do the quality initiative requirements of this bill without additional funding. The membership of the Alaska School Board Association feels they will be set up with high expectations and not have the ability to meet the requirements. With reference to the instructional unit issue, he said it can be understood and with appropriate factoring he believed a per pupil appropriation could be used. The issue of area cost differentials has been used in the past, it has been discussed, and in terms of simplicity, he didn't know how the needs of a state as diverse as Alaska could be addressed and still be made simple. He said the hold harmless provision is so critical to school districts that have been extended beyond their limits for the past ten years. MR. ROSE said the Association of Alaska School Boards is concerned about the principal nature of how the future is addressed. Does the state of Alaska have a principal centered mission that places quality and kids first? He said, "I don't think that many of the things we do express that. I think we say one thing and we do something else." He cited examples of some of the state and federal mandates placed on schools: The Americans with Disabilities Act, the Family Medical Leave Act, Individuals With Disabilities Education Act, and many others. He noted that school districts are required to provide insurance and without a deferred maintenance program, the risk of loss to the facilities increases. The bottom line is on the school district. He continued, "Now, I'll explain about these mandates. We looked at the policy implications on school districts. You've heard about some of the cuts that have taken place - they're happening across the state - the administrative workload that's required to meet the compliance of not just these mandates but so many more that we have on the books is considerable, so when you talk about administrative costs, you're talking compliance. When we identify the categorical funding that's provided to meet these requirements, they're normally inadequate or nonexistent. So, where does the money come from? It comes from 01 funding, it comes from regular instruction - the money that you give us to teach reading, writing and mathematics." MR. ROSE stated the issue of results based government is all about mission, results and cost. What is the mission? He said, "We apparently are going to be graded on how kids perform in mathematics and language arts. But when you look at the mandates that we're under - and they are considerable - it mandates us to spend our money in a different direction. So if our mission is pointed north, but the requirements require us to go west, we're not making the progress that I think you want to see." MR. ROSE reiterated his willingness to work in partnership with the legislature to accomplish the task at hand. He had been asked if he could identify the mandates to be eliminated. The answer is no, because these are policy issues that need to be addressed by the legislature. He concluded the association supports HB 351 in the concept that it is new money; there are some concerns about how it might be implemented, but he thought those could be worked through. He pointed out there are a number of bills before the legislature, but he urged legislators to consider quality and kids first. CHAIRMAN BUNDE thanked Mr. Rose for his comments and asked Mr. McPhetres to testify. Number 0273 STEPHEN McPHETRES, Executive Director, Alaska Council of School Administrators, testified in support of HB 351 with the proviso that it stays together as one piece and does not get divided. He recognized that it is a risk to come forward and support increased funding for schools, but the funding is needed desperately enough to take the risk and step forward and say, "We will be as accountable as necessary in order to get the additional funds." In terms of the quality schools information, a new accreditation standard and new accreditation process is being looked at. For decades, schools have been under the Northwest Association which has been an expensive process and going to a different accreditation system probably won't be any different. He commented, "So if we look about accountability and we look about accreditation, we look into dealing with schools in crisis, it is going to take additional dollars to help bring it up." MR. McPHETRES said it is imperative for the Department of Education to have financial assistance in order to make this happen. The department cannot be effective if a piece of legislation goes through with the accountability that does not give them the tools to be able to follow through with supervision, assessment and evaluation. MR. McPHETRES pointed out that last fall a group of associations designed a survey that was sent to elected officials and municipalities across the state. He said the results were very interesting and HB 351 speaks to the results of that survey better than any other piece of legislation that's been introduced to date. He urged committee members to review the results and the comments by local officials regarding the funding of schools in the document provided by the Alaska Municipal League. MR. McPHETRES referred to Representative Kemplen's earlier question regarding funding, and said he would like to see legislation introduced by a majority member that would put the interest earnings reserve account monies into the constitutional budget reserve fund where it would be available to take care of school funding and deferred maintenance, and there would still be money left over for future years. CHAIRMAN BUNDE asked John Cyr to come forward and present his comments. Number 0418 JOHN CYR, President, NEA-Alaska, testified that NEA-Alaska supports many of the provisions of HB 351 providing the bill is not broken apart and the mandates are not put on school districts and/or teachers without the money to support them. MR. CYR said NEA-Alaska supports HB 351 because of their belief that it improves schools, increases school funding in both the short and long term, it will fund single site schools, and it improves funding for centralized correspondence. The NEA-Alaska supports the reporting requirements specified in Sections 2-4. He explained that research and valid data should drive the decision making in all schools, and suggests that other reporting requirements be added such as strategies used by school districts to reduce truancy, that curriculum offered students in grades 9 - 12 be reported, and a detailed budgeted and actual expenditure of salaries, maintenance, operation and debt service should be reported on a standard document so comparisons can be made district by district. The NEA-Alaska maintains that Section 5 is a step in the right direction by providing the system of state accreditation to all public schools. Even though NEA-Alaska does support greater clarification of the standards to be used to accredit schools, they support the concept of identifying schools that are deficient or in crisis. Mr. Cyr expressed support for the additional resources and technical assistance so that all schools can in fact become distinguished or successful. Number 0533 MR. CYR said that NEA-Alaska proposes that new language be added to provide for school employee professional development so that emphasis can be placed on on-going support and technical assistance for school employees. He said the commissioner was right; it isn't districts that improve, it's schools and individual classrooms and those people in the trenches of educating children must have the tools to get better at what they do. In terms of school improvement plans, NEA-Alaska recommends that academic mentoring teams be identified and utilized to provide teachers and support staff a direct opportunity to provide change concerning curriculum, instruction, assistance to teachers and school employees and initiate strategies for specific child centered instructional practices. He emphasized that the people in the field working with the children must be given the chance to change the way they do business, and HB 351 is a vehicle to do that. MR. CYR continued that NEA-Alaska supports allocation of aid to students on a structural unit basis versus per child. In addition, they support adding an adjustment for single site school districts; but do not support the artificial percentage of special education student funding. If there is a concern that districts are over identifying too many gifted/talented children or too many special education children, he suggested that some type of universal criteria be looked at so that a gifted/talented student in district A is the same as it is in district B and there needs to be some kind of oversight on the reporting. Those students who have problems need to be served and funding needs to be there and the gifted and talented students truly need to be served and they need funding. Districts should not be penalized because they have more or less students in those categories than other districts. MR. CYR said that NEA-Alaska supports the increased assistance for centralized correspondence study as specified in Section 8, as well as the increase in the instructional unit along with the slight increase proposed each year thereafter. MR. CYR pointed out the Mat-Su School District is looking at cutting 36 classroom teachers for next year; that's with funding at the cap. That district cannot afford to lose 36 teachers. He stressed the necessity for something to be done at the legislative level to further fund education. MR. CYR concluded that NEA-Alaska has changed. One-third of the staff works specifically on educational excellence; not just contract negotiations, but making schools better. A health trust has been put in place and insures over 5,000 members across the state to hold health costs down. The NEA-Alaska is doing all it can to help the districts keep costs in line, now it's the legislature's turn. CHAIRMAN BUNDE thanked Mr. Cyr for his comments and asked Mr. Burrows to present his testimony. Number 0728 BILL BURROWS, President, Fairbanks Board of Education, said he didn't come before the committee to necessarily endorse or support a particular bill, but rather give some anecdotal evidence for the need for immediate relief and explain the situation in Fairbanks. The Fairbanks School District is being hit hard because of the way the formula works currently, specifically with the aspect of how the assessed value increase impacts the money Fairbanks gets from the state. As the assessed value of the Fairbanks Borough goes up with respect to both real and personal property, the state funding decreases. Two years ago, that amount was $750,000, last year it was $900,000, and this year it's $2.3 million. That's money that has to be requested from the borough. In addition, the Fairbanks School District has increased enrollment. The budget currently being reviewed by the board requests 15 additional teachers, which will have to be funded by the Fairbanks Borough. In conclusion, the Fairbanks School District is facing increased cost, increased enrollment, less money from the state, and having to fund the enrollment increase. To further compound the problem, the borough is not realizing the revenue from this increased assessed value to pay for the increased school funding in addition to the borough's increased needs. MR. BURROWS concluded that a delegation from Fairbanks came to Juneau to discuss the problems Fairbanks is facing. He said, "Whatever is done to change or adjust or fix school funding, we need help this year or we're in big trouble." Number 0823 CHAIRMAN BUNDE expressed his appreciation to Mr. Burrows for taking the time to come to Juneau to deliver his message. He noted this was the first hearing on HB 351 so it would be held in committee and heard at a later date. HB 294 - LOCAL & STATE EDUC. FUNDING Number 0852 CHAIRMAN BUNDE announced the committee would next hear testimony on HB 294, "An Act relating to the formula funding public education; and providing for an effective date." He asked Representative Gene Kubina to present his bill. Number 0875 REPRESENTATIVE GENE KUBINA, Alaska State Legislature, presented the sponsor statement for HB 294. He said HB 294 does two things: 1) it raises the instructional unit value from $61,000 to $64,000; and 2) it increases the level of local contribution from 35 percent to 40 percent. The only districts affected by this are North Slope, Valdez, and Unalaska. It would distribute the rest of the money to the other school districts. Anchorage would receive $12 million; Fairbanks $4 million, and Kenai and Mat-Su would receive $3 million each and on down the line. REPRESENTATIVE KUBINA said he believes the current formula does work, but because inflation has not been dealt with for ten years, it's out of whack. He mentioned the concepts of other legislative bills, but it was his opinion that a plain and simple bill needed to be introduced and become part of the discussion of simply addressing the inflation factor in the existing formula. REPRESENTATIVE KUBINA said many people believe his school district is the rich school district, but the fact is, Valdez is debating cutting the only reading teacher in the elementary school and cutting one librarian. His point is that if the Valdez School District, who everyone perceives as being the wealthy district, is going through these problems, what are other districts going through. REPRESENTATIVE KUBINA urged committee members to consider this approach and noted there are battles going on to change the funding formula, but if it can't be changed so that it's fair and equitable for all districts without robbing Peter to pay Paul, he was hopeful this simple approach would be used to find an answer. Number 1061 CHAIRMAN BUNDE asked what the local contribution would be in North Slope, Unalaska and Valdez with the passage of HB 294. REPRESENTATIVE KUBINA said it would go up 5 percent; from 35 percent to 40 percent. The local contributions would be as follows: North Slope $908,000; Valdez $263,000; and Unalaska $136,000. He corrected those numbers to reflect North Slope at $886,000, Valdez at $259,000, and $141,000 for Unalaska. He urged committee members to pass HB 294 out of committee so it could become part of the funding debate in the Finance Committee. He pointed out the amendment addressed the single site issue which has been the only complaint about the bill, and it is his opinion it should be included in HB 294. CHAIRMAN BUNDE noted there were a number of people in the audience waiting to testify. He asked Marilyn Leahy to present her comments. Number 1202 MARILYN LEAHY, Member, Valdez School Board, testified in support of HB 294, although it wouldn't benefit the Valdez School District. In her opinion, this is a simple fix and even though there are more elaborate solutions being proposed to redistribute monies, more funds need to go into the system. MS. LEAHY discussed some accomplishments of the Valdez School District with funds that were available in the past. For example, the eleventh graders came out in the 81st percentile on the California Achievement Test this year and the eighth graders came out in the 66th percentile. However, as a school board member, the decisions having to be made will take this good system apart piece- by-piece. MS. LEAHY concluded that investment in education does pay off. The study entitled, "Student Achievement in a Changing American Family" indicated that two-thirds of the increase in the national assessment of educational progress test scores were due to the federal dollars that had been directed to the disadvantaged youth. CHAIRMAN BUNDE asked Darroll Hargraves to come forward and testify. Number 1344 DARROLL HARGRAVES, Representative, Alaska Gateway School District, said the Alaska Gateway School District recently chose not to pass a resolution, but the board had directed him to support increased funding for education that would affect the Alaska Gateway School District. The board further directed that support be given to legislation that was simple and easily understood. He noted there have been a number of proposals the last couple years, but he wasn't confident any of them were simple and easy to understand. He cautioned that the formula to fund education may become so complicated and draw so much opposition that it may not be possible to pass a foundation funding formula that's agreeable and acceptable to everyone. MR. HARGRAVES shared a chart showing increased costs within his district. He noted there has been a $6,000 decrease in the average teacher salary in the Gateway School District. If the level of foundation funding for next year remains the same as this year, positions will be eliminated, there will be no salary increases, and cuts will have to be made in other places in order to continue operating. He noted the Gateway School District has been able to use reserves in the past, but all those reserves have been used, except what's required by law. MR. HARGRAVES said because of the complexities of the other bills, he would urge the committee to consider HB 294, which will save school districts. CHAIRMAN BUNDE asked Carl Rose for his comments on HB 294. Number 1625 CARL ROSE, Executive Director, Association of Alaska School Boards, testified in support of HB 294. CHAIRMAN BUNDE asked Commissioner Holloway for her comments. Number 1645 SHIRLEY J. HOLLOWAY, Ph.D., Commissioner, Department of Education, said the department's position is there shouldn't be any new funding to public education without all the pieces. She stated, "We are absolutely committed to the fact that we know that we need the public's confidence in public education and that's going to come with accountability (indisc. - coughing) new money." CHAIRMAN BUNDE thanked Commissioner Holloway for her comments and asked Mr. Cyr to comment. Number 1680 JOHN CYR, President, NEA-Alaska, testified in support of HB 294. He said, "I'd be more than happy to share all my charts and graphs with you and tell you all my sad stories. We're starving to death out there. You all have got to help us." Number 1715 CHAIRMAN BUNDE thanked everyone for testifying and announced that HB 294 would be held in committee for further deliberation. ADJOURNMENT Number 1745 CHAIRMAN BUNDE adjourned the House Health, Education and Social Services Standing Committee at 5:03 p.m.

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